ETB CEO Says No Need for Buyout Amid Growth Into Mobile, TV

Empresa de Telecomunicaciones de Bogota (ETB) SA, the city-owned phone company, has no plans to seek a partner or buyout for at least two years as it adds television and mobile service, Chief Executive Officer Saul Kattan said.

“What would they contribute?” Kattan said in an interview. “We have money, ability to take on debt. It would be cheaper to bring 20 or 50 world-class executives and pay them high salaries than it would be to sell the company.”

ETB fell 3.9 percent today to 420 pesos at 2:15 p.m. in Bogota, halting a rally that drove it to a 14-month high earlier this month amid speculation the ouster of Bogota Mayor Gustavo Petro would lead the company to seek a strategic partner. Petro, who was elected mayor in October 2011 and removed from office for allegedly mishandling garbage collection, had opposed selling ETB and hired Kattan in January 2012.

“The market seems to think it would be easier for the company if it did find a partner,” Juan David Ballen, an analyst at brokerage Alianza Valores SA in Bogota, said in a phone interview.

ETB’s sales rose 1.8 percent last year, according to Kattan, after declines in 2011 and 2012. Providing television, which is in trial stages now with sales set to begin in two months, and mobile-phone service starting in September will help boost revenue about 7 percent in 2014, he said.

“I see a lot more value for the company in keeping with its transformation,” Kattan said. “The mayor has proved he was right” in his decision not to sell the company.

Petro’s removal from office was suspended last week in what he called a “temporary democratic victory.”

Slim Dominance

ETB won a 4G radio license with partner Millicom International Cellular SA in a June auction. The city-owned company will be competing with billionaire Carlos Slim’s America Movil SAB, whose Claro unit has about 60 percent of Colombia’s mobile-phone lines.

Lawmakers haven’t taken enough measures to stem Slim’s dominance in Colombia, Kattan said.

“It’s very dangerous for a country that depends so much on connectivity,” he said.

America Movil’s press office didn’t respond to an e-mailed request for comment.

Kattan said ETB is undervalued by stock investors, with a market value of about $780 million even though the company has at least $850 million in cash and expected cash coming from the sale of assets and a payment due from a dispute.

“The share price should be at least triple what it is today,” Kattan said. “The shares are going to get a lot of strength.”

To contact the reporter on this story: Christine Jenkins in Bogota at cjenkins28@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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