Archive for February 12th, 2007

Government agrees to buy CANTV in another revolutionary step into fantasy land

February 12, 2007

It was indeed a remarkable sight. Another day in fantasy land. The Minister of Communications of a Government that can’t even keep simple imports flowing in an orderly manner, talking about running Government companies efficiently. Suggesting that the “new”, “old”, CANTV, under Government management will work even better than the current one, while in two years CVG Telecom, the Government’s “competing” (what an euphemism!) telecom company, with US$ 250 million plus in investments, has gone through five Presidents and as far as anyone knows, few phone calls have been completed via its network. Unless you believe in fairy tales and this Government is definitely full of fantasies.

But hold it, isn’t that Minister Jesse Chacon? Wasn’t he the head of the telecom regulator CONATEL, when his boss Diosdado Cabello told us in 2001 the wonderful benefits of opening the telecom sector? Whatever happened to those concepts? Or are we to believe that the telecom opening failed because of the participants? Why wasn’t it the fault of the regulators? Could it be they regulated too much? Or that the road to permits and access to bandwidth and services and the like was too cumbersome and filled with obstacles, if not tollbooths (full of euphemisms tonight, no?)? Or were they simply living a different fantasy or was it a different dimension?

As if this were not enough, then, the new Vice-President told us about how all of the privatizations of the 90’s did not make the people less poor. But he failed to mention that the telecom sector has topped the list as the sector with the largest investments in the country, year, after year, after year, since CANTV was privatized. And that if CANTV had remained in the hands of the Government, these investments would have never taken place or its two wireless competitors, Digitel and Movistar, would have beaten CANTV to the game and most likely they would be announcing their nationalization today instead.

And thus, the Government in their usual confusing style announced an agreement to buy Verizon’s stake in CANTV for a price of US$ 17.85 per ADR. While Chacon and Rodriguez spoke for quite a while, the Verizon representative communicated more in four sentences than they did in half an hour, he actually used words like “tender”, implying the Government will buy everyone that wants to sell, which was never mentioned by the two Government representatives. But they talked, boy, how they talked, about efficiency, social goals, socialism, not for profit and other such fantasies.

And I understand that in the morning they will announce a dividend also to be paid by CANTV (over three bucks!), which will make the final price above that offered by Mexican Carlos Slim and his companies Telmex and America Moviles. Thus, in usual revolutionary fashion, the Government buys “cheap”, but pays a bundle. It sends a message of revolution to the masses and the gallery, while paying upfront to the capitalists, who leave the country and live happily ever after.

But that is not the real question. the real question is how the Government acts with its Daddy Warbucks attitude, with CANTV and EDC being their little orphan Annies, spending some US$ 3 billion in buying well run companies in the interest of sovereignty, while the country’s infrastructure is simply falling apart. If not collapsing.

And falling apart it is. Ask the people who have to drive to El Junquito everyday, or to Los Teques, or those that go to Oriente, a recently built highway with sections that have collapsed or are unfinished. (Will not mention the old viaduct, that is ancient history.) These are no fantasies for them, they are the hard reality of daily life. Somehow I would think that spending these US$ 3 billion locally on much needed infrastructure, would and should be better for the well being of the population that having the Government spend US$ 3 billion that goes abroad and assume the management of these two well run companies, which will become in short term order, the object of desire of politicians, a source of pork barrel politics and giveaways, that in less than five years will make these companies as inefficient as the old CANTV or the current Government national electric company CADAFE.

And if these two examples , CANTV, from the past, and CADAFE, from the present, were not enough, one only needs to see how the main focus of the Government for eight years, the self-proclaimed self sufficiency in agriculture, has been a total failure (if not disaster!). The Land Bill gave the Government the power to take over land, which it did, in order to distribute it to the peasants, which it has not done in a magnitude commensurate to the expropriations. With the end result being that according to the Government’s own statistics, agricultural production went down 9% in 2006. Meanwhile, food inflation was 4% in January and 30% in the last twelve months, as too much money chases the few goods that are produced locally. The Government meanwhile, has not even been able to import efficiently at any price, with billions being spent, while simultaneously aiding the destruction of the same agricultural production they defend with such passion. Or is it fantasy?

But having failed at their main project for the last eight years, is no reason for them to believe that they are on the wrong path. Now Chavez, who can’t find a handful of managers to run the current Government well, will have to spread the few he has even further. The conclusion is that, if the Government survives the next five years without a major financial crisis, in 2012, the same characters (or maybe those running agriculture today) will announce the nationalizations of telecom companies Movistar and Digitel, as the last step in acquiring total sovereignty in telecommunications as the “new”, “old”, CANTV, becomes so inefficient that they have to merge all in one. And that is no fantasy, it is a prediction.

And the usual suspects will be applauding that day in the future, as much as they did today, even if their Internet access becomes intermittent (or restricted!) or part of the “new”, “old”, CANTV, is sold at a bargain price to a friend of the regime or if corruption is so rampant, that the current profitable CANTV, has billion-dollar losses. After all, the revolution does not want profits and apparently cares little about losses. Losses make us all poorer and that is apparently good for preserving a revolution.

And these fanatics could care less, because results are not important for the revolution. Where is the Orinoco-Apure axis? What happened to the US$ 500 million spent in Chavez’ first year on it? Where is all the money spent on agricultural subsidies? Or where are the estates expropriated to benefit the people? How many are owned by active or retired military? By Chavez’ relatives or those that claim to be his relatives? Why is agricultural production down? Why are there food shortages? (Add your own list here…)

I know I ask too much. But in some sense all my questions were answered today by Minister Chacon at the press conference to announce the takeover of Cantv. He actually dared to say that the “new”, old, CANTV, will provide better service to the Orinoco-Apure axis. Thus, he in fact added one fantasy on top of the other one. The power of dreams!

And that is all the revolution seems to be. One fantasy on top of the other, on top of the previous one, until they all believe their stories.

And they actually keep a straight face telling us about it.

And that is all the revolution seems to be about.

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