Empresa de Telecomunicaciones de Cuba SA

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Etecsa is the Cuban telecommunications company which provides local, national and international phone services on an exclusive basis. The company started to be privatized in 1994 when Cuban government signed a contract with the Domos, a private Mexican group, for the sale of 49% stake. Under a 55-year contract to rebuild the telecommunications system in Cuba, Domos agreed to buy half of Etecsa for $706 million. Domos envisioned to expand the network by 1 million lines and upgrade 200,000 of the 450,000 existing lines in 1994. The total investment was estimated in $750 million. The partial privatization of Etecsa, which included a 12-year exclusive period, was the flagship foreign investment project in Cuba. Domos created Compania Interamericana de Telecomunicaciones (Citel) to own its participation in Etecsa. Soon after signing the contract, Domos sold a 12% stake in Etecsa to STET International, a unit of Telecom Italia, leaving Domos with a 37% holding. The joint venture came under strain after Domos failed to pay a final installment of $320 million for its original 49% stake. As a result, Domos relinquished its entire stake in Etecsa. As of December 1997, Telecom Italia was the sole private investor, with a 29% holding. In December 2003, Etecsa finalized the merger by absorption of two Cuban mobile operators, Cubacel and C-Com. Ectesa thus became the sole integrated wireline and mobile telecommunications operator in Cuba. As a result of the merger, Telecom Italia’s equity interest, initially 29%, was reduced to 27% of the share capital of the new Etecsa.