ICE, Telefonica amongst those linked with possible Hondutel investment

2 Sep 2014

According to the newspaper El Heraldo citing the head of the national regulator Conatel, Ricardo Cardona, Costa Rica operator Instituto Costarricense de Electricidad (Grupo ICE) and Telefonica of Spain are amongst the interested parties said to be considering a major investment in struggling fixed line operator Empresa Hondurena de Telecomunicaciones (Hondutel). The paper suggests that a bid from ICE could be imminent, with the Conatel official noting: ‘We are waiting for a strategic partner with Hondutel [that] could invest between USD300 and USD400 million’. The second firm that apparently has its sights on Hondutel is Telefonica which, according to Cardona, is expected to realise its strategic investment next year.

Last month, TeleGeography’s CommsUpdate reported that Hondutel urgently needs around USD600 million in funding to modernise its aging infrastructure and meet its debt obligations if it is to survive in a liberalised telecommunications market. Whilst the company successfully reduced its net losses in H1 2014 by 55% to HNL134.06 million (USD6.39 million), from HNL302.6 million the previous year, the improvement is deemed insufficient to guarantee its long-term position. However, industry watchers note that if the bailouts work, Hondutel could start generating profits in mid-2015, and in June this year, Hondutel revealed that it generated a net profit of HNL13.6 million, ending 41 consecutive months of losses; the positive results were attributed to a series of measures implemented by manager Jesus Mejia to improve operational efficiency.

At the start of this year Hondutel had debts of some HNL1 billion and HNL2.22 billion in lawsuits stacked against it. The management’s goal is to reverse the current debt ratio: ‘The mission is that we are 1-1 at the end of the year [and that] the company is sustainable and by June next year can generate profits,’ Jesus Mejia said. Hondutel’s primary creditors are the National Electricity Company, or ENEE, with HNL155 million of its debt and the National Telecommunications Commission (HNL600 million).

Honduras,Telefonica, Grupo ICE, Hondutel (Empresa Hondurena de Telecomunicaciones),

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