There are some redeeming features of Latin America’s go-it-alone left-wing democracies, not least the fact that they put the USA’s regional-political nose out of joint. Ten out of ten for that.

But renationalising former state-owned telcos is a road that leads only to madness. In Venezuela, President Hugo Chavez has long stated his intention to bring CANTV, the dominant PTO, back into state ownership. Now, in Bolivia, another maverick premier, Evo Morales, wants to do the same with that country’s dominant carrier, Entel.

One thing that these two cases have in common is that both were privatised during a flood of economic liberalisation in the 1990s. Another is that both are controlled by strategic investors, Verizon in the case of CANTV and Telecom Italia in the case of Entel, who might happily renounce their stakes in the companies.

The issue could well boil down, therefore, to how the respective governments intend to sequestrate the assets of these telcos. Repatriating foreign-owned (and listed) shares would be a disaster for regional investment, even if it would play well to a domestic audience. Yet Verizon and TI, while seeking an exit strategy, would suddenly turn to hard bargaining tactics if forced into a corner.

Smart move?
Leaving aside such messy commercial intricacies, you have to question the sanity or the short-term memory of anyone proposing to take these companies back into state ownership. Ten years ago, you might saunter down the streets of Caracas or La Paz and marvel at all the telephone lines strung from poles at every corner. Only when you realised that most of these were informal (and illegal) ‘party lines’, and that the waiting time for a new line was about five years, did the penny drop.

Sure, technology has improved the situation. Wireless has bridged much of the gap in supply for basic telephony. With broadband now on the horizon, traditional telcos have a chance to re-assert themselves. Can they do this under the dead hand of state control?

It seems like the wrong time to hand back control of such an important economic and social lever to the bureaucrats for whom corruption may or may not be more than a passing state of mind. Even if the key strategic investors find their interest waning where these far-flung and exotic land grabs are concerned, and are wearied by the politics underlying it all, they must owe it to their customers not to consign them back to a dustbin full of red-tape and graft.

There’s a lesson here which, if ever learned, will doubtless be learned too late by those who matter. Telcos are not chess pieces. You can’t slide them back and forth while pondering the next and best move.

If their plans come to fruition (as they likely will), Chavez and Morales will between them upend the chessboard, damage the pieces and change the rules while they are at it. It’s a poor outcome.

We might praise the duo for giving the Americans a bloody nose in their own backyard. But giving their citizens a bloody awful telecom service in their own homes and businesses? Unforgivable and stupid.
Jim Chalmers