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Puerto Rico Completes Telecom Sale

March 2, 1999

SAN JUAN, Puerto Rico (AP) _ After nearly two years of negotiations and a sometimes-violent labor strike, Puerto Rico on Tuesday completed the $2 billion sale of its telephone company to a consortium led by GTE Corp.

Gov. Pedro Rossello called the sale of Puerto Rico Telephone Co. ``a significant step″ in his ambitious privatization agenda, which includes sales of hotels and private management of state utilities and hospitals.

The Federal Communications Commission approved the deal on Feb. 12.

In June, about 6,400 workers went on strike to protest the sale, fearing widespread layoffs. Weeks of protests, service outages, an airport blockade and sabotage of phone lines failed to derail the deal, although tens of thousands of customers temporarily lost telephone service.

GTE, of Irving, Texas, pledged there would be no layoffs for at least a year after it assumed control. GTE serves about 21 million local phone customers in the United States and has agreed to be acquired by Bell Atlantic Corp.

Public sector workers comprise a quarter of Puerto Rico’s 1.2 million-strong work force but have lost ground under the Rossello administration.

The GTE consortium is acquiring a controlling stake in PRTC. To appease labor interests, Rossello said that 4 percent of the stock would be distributed to company workers. The government retains 46 percent of stock which it has said also could be put up for sale.

The complex deal also provides millions of dollars to finance improvements to Puerto Rico’s water system and to fund a public pension.

PRTC provides local and long distance phone service and Internet access to business and residential customers. It has 1.3 million phone lines, more than 155,000 cellular customers and more than 237,000 paging customers.

PRTC had a monopoly in this U.S. commonwealth of 3.8 million people until 1996, when the law changed. Now, it faces competition from private firms and has been forced to cut rates.

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