THE ARGENTINE TELECOMMUNICATIONS SECTOR Page 17 financing arrangements, Manufacturers Hanover failed to amass enough sovereign debt and Bell Atlantic had to withdraw its bid in early October.<sup>3</sup> " Following the procedures outlined in the Pliego, the privatization team then approached the France Cable and Radio/Stet consortium. The consortium was fornally invited to enter negotiations for the purchase of the northern company on October 4. The consortium mobilized to deliver a bid of US$ 100 million in cash and US$ 2,309 million in debt and interest; this was an increase of US$ 209 million in debt and interest over the consortium's original bid and nearly matched the failed bid of Bell Atlantic. The government accepted this bid and extended the deadline for taking possession of the northern and southern companies by one month to November 8. The consortium then had this short period in which to make its financial arrangements.<sup>34</sup> The transfer contracts signed on November 8, 1990 transferred 60% of the shares in the northern company, henceforth known as Telecom Argentina, to the Nortel consortium operated by France Cable and Radio and STET and 60% of the shares in the southern company, now known as Telefonica de Argentina, to the Cointel consortium operated by Telefonica of Spain. The shareholding of the these two consortia is in Table 6. The government of Argentina retained 40% of the shares in the two companies, 25% of which was to be sold to the general public, 5% to telephone cooperatives, and 10% to ENTel workers. The responsibility for liquidating this holding remained with the intervenor for ENTel.

The international and domestic public offerings of Telefonica's shares were made in the week of December 12, 1991 while the offerings of the government's shares in Telecom were made in the week of March 23, 1992. The 5% of the shares reserved for cooperatives was included in the offering. Cooperatives were given priority in the allocation of these shares, although there are no indications that they took up their entire allocation. Both offerings were oversubscribed and both garnered much higher revenues than the US$ 300 million the government had anticipated. The December Telefonica sale brought in US$ 830 million while the March sale of Telecom brought in US$ 1,227 million. The cash value of these 30% shareholdings turned out to be higher than the cash value of the first 60% shareholdings the government had sold by tender.<sup>35</sup> The sale price of the first 60% of ENTel in November 1990 was US$ 214 million plus US$ 5,029 million of Argentine debt and associated interest at face value. At the time of the transaction this debt traded in the secondary market was worth 19 cents on the dollar or US$ 955 million. Thus **"ie** equivalent cash value of the price paid for the first 60% of ENTel was US$ 1,169 3 Wall Street Journal, "Argentina Kicks Off Privatization Drive," June 26, 1990; La Nacion, "Se adjudico Entel a Bell y a Telefonica," July 2, 1990, ard "Postergan la firma para la cesion de Entel," August 13, 1990; and Wall Street Journal, "Argentina Cancels Sale of Phone Unit to U.S.-Led Group," October 8, 1990.

3 Decree 2096/1990; Telecom Argentina, Prospecto, March 1992, p.12; and La Nacion, "En una tensajornada, se ajudico al grupo STET la Zona Norte," October 8, 1990.

3 La Prensa, "Venden al publico el _25%_ de las acciones de ENTel," May 24, 1991.