Puerto Rican Government to Sell Phone System

Gov. Rafael Hernandez Colon said Tuesday his government will sell the Puerto Rico Telephone Co. for at least $2 billion to pay for education reforms and development on the Caribbean island.

“It is the only company which has enough value” to generate the money needed to revamp Puerto Rico’s school system and the island’s infrastructure, the governor said in his “State of the Nation” address.

Hernandez Colon said the government bought the telephone company during his 1974 Administration for $165 million when it “was in total abandonment” and had only 300,000 telephone lines.

He said the company, which made $70 million in net income last year, now accounts for 1 million telephones in the Spanish-speaking U.S. commonwealth of 3.3 million people. Hernandez Colon said that in private hands, the telephone company can make at least $170 million a year.

“Technologically, Puerto Rico Telephone is among the most advanced in the world,” he said.

The company’s Puerto Rico Long Distance subsidiary has an estimated $200-million long-distance market.

Hernandez Colon said he will introduce legislation stipulating none of the telephone company’s nearly 8,000 jobs would be affected by the sale and that there be no rate increases for three years after it is bought.

It was not immediately known if there is a buyer for the telephone company.

Hernandez Colon was in New York City in January and met with multimillionaire financier Donald Trump. The governor refused to provide details but said then they discussed ways to invest in education reform plans. At the time, Hernandez Colon said Trump “was interested.”

The governor said he wanted to create two special funds from the telephone company sale: a $1-billion fund for education and a $1-billion fund to modernize the island’s highways, public housing, airports, waste dumps and energy operations.

The governor has long said that educational reform--improving schools, classrooms and textbooks and providing salary increases for teachers--was a priority of his Administration.

“This means there won’t be one school in Puerto Rico that is not painted, repaired . . . that no school lack desks, blackboards, chalk,” he said.