Panama eyes sale of Cable & Wireless stake

PANAMA CITY (Reuters) - Panama may sell its 49 percent stake in telephone operator Cable & Wireless Panama, also owned by Cable & Wireless, the government said on Tuesday.

Panama's government is examining a study of options but has not decided whether the sale will go ahead or how it would be carried out, economy ministry spokesman Manuel Naza told Reuters.

In 1997, London-based Cable & Wireless (CW.L) bought 49 percent of state-owned telecoms monopoly Intel, for $652 million (331 million pounds), making it the first foreign firm to enter the Panamanian telephone market.

The government retained a 49 percent share with the remaining 2 percent owned by employees.

Under the deal, Cable & Wireless has the option to buy a further 5 percent share if the government decides to sell.

Cable & Wireless Panama is the country's biggest telecoms firm, providing fixed line, Internet and mobile phone services.

It's mobile business has 899,000 customers, out of a total population of 3.2 million. It is also one of Cable & Wireless's most profitable ventures.

But Cable & Wireless has faced increased competition in recent years, most notably from Movistar, the mobile phone unit of Spain's Telefonica S.A. (TEF.MC). Local firms have also eaten into the company's fixed line and Internet businesses.

(Reporting by Andrew Beatty; editing by Carol Bishopric)