Telecom Italia wants arbitration over Bolivian firm

LA PAZ, Oct 23 (Reuters) - Bolivia's government said on Tuesday that Telecom Italia has sought international arbitration to block the state takeover of its Bolivian subsidiary Entel.

Leftist President Evo Morales issued a decree in April ordering Telecom Italia (TLIT.MI) to sell part or all of its 50 percent stake in Entel to the Bolivian state.

Initially Telecom Italia agreed to talk with the Bolivian government but talks collapsed when the Bolivian government refused the company's request to move the negotiations to another country.

"Surprisingly, the Bolivian state has learned about ... an international arbitration claim over the decision by Bolivian authorities to recover the shares in the hands of the company (Telecom Italia)," deputy Presidential Minister Hector Arce said at a news conference in La Paz.

An Entel spokesman in La Paz said he could not confirm whether Telecom Italia had initiated a claim against Bolivia.

Arce said that Telecom Italia brought a case on Oct. 12 before the World Bank's International Center for Settlement of Investment Disputes, or ICSID, which facilitates conciliation and arbitration in disputes between governments and private foreign investors.

In May, Bolivia said it was planning to withdraw from the ICSID and a high-ranking government official accused the institution of favoring multinational companies in its rulings.

Bolivia handed a 50 percent stake in Entel and administrative control to Telecom Italia in the mid 1990s in exchange for pledges from the Italian company to double Entel's value by investing $610 million.

Morales' administration claims the company has invested much less than agreed, an accusation the company denies.

Entel is Bolivia's biggest telecommunications company, commanding an 80 percent share of the long-distance market, and about 70 percent of the mobile telephone market.

The government holds 47 percent of Entel and the remainder is in the hands of company workers. (Reporting by Carlos Quiroga, writing by Eduardo Garcia, editing by Brian Moss)