Telecom Italia's Bolivian arbitration deferred

LA PAZ, Dec 16 (Reuters) - The arbitration case filed by Telecom Italia TLIT.MI against Bolivia over the nationalization of its former subsidiary Entel has been put on hold after a preliminary hearing in Holland, the nationalizations minister said on Tuesday.

Telecom Italia’s unit Euro Telecom International (ETI) had asked the World Bank to arbitrate in a dispute with Bolivia over compensation for the state takeover earlier this year.

But Bolivia says that its withdrawal from the World Bank’s International Center for Settlement of Investment Disputes (ICSID) in 2007 gives it immunity from the Italian company’s claim.

“The case filed by ETI has been put on hold for 2009 while the complaints that Bolivia have made regarding the (ICSID) jurisdiction are resolved,” Nationalizations Minister Hector Arce told the state-run television network from The Hague.

The temporary suspension gives Bolivia a chance to prove the ICSID does not have “jurisdiction” over the case, Arce said.

Entel is the largest telecommunications company in Bolivia, with 80 percent of the long distance market and 70 percent of mobile telephone services.

Bolivia gave a 50 percent stake and administrative control of Entel to Telecom Italia in the mid-1990s, in exchange for pledges of $610 million in investments in the company.

The administration of leftist President Evo Morales claims the company has invested much less than what was agreed, an accusation the company denies.

The nationalization of Entel is part of a drive by Morales to return to state control key economic sectors. (Reporting by Eduardo Garcia; Writing by Kevin Gray; Editing by Leslie Gevirtz)