PANAMA CITY, May 6 (Reuters) - Panama may sell its 49 percent stake in telephone operator Cable & Wireless Panama S.A., also owned by Cable & Wireless PLC, 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 PLC (CW.L: Quote, Profile, Research) bought 49 percent of state-owned telecoms monopoly Intel S.A., for $652 million, 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 PLC 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 PLC'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: Quote, Profile, Research). Local firms have also eaten into the company's fixed line and Internet businesses. (Reporting by Andrew Beatty; editing by Carol Bishopric)