Cuba telecom firm hikes prices, cites debt – yet military owner has millions of dollars

Miami Herald

7 days ago

A recent astronomic price hike on internet data packages for cell phones in Cuba has caused such an uproar, even among government supporters, that the island's leaders have been forced to acknowledge criticism publicly, promising to find 'solutions' for the most affected, although without any signs of backtracking on the measure.
On Friday, Cuba's telecom monopoly, ETECSA, announced that it was raising cell phone service prices. Users were dismayed at learning by how much: they will be limited to one data package per month of up to 6 gigabytes plus 60 call minutes capped at 360 Cuban pesos — about a dollar in the informal currency exchange market. Anything further would cost over 800% more in Cuban pesos — or its equivalent in dollars. The increase means state workers would need to spend almost their entire monthly salary of around 4,000 Cuban pesos to buy the next-level package or rely on top-ups in dollars from relatives abroad.
'We find ourselves in an extremely critical situation due to the lack of foreign currency and the significant reduction in revenue in recent years,' Tania Velazquez, the president of ETECSA, said in a television interview on Saturday to justify the price increases. 'The company faces high debt — it's a reality we must acknowledge. We have debts that prevent us from importing necessary technology, supplies and equipment. We're not even talking about development, but simply maintaining current services.'
But critics of the company have wondered what ETECSA, which is partly owned by Cuba's military, has done with the millions of dollars it racked up by selling top-up data packages to Cuban exiles abroad, who pay for the service so relatives on the island can remain a WhatsApp call away.
Secret financial documents obtained by the Miami Herald reveal that RAFIN S.A., a military-controlled company with a major stake in ETECSA, had $407 million cash on hand as of August of last year.
RAFIN is part of the larger conglomerate of companies known as GAESA, which is owned by Cuba's Revolutionary Armed Forces. RAFIN was created in 1997, and Cuba's Central Bank lists it as one of the financial institutions operating on the island. Both GAESA, which controls large swaths of the island's economy, including tourism, and RAFIN are under U.S. sanctions for their ties to the Cuban armed forces.
Due to the lack of transparency in government affairs, the current ownership structure of ETECSA is unclear. However, in 2011 it was widely reported that RAFIN had bought 27% of ETECSA's shares from Telecom Italia. According to media reports, RAFIN paid $706 million. Banco Financiero Internacional, currently part of GAESA, also held 6.15% of ETECSA shares at the time. The remaining shares were owned by Cuban companies affiliated with the Ministry of Communications and the Cuban government.
According to GAESA's consolidated balances obtained by the Herald, the conglomerate was holding $407.8 million 'in cash' at RAFIN as of last August.
The dollar amount suggests that ETECSA is a significant source of foreign revenue for GAESA, not just through international calling rates and other typical services but also through cell phone data packages that Cubans abroad purchase with hard currency for relatives and friends on the island.
RAFIN is listed in international business databases as operating in the telecommunications and information technology industries.
'GAESA uses RAFIN to finance things; that's why it has so much money,' said a source with knowledge of GAESA's operations who asked for anonymity for fear of government retaliation. 'It's not a bank... but it finances investments, provides money for hotels and ETECSA stuff.'
A fight for dollars
GAESA keeps its own money outside the reach of the civil branches of government and has steered foreign currency away from public services to finance the construction of hotels. A Herald investigation found that GAESA's leading tourism subsidiary, Gaviota, had $4.3 billion cash on hand last year, at the time public health, electricity, agriculture and other basic services have been collapsing on the island.
It seems unlikely that the military would allow ETECSA's leadership to freely tap into RAFIN's coffers to upgrade the company's technology or pay its debts, the two reasons for the price increases provided by Velazquez on Saturday.
Besides the latest effort to increase internet data prices, Cuban observers believe the Cuban military conglomerate is behind other government-sanctioned schemes to squeeze the country's hard currency revenue while resisting significant reforms.
'This decision by ETECSA — or, rather, made through ETECSA — is similar to many others recently implemented under the pretext of correcting distortions in the Cuban economy,' said Ric Herrero, the executive director of the Cuba Study Group, a Cuban American organization supporting the private sector on the island.
'It gives the impression that a kind of vacuum cleaner operates behind the military-led institutions, all in a desperate attempt to capture foreign currency at the expense of the population and the most basic state benefits,' Herrero added. 'It is clear that there is no other vision or plan to rescue the Cuban economy.'
Activists have also stressed that the price hike comes with a major bonus for the government: It will effectively restrict Cubans' access to information, the internet and social media, which officials have linked to anti-government protests and increasing dissent among Cubans.
Some activists and U.S. officials, including U.S. Rep. María Elvira Salazar of Miami, have urged Cuban exiles to stop financing ETECSA by buying top-up packages for their relatives.
Crack in government support
Still, Cubans' uproar over the measure during the weekend is a sharp reminder for the government of the growing discontent on the island, even among its core supporters.
Shortly after ETECSA announced its new pricing policy, readers flocked to the official online news outlet Cubadebate to leave over 1,600 comments, mostly critical, on an article reporting the increases.
'As always, the people never benefit from any measures taken by those who lead us,' said one reader who appears to be a teacher. Another wrote, 'ETECSA wants DOLLARS and is putting a noose around our necks so we hand them to them. Simple as that.' Some openly advocated for major political and economic change, urging the government to stop 'trampling on the people,' 'step aside,' and pay workers in dollars.
More rare was criticism from representatives of the Federación Estudiantil Universitaria, a student federation under government control. The federation branches at the University of Havana's schools of communication, mathematics, philosophy, history and languages, as well as representatives at an international relations school tied to the Cuban Foreign Ministry, put out a statement expressing 'disapproval' of measures that would significantly limit access to the internet for students and the rest of Cuba's population.
The widespread condemnation also led to an unusual instance by state media of seeking accountability, producing headlines like 'ETECSA responds to criticism and explains new measures' and an editorial in a provincial newspaper calling for ETECSA to come up with more affordable rates. 'Isn't there a middle ground between ETECSA's financial asphyxiation and the economic asphyxiation of users?' the Matanzas newspaper Girón wrote.
The pushback prompted officials to scramble to respond. Prime Minister Manuel Marrero chimed in on Saturday, stating on X that the National Assembly had approved the price increases and that concerns among the population were partly due to a lack of explanation.
After Velazquez's television interview later that day was not able to sway public opinion, the country's leader, Miguel Díaz-Canel, said Sunday on X he was aware of 'the opinions, criticisms, and dissatisfaction of our people with the measures announced by ETECSA.'
'We do not like any measure that limits benefits, and it is our duty to thoroughly explain each step taken to avoid the blows of the #Blockade,' he said in reference to the decades-old U.S. embargo, a frequent stalking-horse of the government. 'Options have been developed for the most vulnerable sectors, including our beloved students.'
Announcing that there would be a special television program to address the situation later on Monday, Marrero echoed Díaz-Canel's comments, saying that 'listening to the people, addressing their demands, explaining and finding solutions together has always been and will always be a practice of the Revolution.'
But even people aligned with communism warned the government its supporters were on the brink of exhaustion.
'The way in which this ETECSA rate increase has been implemented makes even more evident something that has been observed and warned about for some time: the growing rift between the state leadership and the revolutionaries, the masses who have not renounced their identification with the Revolution and have sacrificed for it but who do not feel represented by the government' wrote Javier Gómez Sánchez, a digital content creator who writes in Cubadebate and other outlets aligned with the government.
He cautioned Cuban officials to be careful about believing 'that popular support is infinite, that the people have the capacity to absorb, and absorb, and absorb political misery one after another, and that those people will support a government like this because they have to.
'The next question is whether they'll end up like Ceausescu,' he said, referring to the Romanian socialist dictator, whose violent death in 1989 marked the end of the communist regime in that Eastern European nation.