Colombia's antitrust watchdog said Wednesday that Telefonica SA (TEF, TEF.MC) could take over local state-owned telecommunications company Empresa de Telecomunicaciones de Bogota SA (ETB.BO), or ETB, if it wins the auction to be held Sept. 15.

The regulator said both ETB and Telefonica asked its opinion on a possible merger, which confirms that Telefonica is planning to bid for the Bogota-based telephone company.

The antitrust agency said in a statement there are indeed "high concentrations of some of the markets related to telecommunication services," though the merger wouldn't imply a "significant restriction to competition."

The regulator will carry out a control after the merger on the merged company to avoid anti-competition actions.

The Bogota city council, which controls ETB, plans to hold an auction on Sept. 15 to sell new shares in the company equivalent to a 36.6% stake to a new partner. The winner will be the one that offers the highest price per share.

ETB hasn't released the list of possible bidders, but besides Telefonica, Mexico's Telefonos de Mexico SA (TMX, TELMEX.MX) as well as Millicom International Cellular SA (MICC) were mentioned as possible bidders.

After the auction, the city council, which controls the company, will change its current shares into non-voting shares.

The new partner will then commit to hold a tender offer to buy minority shareholders' stakes at the same price.

In the case that all minority shareholders decide to leave the company, the partner would end up with a stake close to 49%, but with a majority of voting shares.

-By Inti Landauro, Dow Jones Newswires; 57-310-867 65 42; colombia@dowjones.com