Shares of Colombian state-controlled telephone company Empresa de Telecomunicaciones de Bogota SA (ETB.BO), or ETB, lost 27% Thursday after the company halted the process to sell a controlling stake as no bidders showed up.

ETB, which is controlled by Bogota's city council, was planning to hold an auction on Sept. 15. Prequalified bidders had until Wednesday to file offers and none did, ETB said in a filing to the Colombian stock and bond regulator.

"The company will keep on working to add value for its shareholders," ETB said in the filing. Shareholders weren't impressed, however, as the share price fell 27% to end at 792 Colombian pesos (US46 cents), its lowest point since April 2009.

Andres Jimenez, a market analyst with local brokerage Interbolsa, said the shares may drop to below COP700. The share price had risen to a record COP1,280 in late 2009 on speculation over the search for a partner up from around COP500 in late 2008.

ETB urgently needs investment to be able to compete with larger and financially stronger Telefonica SA (TEF, TEF.MC) and Telefonos de Mexico SA (TMX, TELMEX.MX), or Telmex. The competition has brought all telecom fees down over the past few years and both Telefonica and Telmex have won significant market shares in Bogota, where ETB used to dominate.

The Bogota city council was planning to sell new voting shares in the company to the new partner and change its own shares into non-voting, which would have given the new partner the control of the company.

ETB hadn't released the list of possible bidders though Telefonica had asked Colombian anti-trust authorities whether a merger would be possible and the answer was "yes."

Besides Telefonica, Telmex as well as Millicom International Cellular SA (MICC) were mentioned as possible bidders.

Julian Cardenas, a market analyst with local brokerage Corredores Asociados, said ETB has little choice other than looking again for a partner offering better conditions as its traditional business, local calls, isn't profitable enough anymore and the company needs investment to be able to compete in other fields.

Samuel Moreno, the mayor of Bogota, told local radio Caracol, that the outright sale of the company is out of the question, although his administration will seek new alternatives. The city council controls 86.59% of ETB, 11.60% trades on the stock market and the remainder is in the hands of state institutions.

Fernando Carrizosa, the company's president, didn't return phone calls seeking comments.

-By Inti Landauro, Dow Jones Newswires; 57-1-694 00 76; colombia@dowjones.com