Bogota's new mayor Gustavo Petro begins work Wednesday on his controversial plan to merge two city-controlled utility firms, money-losing phone company ETB (ETB.BO) and moneymaking power company EEB (EEB.BO).

An official from Petro's office said the mayor was meeting Wednesday morning with company representatives from ETB to discuss the possible merger, but said any final decision may be months away.

"There are still many steps to go, including feasibility studies and other things," said the official. "I don't see any final decision for many months."

Petro, a former Marxist guerrilla with the now disbanded M-19 movement and also a former senator, caused a firestorm in financial markets when he said in early December that once he took office he would follow through with a campaign promise to merge EEB and ETB.

Shareholders of EEB felt it would be unfair to saddle the company with ETB's debt, and as a result EEB shares have fallen 19% since Petro made the comments, closing Tuesday at COP1,025. Shares of ETB, which could benefit from a merger with EEB, are up 5% since the comments were made, and closed Tuesday at COP461. ETB is in desperate need of cash at it faces increasing competition from the local units of Spanish telecommunications company Telefonica SA (TEF, TEF.MC) and Telefonos de Mexico SAB de CV (TFONY, TMX).

The share prices of EEB and ETB were unchanged early Wednesday in Bogota.

The drop in ETB shares was so sharp in mid December that Colombian regulators suspended trading for three days, saying it wanted to protect investors.

Petro has stood by the merger plan, and said his comments about a tie-up aren't the cause of ETB's share price decline. He noted that he originally made the merger proposal months ago during his campaign. Petro has asked regulators to investigate the "true" causes of the decline.

-By Dan Molinski, Dow Jones Newswires; 57-310-867-6542; dan.molinski@dowjones.com