Business Notes PRIVATIZATION

Like much of the U.S. mainland, Puerto Rico is strapped for funds that it sorely needs to overhaul its schools and other public facilities. But the commonwealth does own a thriving telephone company that has a total value of more than $2 billion. So last week Governor Rafael Hernandez Colon proposed that Puerto Rico sell the phone company and invest the proceeds in two $1 billion funds. The commonwealth would use the interest from the funds to upgrade Puerto Rico's schools and rebuild its crumbling infrastructure, including its water and sewerage systems.

Prospective bidders include GTE, BellSouth and the Spanish national telephone company. But Puerto Rican labor leaders said they oppose the deal because a new owner might lay off workers. Deja vu? In 1978 the commonwealth proposed selling the phone company but canceled its plans when prospective buyers refused to guarantee job security.