Ecuador: Gov’t seeks cell phone concessions

Last week, Ecuadorian divisions of Mexico-based America Movil and Spain-based Telefonica SA where ordered to pay a combined $700 million in order to renew their operating contracts. Though those two companies control 96% of Ecuador’s market, the government’s demand would be about seven times what they paid when they first entered the market.

Ecuadorian president Rafael Correa believes that foreign cell phone operators should lower their rates and provide a fairer deal for their customers:

“If they want to pay, great, and if they don't, well we wish them good luck,” said Correa. “We won't beg any company to stay in the country. We're asking a fair price for the country”…

Correa said Porta [America Movil’s Ecuadorian unit] is one of America Movil's most profitable units.

“It's marvelous that it's profitable, but we need something to remain for the state and for Ecuadoreans, too,” he said.

Earlier this month, Ecuador’s communications watchdog group charged Porta with repaying clients $27 million for overcharging them in the 1990s.

The reworking of cell phone contracts is part of the Correa administration’s strategy to alter contracts with key sectors such as oil and mining.

Sources- Xinhua, Bloomberg, Reuters, International Herald Tribune

Image- BBC News