Sunday, April 20, 2008

Equador - problems with concession renewal

Ecuador rejects second America Movil bid

President Rafael Correa warned Saturday that Mexican telecommunications company America Movil must leave Ecuador unless it boosts an insufficient second bid to keep its mobile phone service contract in the country.

"The first offer they presented us was a real insult to our intelligence. The second isn't as bad, but it's still far from what the concession is really worth," Correa said in his weekly radio address, without revealing the amounts America Movil had offered.

America Movil SAB, Latin America's largest mobile phone service provider, which is owned by Mexican billionaire Carlos Slim, has operated in Ecuador since 1993. Its concession expires in August, but two previous, undisclosed offers to renew its deal were rejected by Ecuador's government.

No one answered calls at America Movil's headquarters in Mexico seeking comment on the issue.

Correa in February announced that local units of America Movil and Spain's Telefonica SA, which operates a rival mobile phone service in Latin America, must pay a combined $700 million to renew operating contracts — 12 times the $58 million they paid for their concessions in the 1990s.

Telefonica on Friday agreed to pay $220 million to extend its contract through 2023, Correa said. He threatened to hold an international auction for America Movil's concession and exclude the Mexico City-based company from bidding if it doesn't reach a deal in the next few weeks.

America Movil's subsidiary, Porta, controls 68.8 percent of Ecuador's mobile phone market, while Telefonica's Movistar controls 26.8 percent and state-run Alegro PCS controls 4.4 percent.

About 9.8 million of Ecuador's nearly 14 million people have mobile phones.

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