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Ecuador: America Movil will pay US$ 480 million to continue operating Print E-mail
Tuesday, 06 May 2008

America Movil will pay the government of Ecuador around US$ 480 million to renew its mobile concession. The amount is almost US$ 200 million more than last week’s offer from America Movil, which the government rejected.

Jaime Guerrero, the head of Ecuador’s telecommunications regulatory body, said the agreement was reached at a meeting between President Rafael Correa and the America Movil’s Chief Executive Daniel Hajj. Correa is pursuing a program of increasing state control of the economy. The former economy minister has attempted to negotiate with foreign oil and mining companies to improve the terms of their contracts.

"Although it is highly unusual to see a demand this high -- and it sets a precedent for other markets that should put fear into the hearts of operators -- the concept is consistent with standard capitalist economic theory," said Yankee Group analyst Wally Swain.

"America Movil's original response seemed to be based on non-financial factors -- like long-term concerns about Ecuador as a place to do business," Swain added.

The other major mobile operator in Ecuador, Telefonica, already agreed to a new 15 year concession. Together, Telefonica and America Movil’s Porta subsidiary control 95% of Ecuador's mobile market. America Movil and Telefonica are also the two largest mobile operators in Latin America.

Source: Reuters -  WDR/Intelecon Regulatory News.