Regulator orders wide ranging shake-up at underperforming state-run fixed line telcos

7 Apr 2004

Ecuador’s telecoms regulator Suptel has sent a report to the country’s national telecoms council, Conatel, recommending a new company be sought to take over the operations of underperforming state-owned telecoms operator Pacifictel. In a statement released yesterday, Suptel said that Pacifictel had failed to meet quality of service standards since the beginning of 2002, adding that up to 30% of the operator’s installed fixed lines were out of service in any given time since that date. In addition to its failure to meet rollout and quality requirements, Pacifictel has been inundated in recent months by allegations of corruption and mismanagement, with a judge recently ordering the arrest of nine former Pacifictel employees, including former president Mauricio Galindo. Last month Ecuador’s president Lucio Gutierrez ordered state-owned holding company Fondo de Solidaridad (FS) to replace all of the high ranking executives at its 29 divisions – including Pacifictel – in a bid to rectify the situation. At the time he stated that the posts should be filled with people holding no political loyalties. Shortly afterwards PriceWaterhouseCoopers (PWC) was selected to oversee the process.

Pacifictel’s network covers the southern and western provinces of Azuay (except the city of Cuenca, which is covered by ETAPA), Canar, El Oro, Galapagos, Guayas, Loja, Los Rios, Manabi, Morona Santiago and Zamora Chinchipe. At the end of October 2003 the company had PSTN capacity of approximately 750,000; 95% of connections were digital, with Guayaquil, Ecuador’s main port and largest city, wholly digitalised. Fixed line subscribers totalled 621,220, compared with 580,740 a year earlier. In July 2002 Conatel opted against intervening in the telco’s affairs and instead extended the deadline for it to reach quality and coverage goals. The previous month Pacifictel was first cited by Suptel for having failed to reach build-out targets set down in its 2001 concession modification contract. Conatel overruled this, however, saying that the telco was hindered by ongoing restructuring in 2001 and gave Pacifictel more time to reach the goals laid out in 2002 of installing 80,000 lines the following year. In March 2003 Pacifictel began renegotiating contracts with 19 long-distance carriers to cut costs and standardise agreements, and earmarked USD20 million for upgrading its fibre-optic backbone and expanding its switching centres.

Pacifitel shares the Ecuadorian fixed line market with two other state-run concerns – Andinatel, whose network spans the northern provinces of Bolivar, Carchi, Chimborazo, Cotopaxi, Esmeraldas, Imbabura, Napo, Orellana, Pastaza, Pinchincha, Sucumbios and Tungurahua; and ETAPA, which holds exclusive rights to provide telephony services in the southern Andean city of Cuenca. At the end of October 2003 Andinatel had 806,115 customers across its 13 provinces, while Etapa boasted 90,776 customers, taking the country total to just under 1.52 million.

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