Porta: ‘Its not over’; ‘Oh yes it is,’ says government

1 May 2008

A statement from America Movil’s Ecuadorian mobile subsidiary Conecel (Porta) says that the decision by the Quito government not to renew its operating licence came as a surprise, and that it does not consider the contract negotiation process to be over, reports BNamericas. ‘[Ecuador’s telecoms regulator] Conatel will receive Porta’s representatives next week to explain the basis of the offer [of economic terms from Porta],’ the statement read. However, the head of Conatel, Jaime Guerrero, told press that the cellco’s third and final offer for a 15-year licence fee of USD307 million was too low (the government had wanted as much as USD480 million), and that there was no question of reconsidering the decision. Guerrero stated in an interview with Dow Jones Newswires that Porta’s operations will be taken over by the state on 29 August, the day after its current licence expires. ‘The timeframe has finished for the company. We have given it all the opportunities it needed. The decision to not renew its concession in Ecuador is irreversible. There is no return,’ Guerrero said, adding that the government hopes to maintain the cellco’s workforce, except for high-level executives.

The state eventually plans to hold an international tender for the licence, which America Movil will be excluded from, whilst Guerrero ruled out the possibility of Porta’s 2G/3G network being taken over by the government-run cellco Telecsa (Alegro), which languishes in third place in the market with less than 5% of subscribers at the end of 2007, compared to Porta’s 69% and Movistar Ecuador’s 26%. Guerrero maintained that it would be undesirable to reduce the number of operators below three in the interests of competition, saying: ‘This wouldn’t be healthy for the market. It is necessary to increase the number of operators and not to reduce them. In a prudential [sic] time we will call a bid,’ without indicating when the tender would be launched. Conatel has ordered the National Telecommunications Agency (Senatel) to implement necessary procedures, to guarantee continuity of service for Porta’s subscribers, in conjunction with telecoms supervisory body Suptel and other government institutions. On 5 May Suptel is scheduled to begin a technical, operational and administrative audit of Porta, to determine the value of its assets and the conditions for transferring them to the state once its concession ends.

Ecuador, Claro Ecuador (Conecel)