Ecuador warns cell phone operators over contracts

Economic Times, September 9, 2007

QUITO: Ecuador's leftist president warned on Saturday that foreign mobile telephone firms would have to comply with new regulations after their contracts are renegotiated this year or leave the Andean nation.

"If you guys don't like the new rules of the game, I bid you farewell and we will buy your installations and continue with the cell phone business ourselves," Rafael Correa said in his weekend radio address.

He said that contracts must be renegotiated by December and that firms may lose their concessions if they fail to lower fees and improve services.

Movistar, owned by Spain's Telefonica , and Porta Cellular, owned by Mexico's America Movil , control 90 percent of Ecuador's market and are in talks with the state to extend their concessions for 15 years.

Correa singled out Porta, accusing it of breaching its contract with the state and failing to pay taxes.

"Porta ... party is over, you will have to pay taxes and comply with the contract," said Correa, adding that the company has reported six years of losses.

A Porta spokesman was not immediately available for comment on Correa's address.

The former economy minister, who took office in January and has worried investors with pledges to restructure foreign debt and renegotiate oil contracts, also said he planned to create a telecommunications ministry to watch over the market.

America Movil, owned by Mexican magnate Carlos Slim, is battling Telefonica for dominance of the Latin America's mobile market, one of the world's fastest growing.