Bloomberg News

America Movil, Telefonica Tower Contracts Suspended in Ecuador

May 02, 2013

Ecuador’s anti-monopoly watchdog, seeking to improve mobile-phone coverage, suspended about 2,000 exclusive contracts used by carriers such as America Movil SAB to get prime locations for network towers.

Mobile-phone carriers, also including Madrid-based Telefonica SA (TEF), will be forced to renegotiate the agreements to grant competitors access to the private and public land where their towers are located, said Pedro Paez, head of the South American nation’s Superintendency for Control of Market Power. Affected companies can appeal the decision on a case-by-case basis, he told reporters today in Quito.

Ecuador aims to open the “best” mobile-phone tower sites to increase competition and improve access for smaller companies, such as government-owned operator Corporacion Nacional de Telecomunicaciones, Paez said. With the new rules, Ecuador, a nation divided by the Andes Mountains and the Amazonian rain forest, joins regional neighbors Brazil and Mexico in a push for stricter telecommunications regulations.

The ruling “suspends exclusivity in contracts, because they are against the law, in the distribution of certain specific geographic points that will allow the installation of antennas and other devices, with the purpose of improving the national coverage of all operators,” Paez said.

While Ecuador represents less than 3 percent of America Movil’s revenue, it was the company’s most profitable market last year in terms of the margin of earnings before interest, tax, depreciation and amortization. The Mexico City-based company, controlled by billionaire Carlos Slim, had 11.8 million Ecuadorean subscribers at the end of 2012, compared with Telefonica’s 4.5 million, according to data compiled by Bloomberg.

Mexican Congress this week passed a sweeping bill to encourage foreign investment in telecommunications and to more tightly regulate competition. Brazil has enacted measures to require companies to cut fees and share infrastructure.

Neither America Movil’s Ecuador unit nor Telefonica’s immediately responded to telephone messages seeking comment on the suspension.

To contact the reporter on this story: Nathan Gill in Quito at ngill4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at Papadopoulos@bloomberg.net


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