Licenses for new mobile telephone networks are to be offered in the early summer to inject greater competition and open up the telecommunications market in Ecuador. And there is no longer a state monopoly over fixed-line telephony.
Telecoms regulator Conatel has selected Peruvian investment bank Latin Pacific Capital to manage the sale of the licenses in June.

State-owned fixed-line telephony companies Andinatel and Pacifictel, China’s ZTE, UK-based Cable & Wireless and Telecom Italia are among eight companies known to be interested in bidding for the licenses.

Andinatel operates in the interior of Ecuador and Pacifictel along the coast, while municipal comp-any Etapa covers Cuenca. They operate less than 1.5 million fixed lines between them.
America Movil subsidiary Porta Celular and Bellsouth Ecuador are the two incumbent mobile operators, who have about 800,000 subscribers. But this still leaves more than 10 million Ecuadorians without their own phone.

Competition will open up the market, as well as make the state-owned firms more efficient. The monopoly on fixed-line telephony ended at the beginning of this year, though only about a tenth of the population is connected. To roll out new networks would be a formidable and costly task in the country’s often difficult terrain and scattered rural population.

Luis Burbano Davila, managing director of the state-owned holding Fondo de Solidaridad, believes the newly-opened market represents “an interesting moment for foreign investors.” He says there are many opportunities to make business in the telecommunications sector in Ecuador.”
Andinatel executive president Andres Perez Espinosa says: “The decision significantly helped us to start investment and bring plans up to date that were well behind schedule. They couldn’t be implemented before, simply because the bureaucracy was too big.

“We have now turned into a business enterprise, in spite of still belonging to the state. The administration is different, and this allows us to get on the right track within a business framework.”
Pacifictel executive president Antonino Saenz Fernandez says: “It is a historic and brave decision. In all other countries, the market is opening up. At Pacifictel, we have taken the opening of the market very responsibly and with professionalism.”

Privatization agency Conam is in the process of selecting an administrator for Pacifictel. Conam has already invited bidders to apply for the four-year contract and a decision is expected in April.
Mr Saenz Fernandez adds that Pacifictel is no longer subsidised by the state. “It does all its business through its own initiative and hard work, and pays taxes,” he adds.
The firm hopes to find a strategic partner to upgrade operations to international standard. Once Pacifictel has an administrator, the government will sell a 10 percent stake in the company to staff, plus 2.5 percent to former employees.

China’s ZTE has secured a $23.5 million contract to build the first national fiber-optic communications network in Ecuador. It will be built in two phases: one from Guayaquil, Ecuador’s biggest city, to the capital Quito, and then a 600-mile network from Guayaquil to Huaquillas. When complete, the fiber-optic backbone will connect with Colombia and Peru.