Ecuador Repeats That It Could End America Movil Contract

QUITO -(Dow Jones)- Ecuador's government Thursday repeated a threat to terminate the service contract that Mexican telecommunications company America Movil has with it if the company doesn't fix technical problems.

Early this month the nation's telecommunications regulator gave America Movil 30 days to fix problems with the network of its local operator in Ecuador.

America Movil's local unit, Porta Celular, had service problems Sept. 25 that left some customers without service for around six hours, while the total outages were for more than 19 hours across the country, the government has said.

"To end the contract is an extreme possibility. I don't believe that it will get to that," he said, adding that sanctions outlined to deal with the situation aren't adequate.

"If Porta doesn't resolve the problems its contract will finish," he added.

The concessions of the two private-sector operators, the local units of America Movil, and Spain's Telefonica, expire at the end of next year - though an option exists to extend them for another 15 years.

The government has said that if no agreement is reached by the end of this year, it will start a tender process to select new operators.

Guerrero said also that if the two companies plan to seek extensions to their concessions, they will have to demonstrate they've paid taxes.

"If they have not paid, we cannot do anything. I'm reviewing the situation with the Internal Revenue Service," Guerrero said.

Guerrero also reiterated that key terms in new contracts aren't negotiable.

The price the companies will have to pay for the concession, quality of service, sanctions, price caps and investments in rural telecommunications services, among other things, won't be negotiable, he said.

-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 22nd November 2007