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Ecuador Will Decide on New Movil Contract by the End of Dec

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QUITO (Dow Jones) Ecuador's government will decide by the end of December on whether to extend contracts for two private mobile telephone operators, national telecommunications secretary Jaime Guerrero said Wednesday.

The concessions for the local units of America Movil and for Spain's Telefonica expire next year, but there is an option to extend them for another 10 or 15 years.

"In no more than two weeks, we will begin formal negotiations to extend the contracts. Meanwhile, we had had several informal conversations with both operators to carry out this objective. By the end of the year we will make a decision," Guerrero told reporters.

He said the government has decided on key terms in the new contracts, such as the price the companies will have to pay for the concessions, quality of service measures, sanctions, price caps and investments in rural telecommunications services.

Operators want an extension of 15 years, although one of the requiriment to get that will be to provide services for remote areas.

Guerrero said the government is ready to call a tender process if it doesn´t reach an agreement with the operators.

Meanwhile, Telecsa chief executive Max Bravo said if the government of President Rafael Correa can't reach an agreement for extending contracts, the company "doesn´t have a problem administering one or both of the licenses of the operators."

Telecsa, which operates under the Alegro brand, is the smallest of Ecuador's three operators, and is controlled by the government.

Telecsa plans to invest around $85 million between 2008 and 2009 to improve its technology. For 2007 the company will have invested $60 million.

The company also hopes to increase its clients from the current 500,000 to more than one million next year.

America Movil operates under the Porta brand and Telefonica with the Movistar brand.

Porta's concession expires on Aug. 28, 2008, while Movistar concession expires on Nov. 29 of next year.

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

(END) Dow Jones Newswires

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Tags: telefonica  america movil  movistar  rafael correa  telecsa  alegro  option  porta  Ecuador