Ecuador Agency: Telefonica Tries to Obstruct Tax Payment

QUITO -(Dow Jones)- The director of Ecuador's Internal Revenue Service, or SRI, said Tuesday that Movistar, a unit of Telefonica de Espana has tried to avoid a tax payment of some $4 million.

"The company wants to run out the time and by not paying, to mock the law," Carlos Marx Carrasco said at a press conference.

According to Carrasco, in 2002 Movistar collected a consumption tax from its customers, but it didn't give the funds to the SRI as required.

He accused the company of taking various administrative and legal measures to avoid paying.

Carrasco said the SRI wants the company to assume a more "serious and ethical attitude," especially now that it is negotiating a contract extension with Ecuador.

Movistar and Porta Celular, the local unit of America Movil, are negotiating the extension of their contracts for 15 years.

Porta Celular's contract ends in August, while Movistar's contract ends in November.

The Ecuadorean government is reportedly seeking to charge Porta and Movistar more than $700 million to renew their concession contracts, but telecommunications authorities haven't made public the figures for each operator.

Porta has just over 7.01 million customers, while Movistar has 2.60 million and the state-owned Alegro has 471,576 clients.

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

(END) Dow Jones Newswires

Posted to the site on 1st April 2008