By Mercedes Alvaro
QUITO, Ecuador--Ecuador on Wednesday signed contracts with
Mexico's America Movil SAB and Spain's Telefonica SA to greatly
expand 4G mobile telecom technology in the Andean country.
On Feb. 2, the companies reached a deal with the government of
President Rafael Correa to provide 4G services through 2023.
America Movil will pay $180 million, while Telefónica will pay
$150 million for operating the 4G spectrum. Both companies,
according to the deal, will also have to improve the coverage of
their 3G networks.
Ecuador's vice president, Jorge Glas, said the negotiation
process was "complex and difficult."
America Movil operates in Ecuador under the Claro brand, while
Telefónica operates under the Movistar brand. Claro is Ecuador's
leading mobile operator, with about 67% of the market share,
followed by Movistar with about 29%.
The state-run company CNT has offered 4G technology since 2013,
but its services cover just 4% of clients.
The signing of the contracts coincided with enactment of a law
that establishes a new tax on mobile phones and cable television
services providers linked to market concentration.
Companies with 30% of the market will pay 0.5% of their total
revenues in this new tax a year.
Write to Mercedes Alvaro at mercedes.alvaro@wsj.com
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