Ecuador says mobile firms should lower rates

Business Materials 17 February 2008 01:15 (UTC +04:00)

( Reuters ) - Ecuadorean President Rafael Correa on Saturday demanded that foreign cell-phone operators lower their rates as part of negotiations to extend contracts that expire later this year.

Earlier this week Ecuador said Mexico's American Movil and Spanish Telefonica should together pay $700 million to renew their concessions. That would amount to seven times what they paid in the 1990s when they first entered the market.

The two companies, which control 96 percent of the country's market, are renegotiating their deals with the government to extend their concessions for 15 years.

"In the renegotiation we are asking for a fair price for the owner of the frequency and a substantial reduction of the cost for clients," Correa said during his weekly radio show.

Correa, who said firms that don't comply with new regulations could leave, wants the companies to lower their rates ceiling to $0.22 from $0.50.

The leftist former economy minister has launched an aggressive drive to rework contracts with key sectors from oil to mining to increase state participation in deals.