Sign in Subscribe
Telecommunications industry

Ecuadorian President Partially Vetoes Telecommunications Act Amidst Market Share Dispute

Strategic Insights

— 1 min read

Ecuadorian president Rafael Correa has lodged a total of 24 objections to the country's new Telecommunications Act, which was approved by the national assembly on December 17. Correa's objections predominantly focus on the dominant market share threshold for the imposition of a new tax on telecoms/broadcasting companies. Under the original version of the law, private sector companies with over 30 percent market share in their operating sector must pay an additional percentage of their profits to the government. However, Correa has argued that the threshold should be 35 percent as per earlier proposals. This move has significant implications for companies such as America Movil-owned Conecel (Claro), which controlled over 68 percent of the Ecuadorian mobile market at end-September 2014, and Telefonica-backed Movistar Ecuador, which held a share of nearly 28 percent.

Key Takeaways:

  • President Rafael Correa has partially vetoed the Telecommunications Act with a total of 24 objections, mainly targeting the 30 percent market share threshold for the new tax.
  • The original law requires private sector companies exceeding 30 percent market share in their operating sector to pay an additional percentage of their profits to the government.
  • Correa has proposed a 35 percent threshold as per earlier proposals, affecting dominant players like America Movil-owned Conecel (Claro) and Telefonica-backed Movistar Ecuador.
  • Other objections relate to the issuing and length of licenses, the regime for issuing fines, and the powers of the Agencia de Regulacion y Control.
  • The national assembly will discuss the President's objections and rule thereon within 30 days.

Statistics:

  • 24: The total number of objections lodged by President Rafael Correa to the Telecommunications Act.
  • 68%: The market share controlled by America Movil-owned Conecel (Claro) in the Ecuadorian mobile market at end-September 2014.
  • 28%: The market share held by Telefonica-backed Movistar Ecuador at end-September 2014.
  • 40%: The segment market share approaching DirecTV, which is in the process of being taken over by US giant AT&T, in the pay-TV market.
  • 30 days: The timeframe within which the national assembly will discuss and rule on the President's objections.

Sources:

  • Ecuadorian national assembly approval of Telecommunications Act on December 17.

Read more