Costa Rica accepts bids to offer cell phone service

By Alex Leff | SAN JOSE, Costa Rica | Reuters
* First bids to end Costa Rica state-run telecom monopoly
* Mexico‘s America Movil and Spain’s Telefonica in running
Mexico’s America Movil and Spain’s Telefonica placed bids on Tuesday to offer cell phone service in Costa Rica, pushing the country closer to opening up the state-run wireless telecommunications sector to competition.
Both America Movil (AMX.N)(AMXL.MX), controlled by the world’s richest man Carlos Slim, and the Spanish firm (TEF.MC) submitted bids with a $3.5 million deposit to guarantee their participation, according to Sutel, Costa Rica’s telecoms regulator.
Ending the 4-decade-old telecommunications monopoly was one of the conditions to enter the Central American Free Trade Agreement with the United States, or CAFTA, which took effect in Costa Rica last year.
“We have achieved something very positive (with the bids),” Sutel President George Miley told Reuters. “It’s the beginning of a new era for the country.”
But measures to open up the sector are moving slowly.
Disagreements over the concessions’ terms and challenges by the state phone company have stalled the process, drawing complaints from the Office of the United States Trade Representative.
The Costa Rican Electricity Institute, known as ICE, controls wireless and fixed line business in the country, with 2.6 million cell phone lines. ICE still runs all of Costa Rica’s 1.5 million fixed phone lines but Internet services were opened to competition last year.
Third generation (3G) services were introduced in late 2009 and prepaid mobile services, common in neighboring countries, launched in April of this year. The new companies have promised to modernize Costa Rica’s mobile services.
“Users will have many more options to choose from. Competition will generate growth,” Daniel Bernal, an America Movil representative, told Reuters. Telefonica declined to comment.
The bids required a minimum investment of $70 million to build new cell phone infrastructure, although details of the companies’ offers were not divulged.
Barring any future delays, concessions will be granted February 2011 and services could be available by September next year, Miley said.
(Editing by Richard Chang)
Article via Reuters