Huge potential in competitive telecom sector

NELSON FERNANDO RUIZ CORAL President of the Solidarity Fund

Teledensity rates in Ecuador are among the lowest in South America. With fixed line penetration at approximately 13% and mobile telephony rising fast, there is huge potential for expansion. The sector has been opened up to competition and new companies are entering the market as fixed line operators.

Management of the two state telephone companies, Andinatel and Pacifictel, is being concessioned to an international operator. Once the five-year concession period expires, the firms will return to Ecuadorian control.
“The companies will be managed as strategic business units, with high levels of autonomy under a single administrator,” explains Nelson Fernando Ruiz Coral, President of Ecuador’s Solidarity Fund, which is the major shareholder in both firms.

Andinatel posted a net profit of US$48 million in 2002. Rocio Bohórquez, President of the Board, says the company is ready to accept the challenge of the competition. “Our wish is that the operator that takes over optimizes our resources and gives us the capacity to be able to expand in the future.”

MILTON ORDÓÑEZ RUBIO General Manager of the Solidarity Fund

Milton Ordóñez Rubio, the General Manager of the Solidarity Fund says that Pacifitel, which registered a net loss of US$33 million in 2002, needs “the drive of an experienced foreign administrator, someone who will contribute with state-of-the-art technology.”

The concession process has been closely observed by Ecuador’s Telecommunications Companies Association (ASETEL). Its President, Bernardo Traversari, says the association welcomes fair competition in a sector whose enhancement “will provide resources for investment and employment, and incorporate Ecuador into the global economy in a more efficient and productive way.”

Mobile telephony is booming in Ecuador and has now surpassed fixed-line penetration. Bellsouth Ecuador (Otecel) has been licensed to provide a mobile service in Ecuador since 1997, and is consolidating its position as market leader. In addition to offering personal and business wireless services to its customers, the company offers a wireless service for public telephones. Its digital network reaches 60% of Ecuador’s 13 million people.

ALBERTO SANDOVAL Executive President of Bellsouth Ecuador

“There is room for the sector to grow, both in penetration and in providing existing subscribers with additional services,” says Alberto Sandoval, the company’s Executive President. “Our strategy of operation is already defined, and our emphasis is on service.”

The company has upgraded its network with the deployment of a third generation infrastructure using cutting-edge technology. Mr. Sandoval emphasizes Bellsouth’s commitment to the country. “We invested in a new third generation network because we trust in Ecuador, and we are sure that telecommunications are an engine for its development.”

Bellsouth’s corporate philosophy includes supporting the communities where it operates through the Bellsouth Foundation, which is already established as a leading catalyst for change in education. In Ecuador, the company’s Proniño educational program, which awards scholarships to working children and assists families and teachers, has already seen success in 21 cities countrywide and is proving successful as a long-term effort towards sustainable development.