Nearshore Americas

Ecuador Slaps America Movil with a $138.4 Million Fine

America Movil’s Ecuadorian subsidiary Claro has been fined $138.4 million by the South America country’s market watchdog for anti-competitive practices. This is the latest blow to the Mexican telecom giant which is already striving to fend off a growing outcry over its monopolistic practices.

The watchdog, Control of Market Power, stated in a press release that it had found Claro guilty of violating competitive business practices by signing exclusive agreements with the owners of land where its wireless towers are located.

These exclusive agreements prevented its competitors from buying or leasing lands anywhere near Claro’s wireless towers. The America Movil subsidiary is the largest telecom operator in Ecuador, with more than a 64% market share and 15.5 million subscribers.

As in Brazil and Mexico, the telecom regulator in Ecuador is also enforcing stricter telecom regulations as part of an effort to liberalize the market and push down service prices. In May 2013, the watchdog suspended about 2,000 exclusive contracts used by carriers, including Claro’s. Then it forced the operators to renegotiate their agreement with landowners.

State Telecommunications Corporation (CNT), a public company that also provides cellphone services, first accused Claro of signing exclusivity contracts with the owners of land. This week’s judgment comes in response to CNT’s complaint filed in 2012.

Telefonica is also facing similar complaints in Ecuador, but there has been no news of the regulator fining the Spanish carrier.

The size of the fine, according to reports, accounted for about 10% of Claro’s annual revenue in Ecuador. Claro has describing the ruling as “unfair” and vowed to challenge it in court.

Discontent is growing against America Movil in several countries across Latin America. According to BNAmericas.com, Colombian authorities fined the operator $45.2 million and kept it out when they auctioned 4G spectrum last year.

Ecuador accounts for less than 3% of America Movil’s revenue, but it is one of the operator’s more profitable markets .

This is not for the first time that Claro has been fined in Ecuador, where it has been operating since 1993. The carrier was fined $193 million in 2012 over tax litigation.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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