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TELECOMS: INVESTORS ARE CALLING

Besides the oil sector, the telecommunication sector promises to be the second most important in terms of foreign investment. It is a growing sector that projects a strong increase of users, especially since the country has one of the lowest density of telephones services in Latin America.

Reforms are moving ahead: after having divided the state monopoly into two incorporated companies, Andinatel and Pacifictel, the government is attempting to improve the efficiency of its telcos and attract partners who can participate in the modernization of the sector. Additionally, a third cellular license was issued recently, opening up new business for operators and suppliers of the sector.

"The telecommunication market has not been exploited yet, but there is a clear interest by the international community" says Mauricio Galindo, new Executive President of Pacifictel. "Strategic alliances are being created through partnerships and new contracts". One of the main objectives of Galindo is to negotiate the administration of the company by a foreign multinational, with a goal of improving management structures, decreasing operating costs and improving the efficiency of Pacifictel.

Milton Ordoñez, General Manager of the Fondo de Solidaridad, a government holding which owns 100 per cent of Andinatel and Pacifictel, considers that the transformation of Pacifictel can be seen as a direct offer to investors.

"We want to have profitable companies. We are even thinking of merging the management of state-owned companies and seeking strategic partners that can take charge of the administration of all these companies, which will help us reduce costs and reach desired levels of efficiency" says Ordoñez, who is working tirelessly to provide confidence and reduce government red tape in order to attract foreign investors.

"We have two big projects" adds Galindo. "The first consists in completing the Central Optical Fiber Network, which will improve communications on the coast. The second relates to the connection of Ecuador's telecom system to the Pan-American highway".

Andinatel and Pacifictel have also joined forces to create TELECSA, an incorporated company that won the bid for the third cellular telephone license in Ecuador. According to TELECSA's business plan, $120 Million will be invested by the company this year in order to install its communication network, which would clear the way for the start of operations in December 2003. This September, Ericsson of Sweden was chosen through public auction as strategic partner for TELECSA, thereby opening up the race for major telecom investments in Ecuador.