Colombia senator proposes state management of mobile network

Reuters News
Posted: Oct 09, 2013 7:47 PM

By Carlos Vargas

BOGOTA (Reuters) - A Colombian senator is proposing that a state-run telecoms company be set up to manage the country's network of cellphone towers and lease capacity to operators, a model he said would improve coverage and boost competition.

His proposal comes months before the expiration of 20-year contracts held by Claro and Telefonica to manage parts of the network, but after telecoms group Millicom, operating in Colombia under the brand Tigo, renewed its operating rights in the country for 10 years.

Nationalizing the network would boost competition and improve mobile coverage, enabling all existing towers to be used by all firms, instead of each having its own exclusive, thinner network of antennae, argues Senator Juan Mario Laserna, who will present his bill to Congress next week.

"The most efficient way is to create a network that different operators will have access to, like what exists in China, India and other countries," Laserna told reporters in Congress on Wednesday.

"Instead of renewing contracts we can make a great business for the state."

Complaints abound about the quality of mobile networks in Colombia, even gaining a mention on several occasions in the speeches of President Juan Manuel Santos, whose administration is generally perceived as business friendly.

Last month operator Claro was fined the equivalent of $45 million for anti-competitive practices.

It was not immediately clear how far the proposal was likely to progress through Colombia's bicameral Congress, but it originates from one of the country's higher profile senators, who is also a member of the government coalition.

Claro, part of Mexico's America Movil, would have to return control of its cellphone network to Colombia in March next year when its 20-year contract expires, as would Spain's Telefonica - if those contracts are not renewed.

Should the proposal become law, the new state company would have assets of between 6 trillion and 7 trillion pesos ($3.2 billion to $3.7 billion) and annual revenues of around one trillion pesos, principally from the leasing of cellphone towers.

"Having only one large network will optimize and significantly improve service, decrease costs and avoid dominance of the market," Laserna said.

(Writing by Julia Symmes Cobb; Editing by Peter Murphy and Steve Orlofsky)