MTC to decide future of Movistar's concession in coming weeks

Tuesday, October 25, 2011

Peru's transport and communications ministry (MTC) expects to determine the fate of mobile operator Movistar's concession in the coming weeks, state news service Andina reported.

MTC head Carlos Paredes said that during this week, the ministry will collect all the technical, economic and legal information required to rule on the issue.

The official said the ministry has to decide whether it will renew the concession with the operator. Should MTC choose to renew, it will also need to determine the economic conditions for the new concession contract.

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According to previous press reports, the government may call an international tender to re-farm the spectrum used by Movistar if renewal negotiations fail.

Movistar and the government are currently in negotiations to renew the concession contract to operate in capital Lima and Callao. The contract was first signed in 1991 and expired May 26 this year.

Movistar is asking the government to renew the concession for another 20 years. The previous administration had reached a preliminary agreement with the operator to renew the concession, but that was put on hold by the current president, Ollanta Humala.

Under the preliminary agreement, Movistar - fully controlled by Spain's Telefónica (NYSE: TEF) - committed to investing US$500mn over the next five years.