Tigo halves international calling rates

- Friday, January 6, 2006

Tigo halves international calling rates

Honduran mobile operator Tigo, operated by Millicom International Cellular (Nasdaq: MICC), has halved international calling rates just 11 days after incumbent fixed line operator Hondutel lost its monopoly of the international long distance market, local daily La Prensa reported.

Tigo, which was formerly known as Celtel, cut calling rates to the US to US$0.38 from US$0.83.

Hondutel's monopoly of the international long distance market ended on December 25 as stipulated in the 1995 telecommunications law, thus opening up the market to greater competition.

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Up until December 25 Tigo and competitor Aló, owned by Mexico's América Móvil (NYSE: AMX), had been paying Hondutel US$0.58 a minute to connect international calls, according to a study cited by local press.

Aló announced rate cuts of 18-32% for calls to the US, Mexico and Central America two days after Hondutel's monopoly ended.

Hondutel cut international calling rates by US$0.13 in early December to US$0.71, in expectation of the pending competition and is expected to make further rate cuts during the year.

José Otero, president of Signals Consulting, has speculated that international calling rates could come down by 50-70% by the end of 2006.