Spotlight: The outlook for Ecuador's telecoms sector in 2023

Bnamericas Published: Thursday, January 12, 2023
Spotlight: The outlook for Ecuador's telecoms sector in 2023

Ecuador's telecommunications market offers plenty of opportunities for investments and growth in 2023, especially after recent bills passed by the local legislature and a regulatory change to cut the cost of spectrum for incumbents Telefónica, América Móvil and CNT, as well as any potential newcomers.

There are still swaths of the population remaining to be connected and great opportunities for growth in ARPU for telcos with migration to postpaid plans. 4G coverage is also relatively low compared with countries of similar populations and economic size in the region. 

At the end of November, the country had 18.3mn mobile lines in service, 78.6% of which were repaid and only 21.3% postpaid, statistics from regulator Arcotel show, with around 55% of all lines being 4G LTE. 

The sector is led by Claro with a 51.5% market share, Telefónica (Otecel, 31.1%) and public telco CNT (17.2%).

Fixed broadband penetration has grown to 56% (2.7mn accesses), but that is also comparatively low, opening up growth possibilities for the main players in this field – Megadatos, CNT, Conecel (Claro) and Setel – and particularly for internet service providers, which together account for roughly a third of these accesses in the country.

The pace of this expansion and the size of the opportunities all hinge, of course, on macroeconomic factors, political stability and the consumption capacity of households, enterprises and individuals.


From a regulatory standpoint, things seem to be improving in Ecuador.

Arcotel recently issued a new regulation on granting and renewing qualifying titles for providing telecoms and subscription-based audio and video services, among others. The regulation includes changes in fees and rates for titles that allow spectrum use.

The measure was presented as part of talks on the renewal of Telefónica's and Claro's spectrum licenses. 

According to operators' association GSMA, this change will gradually lead to an 83% drop in spectrum prices, while the Inter-American Telecommunications Association (Asiet) sees a potential for greater investments.

"In Ecuador, the new regulation of fees for the use of spectrum was published, in which a change was made in the formula to gradually adjust costs to international references under ITU criteria," Asiet said on Twitter.

"With a view to the long term, the Ecuadorian regulation was also reformed, so these prices are set based on the cost incurred by the regulatory authority to carry out its activities of administration, management and control of the radioelectric spectrum," added the association.

Despite the drop in prices, Ecuador has not yet outlined a new tender that includes 5G. 

The revised spectrum fees follow a new framework for the transformation of telecoms and digital services, with the goal of President Guillermo Lasso’s government being to facilitate investment.

The so-called digital transformation law was approved by the legislature in December.

Telecommunications minister Vianna Maino has said that the law will boost and develop the various sectors of the Ecuadoran economy, in addition to allowing big techs, such as Amazon, Google and Oracle, to establish themselves in the country.

Regional tech multinationals are already moving to the country, such as Argentina-based tech giant Globant, which launched operations in Ecuador in December with nearly 140 professionals. It plans to hire at least another 500 in the coming months.

Maino also intends to advance with the implementation of the country’s 2022-25 digital transformation agenda and have most of the milestones achieved by 2024.

“We are going at an accelerated pace in each of the sectors. We believe … that we are going to arrive a year earlier, in 2024,” Maino said during presentation of the agenda in August.

That agenda outlines various general objectives, such as deployment of technological infrastructure, advancing the digital culture, motivating digital transformation in productive sectors, reducing the communication gap between the State and citizens, and promoting interaction between State entities, among others.

The pillars of the plan are digital infrastructure, culture and digital inclusion, digital economy, emerging technologies for sustainable development, digital government, interoperability and data processing, security and trust.

Although not going into much detail, the agenda also mentions the deployment of secure and high-capacity broadband networks, as well as the promotion of competition "in a favorable environment for both public and private investment."

As a separate initiative, Ecuador’s telecoms ministry and municipalities association AME said that they are aiming to improve infrastructure deployment in cities through regulations and a smart city guide.

Maino recently said that all such measures will lead to Ecuador to receiving around US$1bn in telecoms investments over the next 18 months.


The need to expand connectivity and to densify coverage should ensure there is plenty of activity in the tower sector this year, regardless of the macroeconomics situation.

Ecuador is said to have 4,200 subscribers per antenna (compared with 1,200 in the US) and a need for over 400 new towers annually, according to estimates.

One of the newest players is DigitalBridge-backed Andean Telecom Partners (ATP), which claims to be the largest privately owned provider of telecommunications and digital infrastructure in the Andean region. 

ATP effectively entered Ecuador last year with the acquisition of BTS Towers from a group of investors that includes the International Finance Corporation (IFC), Cartesian Capital Group, and Amzak Capital.

In a report right after this deal, Fitch said ATP's challenges include "currency weakness, which has contributed to lower ebitda, and a slower than expected build out of towers due to supply chain issues."

“ATP's tower expansion has not met Fitch's expectations, due to various factors, including supply and logistical constraints. ATP had 3,125 towers as of Sept. 30. 2021. This compares with Fitch's prior expectation of 3,600 towers at the end of 2021. The company will add 350 additional towers to its portfolio through the BTS acquisition. Elevated metal prices and high multiples paid for tower acquisitions are factors that will be monitored to the extent they slow forecast growth and deleveraging," the agency wrote.

However, Fitch sees demand for data growing rapidly in ATP's markets, and carriers densifying and upgrading their LTE networks, saying, “Mobile broadband services remain a key factor in future revenue and cash flow growth for the tower industry.”

Despite being one of the smaller companies, Tower One Wireless is perhaps the most active in Ecuador.

Last November, Tower One deployed seven new towers in the country under the build-to-suit (BTS) format, which means it only builds the towers after a long-term leasing contract is signed. 

The company claims to have 60 towers in operation in Ecuador, of a total of 334 in its three main markets of Colombia, Mexico and Ecuador, and 60 tenants per tower in the country.

As of September 30, Tower One had eight master lease agreements (MLAs) signed with major carriers in Ecuador, Colombia and Mexico, and a total backlog of over 350 sites, it reported. At the time, the company said that 29 sites were in different stages of work in Ecuador.

The company recently secured an MLA contract with Telefónica. CNT is also a major client for Tower One.

Also during the second quarter of 2022, the company received US$2.66mn from a local bank in Ecuador, of which US$1.95mn is expected to be used to expand in the country. The loan is unsecured and bears interest of 11% per annum.

Other key players in the tower market in Ecuador include SBA and Phoenix Tower International.

Finally, in submarine cables, Aurora and the Galapagos Cable System could come online in 2023, adding to the existing Pacific Caribbean Cable System (PCCS), South America-1 (SAM-1) and the newest, Mistral.

Another cable in development to connect the country is Carnival Submarine Network-1 (CSN-1).

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