Ecuadorian President Rafael Correa defended the government's intention of reforming the Telecommunication Law so as to analyze the profits of leading multinational telecom companies, to "benefit all citizens and not just a handful," local media reported Tuesday.
The president, who is in town to celebrate the country's 194 years of independence, told the media in Esmeraldas Tuesday that 15 percent of profits from telecom companies, that is, around 130 million dollars, now benefit merely 4,500 of their executives and investors. With the reform of the law, the government would increase taxes on private telcom operators, forcing them to give 12 percent of their profits to the state and 3 percent to their Ecuadorian employees.
These taxes would be used to provide telecommunications services, such as community internet centers and connectivity for public schools, Correa added.
There are three phone operators in Ecuador -- Claro, owned by Mexican billionaire Carlos Slim, which controls 62 percent of the market, the Spanish Telefonica (30 percent) and state CNT (2.5 percent). Employees of Claro and Telefonica have voiced their criticism on the government's intention.
The telecom sector is considered strategic, and as such the profits it generates must be reinvested to benefit Ecuadorian society, said Correa, whose administration will seek greater revenue for the state from the upcoming 4G negotiations with private operators.
The relatively low level of fixed and mobile broadband penetration in Ecuador presents a growth opportunity for telecom companies. Multinationals Claro and Movistar are expected to receive 4G spectrum by the end of the year, after state company CNT was awarded frequencies for LTE services in 2012.