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A Special International Report Prepared by
The Washington Times Advertising Department - Published on April 21, 1999
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Advertisers
(1) Bell South
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Telecommunications industry prepares for privatization
"The main problem with the current law is that it does not allow more than 35 percent of the shares to be sold," explains Alberto Sandoval, Executive President of Andinatel. "Investors want control. This percentage was one of the main factors in the failure of the last two attempts. The law is too old." Andinatel Andinatel and Pacifictel are all that is left of the break-up of the government's telephone company, Emetel. The former is the telephone company for the Andean region, while the latter is for the coast. This takes care of most of the telecommunications in the country, except for the area around Cuenca, which has its own industry (ETAPA) that is owned and managed by the municipality, as well as Bell South and Conecell which have cellular concessions. In September, 1997, Andinatel and Pacifictel became private companies - 100 percent owned by the government. "This arrangement gave us more liberty and was the first step towards privatization," Sandoval explains. The telecommunications law has been delayed and is about a month behind the anticipated schedule. However this law, along with the new hydrocarbon and energy laws should all pass in April. Originally, Sandoval expected investment banks to be chosen between May and September and for shares to be offered in September. However, this process will be pushed back. The procedure for offering shares has not yet been developed by CONAM, the committee on the modernization of the nation. In order to prepare for privatization, Sandoval is looking to start from the inside out. "From its creation, this was a public company. The culture of the company must change," he explains. External consultants, vice presidents with technical expertise in human resource and business development and evaluation procedures have all been brought into Andinatel. "We are re-engineering processes," Sandoval says. Technically, the company is already advanced, with an infrastructure that includes digital switches and new technology. New types of services and the ability to fulfill demand - 500,000 lines have been installed with a demand of 1.5 million - is lacking. Pacifictel Daniel Saab, Executive President of Pacifictel is also preparing his company for privatization. He is a private sector, patriotic businessman who has given his "personal promise to the President to prepare Pacifictel for privatization." He is doing so by sharing his expertise in order to create a "turnkey operation with a high level of technology and trained people." "Pacifictel works like a private company," Saab begins. "We believe in the presidential plan to create a transparent company that is ready to be sold." In the meantime, Saab is also working hard to create an efficient company, one that has a rapid response time to demand. Service, repairs, sales and additional lines have all increased under his leadership. Although 600,000 lines have been installed, 1.1 million are needed. Saab also believes that not all avenues of telecommunications services have been exploited. Caller ID, two and three way calling and call waiting should be offered. Other illegal services need to be eliminated. "The law abolished callback, which bypasses the local phone companies by using special satellites," Saab explains. However, he personally feels that these services will not disappear until the companies offer better and cheaper ones. Andinatel and Pacifictel are also studying a new pricing system. Currently, local phone calls are ridiculously low - less than one cent per minute. They are subsidized by long distance calls that can cost anywhere from $1.00 to $3.00 per minute or more, depending on the origin and destination of the calls. The future for privatization Many Latin American countries, such as El Salvador, Chile and Argentina, have already been through successful privatizations and have received an injection of much needed foreign currency. Others, such as Ecuador and Costa Rica, have failed to jump on the bandwagon. As Ecuador continues to prolong the inevitable, business leaders worry that the country has missed opportunities. International telecommunications companies are not as interested in yet another privatization, and technology is changing and upgrading almost daily. Sandoval, however, believes that Ecuador is a good opportunity. "Our infrastructure and concessions have value. There is a high potential for growth. We are changing the culture of the company and have a good, knowledgeable workforce. Lastly, our infrastructure, with fiber optical cables, is solid, we are part of Intelsat, and there is an interesting future with the Internet." Eric Hertz, Executive Director of Bell South Ecuador, is keeping an eye on the privatization process. The company sees new opportunities from privatization. "Wireless services do better when there are more traditional phone lines. If privatization improves traditional infrastructure, people will perceive an improvement in quality and reliability of cellular phones." Saab concludes, "With privatization and concessions, we can have constant investments like in the United States. When people see the results of privatization and the cost-benefits, they will be more supportive." For more information on the privatization process, contact CONAM at www.conam.gov.ec. |
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Table of Contents (1) President Mahuad announces new economic plan |
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President Mahuad is in full support of privatization. He is very concerned with the new Telecommunications Law. "We have already had two bad experiences," he says with the understanding that if the latest law isn't passed the two companies on the block will not sell. In Mahaud's televised March 11th speech, he gave the Congress 30 days to pass the appropriate laws in order to privatize the telecommunication, energy and hydrocarbon industries.