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Operator competition increases in Costa Rica as licences are awarded

Costa Rica’s state-owned operator is set to face competition for the first time, as the Latin American country has awarded mobile operating licences to Telefonica and America Movil. The two firms won licences with bids of US$95 million and $75 million respectively.

George Miley, president of the country’s regulator Sutel, has suggested that a separate round of bidding might be required for an available third concession. Once the awarded licences have gained the approval of Costa Rican President Laura Chinchilla, they will be issued in as little as two weeks, with operations projected to begin around September.

There appears to be significant interest in the third licence from other firms with a background of operating in emerging markets; according to reports, Millicom have expressed interest, as well as Caribbean operators CWI (the international operations of UK firm Cable & Wireless) and Digicel of Jamaica.

The monopoly current held by the state-owned incumbent operator, the Costa Rican Electricity Institute (ICE), is therefore set to face competition - something that it has not had to do, at least as a fixed-line provider, for over 40 years. At the end of 2010, ICE had logged around 1.8 million mobile connections. The operator was forced to end its monopoly when Costa Rica joined Cafta, and agreement between the US and Central America which mandates free trade.

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