Adapting to a competitive market is being costly for the Instituto Costarricense de Electricidad, which in 2011 accumulated losses of $40 million and a negative return of 2, 1%.
Tuesday, June 19, 2012
Already in 2011 the Instituto Costarricense de Electricidad (ICE) has had to "seek waivers or amendments with eight of its creditors", according to an article in Elfinancierocr.com, because it failed to maintain the necessary financial indicators to fill the banks with confidence.
The Minister of Environment, Energy and Telecommunications (Minaet), Rene Castro, who asked the treasury to conduct the study which revealed the ICE’s underfunding, "said yesterday that the Governing Council has now formed an interagency commission in order to investigate the "worrying deterioration" of the ICE’s finances."
The report also warns of an increase in the company’s total liabilities (debt), which has grown by 184% in four years, while it’s equity grew by only 26% over the same period.
Teofilo de la Torre, chief executive of the ICE, said: "The Institute is committed to the Government to reduce its costs by ¢80,000 million at year-end" and that they "will cut travel expenses, overtime, travelling abroad and there will be no new hiring. "
After one year of competition in mobile communications, the changes that have taken place reveal a market that is different from how many expected.
The market transformation has been swift and contained surprising nuances. Cellular penetration swiftly exceeded 100%, while the use of mobile Internet exceeded forecasts.
Since the formal break up of the monopoly held by the state communications firm, ICE, the number of allocated cell lines has grown from 3.9 to 5.3 million.
Elfinancierocr.com reports that this information was obtained "by an appeal to the Constitutional Court, which forced the Sutel to provide the number of lines that the ICE had up to November 2011, which was considered a strategic issue by the state company and the regulator.
Between the two carriers 100,000 new lines are sold a month and they already have a market share of 20%.
"At the moment, Claro and Movistar between them have a 20% market share. The growth of these companies together is about 100,000 lines per month", said George Miley, a member of the Board of the Telecommunications (Sutel), according to the information portal Signals Telecom News.
Cellular stores have had reduced sales since the process of opening the telecommunications market started.
Retail businesses selling cell phones have experienced significant declines since the start of the privatisation process in the telecommunications sector.
The most commercial aggressiveness has been seen by the Instituto Costarricense de Electricidad (ICE) who are offering packages where the phone is free, and added to this is the entry of new competitors such as Claro and Movistar, which has affected traders dedicated to only selling the phones.
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