One of the conditions for authorizing the acquisition is that America Movil must relinquish the right to operate 25 MHz of radio spectrum with national coverage in the 850 MHz band and 30 MHz of radio spectrum with national coverage in the 1900 MHz band, which currently belong to Telefonica.
According to the technical, legal and economic analysis carried out, it was warned that the acquisition would result in limitations to competition in the markets for mobile and fixed telephony and business connectivity services. Therefore, the Board of Directors of the Superintendence of Competition (CDSC) decided to impose a set of conditions to repair the damages, which include enforcement measures prior to the closing of the transaction (ex ante) and a series of subsequent obligations (ex post) in order to counteract such limitations, informed the Superintendence of Competition (SC).
At the auction held in El Salvador for the 1.7 and 2.1 GHz bands, Tigo was awarded five blocks and Claro was awarded four more.
For the auction held on December 5, the 1.7 and 2.1 GHz bands of the radio spectrum were made available, which is structured in 12 blocks, however, only nine blocks were awarded.
Elmundo.sv reports that "... Siget did not inform how much the revenues from the awarding of these blocks amounted to and indicated that it does not yet have a date for the signing of contracts for the assignment of this segment of the spectrum."
The sanction was imposed following a complaint made "by TVC Network, S.A. de C.V., against Digicel, S.A. de C.V., for a possible abusive dominant position."
The complainant stated that this economic agent was creating barriers to the entry of competitors or the expansion of existing ones in the market for the termination of national and international calls, informed the authorities of the country.
Digicel, Telefonica Moviles El Salvador, CTE, CTE Telecom Personal and Telemóvil El Salvador filed appeals against the $2.2 million fine imposed on them for abuse of their dominant positions.
From a statement issued by the Superintendency of Competition:
The five telephone operators punished for abusing their dominant position submitted an appeal to the Board of Directors of the Superintendency of Competition on 4 November.
Digicel, Telefonica Moviles El Salvador, CTE, CTE Telecom Personal and Telemóvil El Salvador were fined $2.2 million for abusing their dominant position to impede the entry of new competitors.
From a statement issued by the Superintendency of Telecommunications:
SC sanctions telecoms companies for abusing dominant position:
The Board of Directors of the Superintendency of Competition resolved to sanction five telephony operators proven to have each committed abuse of their dominant position typified in Article 30, letter a) of the Competition Act. The investigation, which was based on a complaint filed on October 24, 2013 by Platinum Enterprises, SA de CV, concluded that each of the defendants abused their dominant position by hindering the entry of new competitors or expansion of existing ones in the market for intermediate services for incoming international traffic for call termination on their own networks.
Claro, Digicel, Telefónica and Tigo have grouped in the Salvadoran Chamber of Telecommunications.
An article on Elfinancierocr.com reports that "... The four major mobile and fixed phone companies in El Salvador, Claro, Digicel, Telefónica and Tigo have announced the establishment of the Salvadoran Chamber of Telecommunications, a non-profit organization that will help ensure sectorial expansion, deployment, enhancement and development of networks and the telecommunications industry in the country, according to a press release. "
Operators are opposed to the proposal to tax phone bills and purchases of technological equipment, while the government has shown itself unwilling to cooperate by reducing tariffs.
While the government insists that telecommunications companies must lower telephone rates in order to minimize the impact of a future tax of 10% for public security, telecoms companies have defended themselves arguing that "...
The telecoms company plans to invest $50 million in equipment to expand 4G network coverage in remote areas of the capital.
Digicel El Salvador announced plans for 2015 to invest about $50 million, ie $10 million more than the invested made to upgrade technologies in 2014. Besides this project, the company will be updating the central management system for telephone calls, following the entry into force of number portability in the country.
The launch of Digicel service is part of an investment plan in which $45 million has been invested to modernize the technological infrastructure.
In the first year of execution of the the 2013-2015 Master Investment Plan $30 million will be invested and the remaining $15 million will be invested over the next two years.
José Antonio Rodríguez, CEO of Digicel El Salvador, said "we are taking a leap in technology, going from 2G to HSDPA + technology, known as 4G, which is being used in developed countries."
The Superintendency of Competition believes that auctioning 40 MHz creates disadvantages for new entrants who want to enter the mobile phone market.
From a press release by the Superintendence of Competition in El Salvador:
The Board of Directors of the Superintendence of Competition has recommended to the General Superintendency of Electricity and Telecommunications (SIGET) that the auction of 40 MHz of radio spectrum recently announced should include the participation "only [of] new entrants who are not associated with any mobile operator presently in market. This is to promote competition between agents being equal and ensure the chances of increasing the number of competitors in the market, generating dynamism and competition. Failing the above, the auction will be suspended. "
The Salvadoran Justice system has upheld the fines imposed on electricity distributors and Digicel by the competition regulator.
"The Administrative Litigation Division of the Supreme Court of Justice (CSJ) ruled in favor of the Superintendency of Competition (SC) in two cases: one in which the existence of anticompetitive practices by electricity distributors CAESS and AES CLESA was determined, and the other at the opening of a sanction process against Digicel, for lack of cooperation ", reported Elmundo.com.sv.
The President of Grupo Digicel has announced investments over the next eighteen months of more than $40 million.
In his short visit to El Salvador, Denis O'Brien was interviewed about the expansion, with topics covered such as the Salvadoran authorities refusal to authorize the sale of Digicel to Claro and the company’s future investments in the country.
After the competition regulator imposed the release of part of the spectrum leased by Claro as a condition to the merger between the two companies, America Movil has announced its withdrawal from the move.
In March last year, America Movil announced an agreement to acquire a 100% stake of Digicel El Salvador, for an undisclosed amount.
The Superintendency of Competition (SC) of El Salvador conditioned the operation to Claro waiving the right to exploit 20 MHz of the total spectrum it owns in El Salvador. "The reason for this precondition to authorize the merger of operations of both companies is to retain the current level of competition in the cell phone industry to protect consumers' pockets", explained at the time the head of the SC, Francisco Diaz Rodriguez .
For the second time the Superintendence of Competition of El Salvador has refused permission for economic concentration between both companies.
From a statement from the Superintendency of Competition (SC):
SC does not authorize the purchase of DIGICEL
After carrying out technical legal and economic analysis, the Board of Directors (CD in Spanish) of the Superintendence for Competition (SC) decided to reject application of economic concentration by CLARO from the purchase of DIGICEL, considering that the proposed economic concentration has high probability of having an adverse effect on the dynamics of competition and consumer welfare in the markets for fixed and mobile telephony.
From the month of September recipients of remittances in Guatemala, Honduras and El Salvador will be able to receive them on their mobile phones.
By using a its cellular network platform, the Guatemalan company Tigo Money, a subsidiary of Tigo, will offer international services for money receipts.
Since early 2011, Tigo Money has been in the remittance business nationally in Guatemala.