RACSA: A Telecoms Company On a Ventilator

The market was declared dead several years ago, but the government of Costa Rica has been keeping it alive artificially at the expense of taxpayers purses.

Tuesday, December 16, 2014

Editorial

Radiographic Costarricense (RACSA), is a subsidiary of the state-owned Instituto Costarricense de Electricidad (ICE), the major player in the telecommunications industry in Costa Rica, even after the market opened in 2010. The ICE is, in turn, a direct competitor of RACSA, which in recent years has accumulated tens of millions of dollars in losses, while at the same time losing the market share it once had. 2014 losses were estimated at $5 million.

An article on Crhoy.com reports that the new managers of RACSA, appointed by the new Solis administration have announced a new strategy which should reduce its losses in the next two years and begin to grow in 2017.

The new manager of RACSA, Francisco Calvo, told Crhoy.com that the company will focus on continuing to provide services to private corporate clients who find it very costly to change suppliers, and the public sector in Costa Rica. RACSA, from 2015 will cease providing services to the mass telecommunications market.

Therefore, it will be through the public institutions and companies that contract their services that Costa Ricans will keep paying wages and other unnecessary expenses and will maintain the distorting factor in telecommunications market. These public institutions who are clients of RACSA, will they be obligated to do so instead of having the freedom to choose more efficient suppliers?

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More on this topic

Costa Rica: Telecoms Market Data Must be Updated

November 2015

A ruling by the Administrative Court found in favor of the state run telecoms company and obliges the regulator to update the relevant market data and level the playing field for all operators.

In the lawsuit, the Instituto Costarricense de Electricidad (ICE) argued that the failure to update data on relevant markets and operators prevented the Superintendency of Telecommunications from providing equal treatment to all telecommunications companies operating in the country. Because of this, Crhoy.com reports, "... only the ICE can be fined or receive penalties for noncompliance."

First Casualty of Telecoms Privatization

May 2011

The state run Radiográfica Costarricense (RACSA) is losing clients and and business, forcing its owner, another state run company, ICE, to shore up its cash flow with $15 million.

The change of former clients to AMNET’s cable internet, and local currency appreciation against the dollar, are two major problems facing RACSA, a subsidiary of the Instituto Costarricense de Electricidad.

Halting of RACSA Trust Denied

July 2010

Costa Rica’s Banco Nacional denies that the $360 million trust to expand high-speed Internet has been cancelled.

Eduardo Doryan, head of the country’s state-owned electricity and telecommunications provider (ICE), had declared that without the trust, the high-speed internet investment was impossible, because an institution the size of RACSA could not possibly finance such a huge project.

Power Struggle Between Costa Rican State Telecoms Companies

July 2010

A $360 million investment in a high-speed internet network is in doubt due to conflicts between directorates and a lack of government direction.

RACSA is the company responsible for providing Internet and data communication services to both the Costa Rican public and businesses. Formally it is a subsidiary of ICE, the state telecoms and electricity provider.