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.
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.
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 process of approval of charges and maximum fees does not depend on the willingness of companies, but the process defined in the regulations established for that purpose. "
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.
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.
The Competition Superintendence of El Salvador has acknowledged receipt of a new request for the acquisition of 100% of Digicel’s shares by Claro in March 2012.
From a communciation from the Superintendence of Competition (SC):
SC Receives new application from CLARO - DIGICEL
The Board (CD) of the Superintendencia de Competencia (SC), has received a new application for a new merger request made by the company America Movil, which owns the CLARO brand, for the purchase all of Digicel’s shares.
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