Photo: No for Carlos Slim's Bid for Digicel
El Salvador’s telecoms regulator has rejected an offer by Mexican billionaire Carlos Slim’s America Movil to acquire the local operation of Irish-owned mobile operator Digicel, calling the deal detrimental to consumers.
The competition authority, known as the SC, said Thursday it decided to deny the merger application submitted by Claro, the brand under which America Movil operates in El Salvador.
A “technical, legal and economic analysis” showed a merger would very likely have an adverse effect on “competition and the welfare of consumers in the fixed and mobile telephony markets,” the SC said in a statement.
The analysis also revealed that, by international standards, fixed and mobile telephony in El Salvador is characterized by excessively high levels of market concentration, the statement said.
The SC on July 4 agreed to review a second request by America Movil to acquire Digicel Group Ltd.‘s El Salvador unit; the Mexico City-based company had earlier backed away from an earlier bid to purchase the operator after the SC had imposed conditions on the deal.
In March 2011, America Movil said it had reached an agreement to purchase Digicel’s operations in El Salvador and Honduras for an unspecified amount, subject to government and regulatory approval.
But on Dec. 9, 2011, America Movil said it would not proceed with the acquisition after the SC demanded it return 20 MHz of spectrum as a condition of the deal.
It subsequently submitted its second application to acquire Digicel’s Salvadoran operations in March.
According to official figures, El Salvador, a country with 6.1 million inhabitants, has 7.4 million active mobile phones and more than 1.1 million residential fixed lines in service.
The country’s wireless market is divided among America Movil, Digicel, Spain’s Telefonica, Tigo of Luxembourg and Intelfon, a Salvadoran company.