Ecuador wants cell phones for the poor

QUITO (Reuters) - Ecuador has contacted foreign mobile firms to negotiate new contracts that would impose higher penalties over operational errors and push companies to create a fund that would provide cell phone service to the poor, a government official said on Thursday.

"We are putting emphasis on sanctions... and that companies should comply with their taxes," said Jaime Guerrero, the head of Ecuador's telecommunications secretary, without giving more details on other economic measures in new contracts.

He said companies could donate 1 percent of their revenues to create a fund for the poor.

President Rafael Correa wants to rework contracts with mobile firms to raise the state participation, improve service and lower rates. He has warned that if companies do not comply with the new regulations they can leave the country.

Porta, a unit of Mexico's America Movil (AMXL.MX) (AMX.N), and Movistar, owned by Telefonica (TEF.MC), control 96 percent of the Andean country's market and are in talks with the government to extend their concessions for 15 years.

Guerrero warned authorities will continue to probe Porta over service errors that could lead to the termination of its contract. Ecuador earlier this month threatened to end Porta's contract if the company fails to fix a series of service failures by December.

Guerrero called on courts to ignore any legal actions taken by Porta to annul the government's demands.

Porta, Ecuador's largest mobile firm with more than 6 million clients, has sought arbitration from a local chamber of commerce to block any decision over its contract.

(Reporting by Alexandra Valencia; writing by Alonso Soto; editing by Leslie Adler)