January 8, 2011 / 3:38 AM / 9 years ago

UPDATE 1-America Movil, Telefonica win Costa Rica cell bids

SAN JOSE, Costa Rica, Jan 7 (Reuters) - Costa Rica’s telecoms regulator on Friday awarded licenses to Spain’s Telefonica and Mexico’s America Movil to become the first private firms to provide mobile service in the country’s relatively undeveloped wireless market.

Telefonica put its highest bid at $95 million, over America Movil’s $77 million, for the best of three licenses open for bidding, said the regulator Sutel.

Sutel recommended that the Mexican firm, controlled by billionaire Carlos Slim, win a separate license for $75 million.

The third concession remains open and could call for a new auction, said Sutel president George Miley.

The awards, if approved by President Laura Chinchilla, could be granted in two weeks and the new private service could begin in September, he said.

The companies will compete with the Costa Rican Electricity Institute, known as ICE, which controls wireless and fixed line business in the country, with 2.6 million cell phone lines.

Ending ICE’s 4-decade-old monopoly was one of the conditions to enter the Central American Free Trade Agreement with the United States, or CAFTA, which took effect in Costa Rica in 2009.

“Competition is positive from the start,” said Sergio Regueros, international executive of Telefonica. “Competition generates innovation, proximity to the client and development.”

Sutel’s president George Miley welcomed the offers, stressing that, once the government formally awards the licenses, the money will go toward a national telecoms fund. Sutel had set the bar at $70 million for the minimum offer Costa Rica would accept.

Reporting by Alex Leff; Editing by Sanjeev Miglani

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