Telefonica says will defend Costa Rica mobile rates

SAN JOSE: Mobile phone giant Telefonica said on Wednesday that it will defend the rate it plans to charge customers in Costa Rica despite a challenge from rival America Movil that the rates are artificially low.

America Movil, controlled by Mexican telecom tycoon Carlos Slim, claimed earlier this month that Spain's Telefonica would charge customers below-cost fees to use its network in violation of terms it set with Costa Rica's state-run phone company.

Costa Rica last year ended a four-decade-old telecommunications monopoly in a move that allowed it to enter the Central American Free Trade Agreement with the United States.

Mexico's America Movil and Telefonica won bids last year to offer cell phone services in the isthmus nation and modernize its wireless infrastructure.

Neither company has its network online yet but the two were supposed to have agreed to rates with the now-deregulated Costa Rican Electricity Institute (ICE).

In the complaint filed in mid-August, Claro -- the brand used by America Movil to sell its products in several Latin American nations -- requested the country's telecommunications watchdog to reject an ICE-Telefonica deal signed in July.

"From the standpoint of competition law and the customers rights. (this is) an improper business practice and forms a monopolistic practice," Claro said in the complaint.

Telefonica on Wednesday defended the rates it agreed to with ICE.

"The two sides negotiated prices... that conformed to the reality of the market during the negotiating process," Telefonica said in a statement to Reuters.

America Movil representatives in Mexico and Costa Rica were not immediately available for comment.

There are under 3 million cell phone lines in Costa Rica and around 1.5 million fixed lines.

Slim's telecommunications companies have been at the center of several competition probes by regulators in his home country.

COPYRIGHT REUTERS, 2011