Is Movistar Leaving Costa Rica?

Although Telefonica belies the eventual departure from Costa Rica, rumours have been circulating to the contrary as company employees see a lower demand for Movistar products by customers.

Amelia Rueda reports that confidential sources have written in to say that the company has begun closing stores and laying off staff.

Matías Señorán, spokesperson for the Spanish company, said the store closures are to "improve the business model", that includes staff rotation and change of suppliers.

The exec added that more changes to the business model are coming, with investment focusing on better infrastructure and better coverage, acknowledging that customer demand has declined.

Movistar and Claro (Mexico's America Movil) started operations in Costa Rica last December each paying millions for a license for a share of market that is now 4.735.000 cellular lines.

This time last year there was only one operator in Costa Rica, the Instituto Costarricense de Electricidad (ICE). Today, there are five: Kolbi (ICE), Claro, Movistar, Fullmovil and Tuyo.

Fullmovil and Tuyo are "virtual" operators, working off the ICE infrastructure.