Colombia to Use $1.45 Billion USD in Arbitration Payments from Claro and Movistar for Pre-financing 2018 Budget
The Colombian government yesterday confirmed that two telecom operators, Claro and Movistar, have submitted payments for the enormous arbitration awards levied against them earlier this year and that the $1.45 billion USD in combined funds will not be used now but go toward pre-financing the nation’s 2018 budget.
Claro, officially known as Comcel (Comunicación Celular S.A. Comcel) in Colombia, met its obligation by paying $980 million USD before the deadline imposed by the arbitration authority. Movistar, officially Colombia Telecomunicaciones S.A. E.S.P., paid $472 million USD (1.4 trillion pesos), according to the government.
According to Finance Minister Mauricio Cárdenas, this major injection of cash will ease the financing burden for the government. “With these resources, the nation will reinforce our external pre-financing,” said Cardenas in a press conference.
The vast sums of the fines were defined in July during an arbitration ruling against Claro, which is a subsidiary of Mexican mogul Carlos Slim’s America Móvil SAB de CV, and Movistar, controlled by Telefonica SA of Spain, for not upholding contractual obligations for their mobile services offered in Colombia.
The sum of the total has been met with challenges. Though it complied with the ruling’s payment timeline, Claro said it would continue to appeal the decision. “Comcel will exhaust every national and international available legal action to challenge the arbitration award,” said the company in a statement.
The dispute surrounds an asset reversal clause of an agreement for cell services that dates back to 1994, according to the government. The award totals were assessed by an arbitration tribunal of the Bogotá Chamber of Commerce.
Photo credit: Jared Wade