Overview

According to the Ministry of Telecommunications (MINTEL), the telecommunications sector is the fastest growing sector in the country, representing $2.5 billion in 2022 (two percent of GDP).  The sector is expected to grow at least five percent per year.  The Ecuadorian government has repeatedly expressed interest in developing digital opportunities for the country, emphasizing that increases in internet access and provision of digital services will create efficiencies and increase productivity.  During his term, former President Guillermo Lasso focused on providing connectivity to underserved communities and updating the regulatory framework.  Additional efforts to increase connectivity featured Ecuador turning on its connection to the Mistral submarine cable country in partnership with América Móvil (Claro) and Telxius (Telefonica).  A Galapagos subsea cable and a Carnival Submarine Network (connecting Ecuador with the United States) are expected to be built in the next few years.  MINTEL announced in May 2023 that Ecuador’s 2022 telecom investment reached a record of $904 million, with $885 million from the private sector.  New international players also entered the Ecuadorian market in the last year including Google Cloud, Amazon Web Services, Starlink, and Oracle.  Expansion of fiber optic deployment also has been one of MINTEL’s priorities, with nearly 10 percent of Ecuador’s fiber optic cable laid in 2022 (20,242 kilometers). 

Only three companies serve the Ecuadorian telecom industry:  state-owned firm National Corporation of Telecommunications (CNT) with a 17 percent market share, Mexico’s Claro with a 52 percent market share, and Spain’s Telefonica with a 31 percent market share.  The three telecoms carriers serve 17.8 million mobile line users in Ecuador, representing a penetration of 97.8 percent (May 2023).  U.S. satellite broadband provider HughesNet is expanding operations, particularly in rural areas, and Space X’s Starlink launched operations in April 2023.  Vrio’s Group/DirecTV remains the market leader for paid TV, with a 46 percent market share (March 2023).    

In 2022, e-Commerce accounted for $3.17 billion, representing a two percent growth from $3.10 billion in 2021 (Statista Market Insights).  Analysts estimate e-Commerce will end 2023 with $3.43 billion in online sales.  According to Ecuador’s Private Banks Association (ASOBANCA), consumers made a total of 929 million e-commerce transactions, of which 456 million were executed through digital channels.

Internet penetration in Ecuador is at 81.3 percent (Jan. 2023, Source: Digital 2023 Global Overview Report).  According to Statista, in 2023 South America’s internet penetration stands at 82.3 percent.

Companies from the People’s Republic of China (PRC) dominate Ecuador’s digital and telecommunications infrastructure.  The former Lasso administration focused efforts in diversifying its vendor portfolios at all IT levels; however, Huawei and ZTE still have a strong footprint in the country.  U.S. companies able to securely integrate their hardware and software to these Chinese legacy systems have a favorable opportunity for market entry.

Mobile broadband for internet access is limited.  In Ecuador, broadband adoption reaches 20 percent in rural and isolated areas, whereas in large population centers it exceeds 70 percent.  According to MINTEL, the solution to this problem is to invest in connectivity infrastructure.  The cost of deploying networks is high in relation to population density and people’s ability to afford internet services.  A possible solution is infrastructure sharing to reduce connectivity gaps between cities and rural areas, as well as considering alternative technologies for rural connectivity.

Table 1: Ecuador’s Telecom Penetration Statistics 

Source- Arcotel, March 2023

Table 2: Ecuador’s ICT Market Size 

(total market size = (total local production + imports) - exports 
Units: $ millions 
Source: Central Bank of Ecuador (communications and mail service) 

Leading Sub-Sectors: 

• Cybersecurity 
• E-commerce 
• Digital marketing 
• Value-chain applications 
• Internet of Things 
• Artificial intelligence (AI) 
• Smart Cities 
• ICT and Telecom Equipment 
• 5G solutions for telecom operators
• Private networks
• Data analytics
• Defense IT solutions
• Government automation solutions
• Port and airports automations solutions
• Service providers for unattended areas

Opportunities 

There are many opportunities in the ICT sector in Ecuador, as the ecosystem is in development.  MINTEL is expected to put out tenders for the deployment of 4G and 5G, though has yet to issue a formal timeline.  Local telecoms regulator ARCOTEL is currently evaluating and reorganizing (with the support of the International Telecommunications Union) the 3.5GHz, 2.5 GHz, 700 MHz, and AWS spectrum for future government tenders.  

The impact of COVID-19 fast-tracked the growth of e-Commerce in Ecuador by at least 300 percent according to the Ecuadorian e-Commerce Chamber.  There are new opportunities in this segment ranging from delivery apps to online education programs at all levels, secure teleworking collaboration solutions, and online gaming. 

Resources 

• Ministry of Telecommunications: https://www.telecomunicaciones.gob.ec/ 
• Arcotel: https://www.arcotel.gob.ec/ 
• Corporación Nacional de Telecomunicaciones: https://www.cnt.gob.ec/ 
• Electronic Chamber of Commerce: http://www.cece.ec/ 
• U.S. Embassy Commercial Specialist – Sandra Tinajero (TinajeroSV@state.gov