UPDATE 2-Ecuador to buy America Movil local unit assets

(Recasts, adds company reaction, analyst's quote and byline)

By Alexandra Valencia

QUITO, April 30 (Reuters) - Ecuador will buy America Movil's local assets, after stripping the telecommunications giant of its operating concession in a move by the leftist government to exert more control over the economy.

The Mexican firm said negotiations are not over yet, and still hopes to find an agreement with the government to extend its concession for 15 years.

Top telecommunications regulator Jaime Guerrero said the government will seek a foreign operator to run America Movil's (AMXL.MX: Quote, Profile, Research) (AMX.N: Quote, Profile, Research) concession, which expires in late August.

"We want competition in the sector," Guerrero told reporters in Quito. He added that the Mexican company will not be allowed to participate in any future bid to regain its concession.

Ecuadorean President Rafael Correa, a leftist ally of Venezuelan leader Hugo Chavez, has worried investors with his aggressive drive to rework multi-billion dollar foreign oil, mining and telecommunication deals.

"There are no foreign operators to run the concession. It will either be a state-merger or companies from Venezuela or China," said Wally Swain, a telecom analyst with Yankee Group in Colombia. "They have to be prepared to deal with a terribly uncertain regulatory situation."

Ecuador rejected America Movil's final economic offer to renew its deal late on Tuesday, saying it did not fulfill the state's expectations.