2013 Peru - Telecoms, Mobile, Broadband and Forecasts

Peru’s mobile market livens up with new players and LTE rollout

BuddeComm’s yearly update of Peru - Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Peru, including the regulator’s market data for the first quarter of 2013, mobile operator data to mid-2013, other industry data, and expected market developments in the coming years.

Economic conditions

Peru’s economic expansion has made it a star performer in Latin America, but GDP per capita is still far lower than the regional average. Telecom penetration reflects the country’s poverty map. Fixed-line and mobile subscribers are highly concentrated in urban areas – particularly the capital city. Besides poverty, another challenge for Peru is the rugged topography of the Andean mountains and Amazon jungles.

Investment opportunities

Peru’s single concession regime allows for the provision of all telecom services, including fixed-line, mobile, pay TV, and internet. The government favours foreign investment and follows pro-business, pro-growth policies. With GDP expected to expand 6% annually over the next several years, Peru’s telecom sector is a promising arena for investors.

Fixed line market

Peru’s fixed-line teledensity is the third lowest in South America after Bolivia and Paraguay. Obstacles to fixed-line growth include widespread poverty, fixed-to-mobile substitution, expensive telephone services, and geographical inaccessibility in the rugged Andean mountains and lowland Amazon jungles. Trading as Movistar, Telefónica del Perú (TdP) dominates the basic telephone market. América Móvil’s Claro occupies a distant second place, and Americatel is third with only about 1% of the market.

Mobile market

Although Peru’s mobile penetration is below the regional average, it measures up favourably with the country’s GDP per capita, which is comparatively lower. Nevertheless, the country’s penetration data hides the fact that about one quarter of the population has no mobile phone at all, while many Peruvians – especially urban dwellers – have multiple mobile subscriptions.

Mobile operators

Three companies compete in the mobile market: TdP’s Movistar is the leader, América Móvil’s Claro is in second place; and third is Nextel Perú. Vietnam’s Viettel is due to become Peru’s fourth mobile network operator, with service launch expected in the second half of 2013, while Virgin Mobile plans to enter the market as a Mobile Virtual Network Operator (MVNO).

Mobile broadband and 3G

Due to the country’s low fixed broadband penetration, 3G services are likely to boom in the coming years. With the expansion of UMTS networks and the declining price of laptops and smartphones, we expect mobile broadband and 3G phone-based internet browsing to escalate.

Broadband market

Fixed broadband subscriber penetration in Peru is considerably lower than average for Latin America. In a country where internet user penetration used to be remarkably high in the days of dial-up, the poor development of fixed broadband may seem surprising. Reasons for the shortcoming are several. Besides the obvious barriers – such as poverty, limited levels of literacy, low computer penetration, and rugged topography – perhaps the biggest problems is the lack of competition, which has made broadband in Peru one of the slowest and most expensive in the region. However, the government's national broadband plan, enacted into law in July 2012, is expected to drive strong market growth in the coming years.

Peru’s fixed-line, broadband, and mobile statistics – 2011 - 2013

(Source: BuddeComm based on industry data)

Market Highlights

• Movistar and Entel won spectrum for LTE services at a public auction held in July 2013, and are required to roll out LTE services by mid-2014.
• Entel Chile, already owner of fixed-line operator Americatel Peru, completed the acquisition of Nextel Peru in August 2013.
• Following the successful implementation of Mobile Number Portability, the government has ruled that Fixed Number Portability will be launched by mid-2014.
• Conditions for the renewal of Movistar’s licence, concluded in January 2013, include investments of about US$1.15 billion to expand coverage to unserviced areas as well as the provision of free broadband connections to state schools, healthcare centres, and police stations.
• The Telefónica group approved the merger by absorption of TdP’s three subsidiaries TEM Perú, Telefónica Multimedia, and Star Global Com into TdP, but regulatory approval is still pending.
• China’s VelaTel is looking to sell WiMAX (LTE ready) operator VelaTel Peru (formerly Perusat).

This report is essential reading for those needing high-level strategic information and objective analysis on the telecom sector in Peru. It provides further information on:

• Regulatory environment;
• Economic trend and its impact on telecommunications;
• Telecoms operators – consolidations, acquisitions, new licences;
• Company performances and ARPU statistics;
• Analyses of Peru’s broadband and mobile sectors, including future outlook;
• 3G developments, regulatory issues and technologies including HSPA and LTE;
• Law for the Promotion of Broadband and for the Construction of a National Fibre-Optic Backbone;
• Historical and current subscriber statistics and forecasts.

Data in this report is the latest available at the time of preparation and may not be for the current year.