2012 Peru - Telecoms, Mobile, Broadband and Forecasts

National fibre-optic backbone to drive growth in Peru’s broadband market

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 2012, operator data to mid-2012, 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. The fastest growing telecom markets include mobile telephony, fixed and mobile broadband, and pay TV.

Fixed/mobile consolidation

Fixed/mobile consolidation continues to reshape Peru’s telecom industry, with both América Móvil and Telefónica having decided to merge their fixed and mobile operations. América Móvil Perú, trading as Claro, has completed the merger by absorption of Telmex Perú, and Telefónica has approved the merger by absorption of Telefónica Móviles Perú into Telefónica del Perú but is waiting for regulatory approval.

Mobile market

While Peru’s fixed-line teledensity is the third lowest in South America after Bolivia and Paraguay, mobile penetration is higher than average for the region, a remarkable achievement considering that the country’s GDP per capita is well below the South American average. However, penetration data hides the fact that almost one quarter of the population has no mobile phone at all, while many Peruvians – especially urban dwellers – have multiple mobile subscriptions.

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 – 2010 - 2012

(Source: BuddeComm based on industry data)

Market Highlights

• The government's national broadband plan aims to provide internet connectivity via a fibre-optic backbone to the more remote regions of Peru. It will be a massive undertaking, requiring substantial funds to implement, but it could boost Peru’s broadband penetration from 4% in 2011 to 9% in 2016.
• Due to Peru’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 both mobile broadband and phone-based internet browsing to escalate.
• Vietnam’s Viettel is due to become Peru’s fourth mobile network operator, with service launch expected in the first half of 2013, while Virgin Mobile plans to enter the market as a Mobile Virtual Network Operator (MVNO).
• The Telecommunications Investment Fund FITEL provides subsidies for telecom services in rural areas and other places that are marginal to private providers. Its 2012 agenda includes 10 projects that are being subsidised and another 23 in the pipeline.
• Movistar’s licences have expired, making Peru the second country in Latin America to face the thorny issue of mobile licence renewal. Negotiations between the government and the operator have been fraught with disagreements and difficulties, and have dragged on for more than two years.

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.