BMI View : The Peruvian telecoms industry has strong potential for growth, despite the effective duopoly of Telefonica's Movistar and Telmex's Claro. The two companies took nearly 95% of the mobiles market in Q215, Telefonica leads the broadband and pay-TV sector and both offer triple-play packages rivals cannot compete with. However, with 4G auctions and Virgin Mobile, AT&T and Falabella prospectively the first MVNOs in H215, competition is set to intensify and push down prices for end users. BMI supports the view that Azteca's Fibre Optic Backbone Network, set to be completed in March 2016 will significantly boost broadband coverage, although mobile broadband will continue to be a key growth area. Despite telecoms penetrations lagging behind many other countries in the region, the market is innovative with mobile banking and OTT TV launching. Due to Peru's size, stronger long-term growth can be achieved if infrastructural problems and piracy are overcome.
Mobile subscriptions rose to 31.5mn in 2014 with strong net additions of 1.4mn. This followed a decline of 1.9% in 2013 with penetration falling to 96%, although this will return to over 100% in 2015. The decline was a one-off event due to a change in Claro's churn policy, with more stable growth forecast towards 37mn in 2019.
Nearly 18% of the market take 3G services and this is set to grow to near a third of subscribers by 2019. 4G connections reached 2mn by May 2015, with 700,000 additions from end-2014. The big three operators offer 4G, but Claro leads the way with 1mn subscribers.
Internet users continue to rise, up 9% to 8.7mn in 2014 but the country's geography limits expansion of infrastructure. Fixed line penetration has struggled to remain over 10% so there is great potential for mobile broadband services across the country. Just 29% of Internet users will take fixed line broadband in 2019.
Due to widespread piracy across the region and slow progress towards digitisation in Peru, just under 1.5mn households pay for TV services. Some 1mn of these take Movistar packages via cable and satellite, making it Telefonica's strongest service in Latin America.
|Peru, telecoms data forecasts|
|Telecoms subscription data, 2012-2019|
|Source: BMI, OSIPTEL|
Key Trends And Developments
Vietnamese military-owned Viettel, operating under the Bitel brand, officially launched mobile services in Peru in late 2014. Viettel won Peru's fourth mobile licence in January 2011 and owns mobile spectrum in both 900 MHz and 1,900 MHz band but its launch date had been subject to a number of delays. By the end of 2014, it had over 500,000 subscribers and a market share of just under 2%.
Three mobile virtual network operators (MVNO), AT&T, Virgin and Chile's retail group Falabella, have expressed interest in entering the Peruvian market, reports La Republica, citing Deputy Communications Minister Raul Perez Reyes. The three MVNOs will be required to negotiate terms with one or more of the country's mobile network operators in two months. The three operators are likely to finalise their agreements and commence launching their services by 2015.
Fitel, the Peruvian Telecom Investment Fund, has awarded a USD285mn contract to Israeli based Gilat Satellite Networks to Build, Operate and Transfer (BOT) fibre optic and wireless networks.
The Peruvian government is implementing a June 2014 ruling by Congress to allow telecommunications operators easy access in requiring regulatory approval for infrastructure based projects, a move that is sure to reduce bureaucratic hindrances.
Peru is posed to lead Latin America in telecommunications towers growth as operators and governments have committed significant resources towards strengthening the infrastructure in the following years.
ProInversion, the investment promotion agency, has published plans to auction three blocks of spectrum in the 698-806MHz (700MHz) band in 2015. The 700MHz band will be used for the provision of 4G LTE services, and will be awarded in 15MHz blocks to each winner for a period of 20 years. BMI believes that a damaging bidding war for 700MHz frequencies could take place among Peru's four mobile operators as they look to compete for three licences of the highly desirable spectrum. BMI believes that Entel may be the company most at risk of missing out on the three blocks should prices spiral out of control.
Peru's Transport and Communications ministry officially launched number portability for fixed telephony services in September 2014. The ministry said that users will be able to have their fixed numbers ported at no charge. Number portability for mobile services was launched in January 2010.
In August 2014, Peru's National Bank Association (Asbanc) selected Ericsson for its mobile wallet solution targeting unbanked Peruvians. Asbanc plans to make the MFS platform available in Peru during 2015 and expects it to reach 1mn users by the end of 2017. In particular, it will target rural areas and expects 2.1mn by the end of 2019.