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Peru has been one of the fastest growing economies in Latin America. It was one of the most concentrated telecoms markets in the region until 2013. This changed when two new mobile operators entered the market, creating more alternatives and better services for Peruvians. At the first Peru Telecom Forum, these changes and the future direction of the market were debated and discussed.

Competition facilitated by regulation, but industry is facing a turning point

During the Peru Telecom Forum, hosted in Lima in October 2016, it was clear that the Peruvian telecoms market is gaining momentum. Peru is the only Latin American market, and probably one of the few in the world, where two mobile operators have recently entered the market. Entel Chile expanded its operation to Peru through its acquisition of Nextel Peru from NII Holdings in 2013, taking advantage of the AWS 4G spectrum belonging to its Americatel subsidiary. Nextel was rebranded, and its aggressive offers changed the market dynamics, reducing prices for consumers as a consequence. A fourth operator, Viettel (under the BiTel brand), started offering low-cost services in 3G in July 2014, mainly targeted at rural areas. By the end of 2013, Movistar and Claro accounted for 95% of total wireless subscribers but, by June 2016, their share dropped to 81%, due to the share growth of Entel (12%) and Bitel (7%).

Several changes in the regulatory framework underpin the changes in the market dynamics, for instance: simplifying and shortening the number portability process to one day; establishing the obligation that smartphones should be sold unlocked; and mandating that Movistar and Claro reduce mobile termination rates by 63%, with a softer glide-path for the new entrants. The regulator also implemented an MVNO regime, and in July 2016, Virgin launched services in Peru, increasing competition by becoming the first MVNO in the country.

The government launched a bid to deploy and operate a national wholesale fiber network, which was won by the only bidder, Azteca Comunicaciones. The operator just completed this 13,500km network, dubbed "Red Dorsal," offering connectivity in the wholesale market for a fixed monthly fee of $27 per Mbps. Initially, large operators were not interested in using the network, which led to the consideration of alternatives that include volume discounts. Meanwhile, the government is also implementing complementary regional network projects.

For their part, operators are worried about the high costs paid for the 700MHz spectrum in the auction in May 2016. The average price paid by the operators reached $0.32MHz/pop (or MHz per person), one of the highest prices paid in Latin America. Also, they expressed concerns that the amount raised won't be applied to telecommunications projects. A large national security regulation that requires operators to validate the identity of mobile subscribers through biometric equipment is also scheduled for implementation by the end of 2016, and requires that operators switch off all prepaid SIM cards that are not registered. These additional costs are impacting prices and future investments in a changing environment where operators are facing challenges from OTT players, which are impacting their traditional business models. Furthermore, the macroeconomic situation is not as good as in previous years. Ovum believes that the regulator must account for the changed market conditions and carefully consider each decision it makes, in light of the key role that telecommunications plays in the country's economic growth.


Further reading

Peru Update, May 2016, TE0001-001044 (May 2016)

Peru TV Update, ME0003-000636 (February 2016)

Peru (Country Regulation Overview), TE0007-000928(August 2015)


Sonia Agnese, Senior Analyst, Latin America

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