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Peru Telecommunications Report Q1 2011
Business Monitor International, Nov 2010, Pages: 77
The Peru Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Peru's telecommunications industry.
With two of Peru’s telecoms operators accounting for over 95% of the mobile phone market together, the market is an effective duopoly, although a fourth operator could enter the market. State investment agency, ProInversión, is set to auction spectrum before the end of 2010, with three operators understood to be interested. BMI believes that Peru can sustain a fourth operator, and its presence should help drive growth.
In line with BMI’s ARPU analysis of other regional and global markets, the decline in ARPUs in Peru is to be expected. ARPUs have fallen over several years as new competition has emerged, bringing in price falls and new services and while Claro has registered single digit ARPU increases in both Q110 and Q210, BMI does not believe this is an indication of a return to growth, and we are not forecasting rising ARPUs over the next five years. We also expect to see declines in the fixed line sector during the forecast period.
Prepaid services continue to dominate Peru’s mobile market, although subscribers to these services generate much lower revenues and this has affected operators' bottom lines. Our forecasts for the mobile market take into account the increase in Q210 subscriber growth, although we continue to expect more subdued growth between 2010 and 2015. Reaching rural subscribers will take considerable financial outlay (fibre optic cable networks are concentrated on Peru’s coastline) and reaching some areas is difficult. BMI believes that while operators will pursue a rural strategy, opportunities still exist in cities and urban areas to generate revenue from new services, such as mobile content and mobile broadband.
There have been several developments in the mobile and fixed-line sector in an attempt by the regulator, Osiptel, to lower prices, encourage greater competition and to grow the subscriber base. These include the number portability scheme, introduced in January 2010 – Osiptel reported in September 2010 that 75,000 Peruvians had taken advantage of the scheme; reduced mobile interconnection charges, which came into force in October 2010; reduced tariff options for mobile phone users making international calls, a scheme that began on 17 October 2010; and a 5.98% cut in costs associated with fixed lines, installation, basic rental and local calls from September 2010. While these measures will affect operators’ margins in the short term, in the medium to long term increased subscriber numbers should compensate for this.
BMI sees strong growth in the broadband market as government projects to bring remote towns online begin to bear fruit and mobile broadband generates much of the market's growth. Other Latin American markets have seen strong growth and the trend seems set to reach Peru too, BMI forecasts a CAGR of 86% in the number of broadband internet subscribers between 2009 and 2015. As mobile broadband gains popularity – if prices are attractive and 3G networks expand – then fixed line operators will be under greater pressure to keep services competitive and ensure that broadband growth continues.
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