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Peru Telecommunications Report Q1 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: February 2008 Product Code: R302-2112 Description Peru’s mobile market continues to grow strongly, although this will not be enough to enable the countryto catch up with its regional peers in terms of mobile penetration - at 38.4% at June 2007 by far thelowest in the region. Market leader Movistar continues to outperform its rivals, taking 57.1% of netadditions in Q207 to boost its market share by 0.1pp to 57%, the first gain for at least two years. AméricaMóvil’s Claro is also performing well, increasing its share of the market by 0.1pp in Q2, to 39.4%. Thereare no signs yet of any change of focus for the two main operators, both of which posted record numbersof prepaid subscribers in Q207, at 88.5% of the total subscriber base for Movistar and 90.5% for Claro.However, usage levels are on the increase, with MOU rising by 22.8% to 82 minutes for Claro and by25.8% to 91 minutes for Movistar. The same cannot be said for ARPU levels. While Movistar recordedits second straight quarter of ARPU growth, an increase of 6.2% y-o-y, Claro’s ARPU continued itsdownward trend, falling by 21.1% y-o-y to PEN28.Movistar returned excess frequencies arising from its 2004 acquisition of BellSouth in summer 2007, andin July the results of the auction were announced. Claro bid just over the minimum US$22.2mn to acquirethe B band spectrum, while ESMR operator Nextel paid US$27mn for D and E band frequencies,US$1.5mn over the minimum bid requirement. The auction seems to have put paid to any hopes ofattracting a new competitor to the market to counter the effective Movistar/Claro duopoly, and BMI nowhopes the government will look to MVNOs to further liberalise the market. Mobile growth in Q207 was in line with BMI’s expectations, and we have left forecasts unchanged forthe present. We anticipate penetration will hit 45% by YE07, rising to 88-89% by 2011. Telefónica delPerú (TdP) is on track to meet its targets for broadband growth, with 527,000 subscribers as of mid-2007,and we have therefore left forecasts for internet and broadband usage unchanged. Broadband penetrationshould reach 2.1% by YE07, with internet penetration relatively high at around 21.5% by YE. However,the fixed-line market grew more quickly than anticipated in H107, and we have raised forecasts for 2007and beyond in light of this stronger growth. We predict the market will grow by around 8% in 2007 toraise penetration by 0.5pp to 9%. Growth rates will continue to slow, but the fixed-line penetration rate isnow expected to continue to rise until 2010, when it will begin to flatten. Table of Contents
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