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New Market Study Published: Peru Telecommunications Report Q1 2014

New Fixed Networks market report from Business Monitor International: "Peru Telecommunications Report Q1 2014"

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Boston, MA -- (SBWIRE) -- 12/25/2013 -- Peru held its auction of 4G spectrum during July 2013, successfully selling two blocks of frequencies to Telefonica and Entel, through their respective subsidiaries Movistar and Americatel Peru. While this is a strong step forward for the market, the decision to auction just two blocks has left the second-largest player Claro, without 4G spectrum. This could pose a problem over the medium term, as mobile broadband growth in Peru has been driven by the Movistar-Claro competition. However, the government announced plans to auction another batch of frequencies by end-2013, leaving the door open for Claro to enter the market, albeit at a later date and at a disadvantage to its rivals. There are the foundations for strong growth in the second half of 2013 and into 2014, with entrance of new players Entel and Viettel into the mobile sector. A high level of postpaid growth is another positive sign for the market and indicates there is growing demand for higher value services and penetration rates below 100% show there is good growth potential remaining.

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Key Data

- A change in churn policy by second placed mobile player Claro, saw the market lose 1.67mn subscriptions in Q213, mostly from the prepaid segment. This has further improved the outlook of postpaid growth in the market, accounting for 31.3% of subscriptions, one of the highest rates in the region.
- In terms of ARPU, operators reversed some of the decline experienced in Q113. Claro and Nextel both reported strong ARPU increasesy-o-y to Q213. However, our long-term outlook for overall decline remains unchanged by quarterly fluctuations for this figure.
- The fixed-line market is continuing to decline, with lines in service declining 7.6% in 2012 to 2.725mn, we continue to predict a decline in subscriptions as demand for mobile becomes ever greater.

Key Trends & Developments

Entel acquired US-based telecoms operator NII Holdings' Peruvian wireless arm, Nextel del Peru, for an aggregate value of US$410.6mn. The transaction is part of NII's strategy to refocus its capital and resources primarily in its two largest markets of Mexico and Brazil. The sale is also part of NII's strategy to raise stockholder value by aligning its financial and operational resources in areas where it can maximise its return on invested capital, according to NII's CEO, Steve Shindler. The transaction also provides extra liquidity for supporting NII's investments in the deployment of its next generation networks, said Shindler.

Entel announced plans to invest around US$400mn over the next 10 years in Peru. The Peruvian government made the announcement as it handed over a 4G license. Entel's investment will see a 4G-based mobile internet service being deployed in Peru, covering 200 districts in the country and regions that draw tourists.

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