Peru Telecommunications Report Q2 2008

Peru's mobile market showed remarkable growth in 2007, reporting a 77% increase year-on-year to reach 15.55mn subscribers by YE07. Penetration reached 54% for the year, far ahead of any forecasts. While it remains the country with the lowest penetration rate, it has closed the gap on its regional peers and outshone all in terms of growth. Competition between the two largest operators remains fierce, with Amrica Mvil's Claro chipping away at Movistar's market leadership position. However, in Q307 Movistar reported a recovery in its market share, regaining 0.7pps in the quarter. Both operators recorded high prepaid subscriber additions, although Claro has recorded a faster growing postpaid segment, but this has yet to have a positive impact on ARPUs. However the operator's MOU figures continue to rise and show positive growth.

Owing to strong growth in the mobile and fixed-line sectors BMI has revised forecasts upwards and included forecasts through to 2012, when we expect mobile penetration to be over 90%. We do not expect the market to grow as fast as 2007, as operators begin to recoup the costs of expansion and concentrate on the prepaid sector. Although the regulator has given no indication of introducing further competition into the market there have been moves to enforce network infrastructure sharing and a timetable for introducing mobile number portability by 2010 has been confirmed by the regulator.

We have also revised forecasts upwards for fixed-line telephony as growth has continued despite the mobile substitution rate and the incredible increase in mobile subscriptions. We expect that the market will continue to see growth beyond 2012, although population increases will see penetration rates flatten.

However, Peru's fixed-line market remains one of the few in the region where we expect growth to continue.