Peru Telecommunications Report Q4 2009

The Peruvian mobile market continues to grow apace with the imminent introduction of a new operator creating further growth prospects for the market. Although growth slowed in the first quarter of the year, a new mobile operator should bring back some growth to the market. The two companies interested in acquiring the spectrum will certainly have their work cut out to compete against Telef??nica's Movistar and Am?(C)rica M??vil's Claro, the operators that control over 95% of the market. However, BMI welcomes the addition of a new operator into the market and expects that the company will invest heavily in order to make its mark on the Peruvian mobile segment. Meanwhile, the existing operators in the market, which includes corporate-focused Nextel, have reported continual declines in ARPUs as they compete to boost their subscriber bases and encourage greater usage. This news will of course be of concern to the new entrant, but, with such high scope for growth, the Peruvian market continues to present strong opportunities.

Meanwhile, Peru's fixed-line market retains its upward trend even as the market is affected by the expansion of mobile services. As many subscribers cannot afford mobile services, the alternatives offered by a fixed line, particularly fixed wireless, enables more Peruvians to gain access to telecoms services.

This has seen the market continue to rise despite a tendency across the region for declining demand for fixed-line services. Although some fixed-line markets have seen slow declines, the interest in broadband services continues to grow, helping to maintain the market to some extent. Increasingly, bundled services are important for driving up broadband subscriptions, encouraging subscribers to spend more on the services they use. Telef??nica del Per?? (TdP) continues to report strong growth for its pay-TV services also, adding a further option for subscribers.

Peru fell one place in our Business Environment Rankings in Q409 displaced by Colombia's stronger showing. The market's continually falling ARPU impacted its ability to retain its position in the middle of the table and saw Colombia overtake it for the first time in several quarters. Peru's continued growth had held its position firmly in the centre of the table, but slower forecast expansion of the market and seeing the country as one of the few to record a decrease to its Country Risk score brought it down to eighth place. While Peru remains one of the few markets with considerable growth potential remaining, operators have lowered prices heavily in order to drive this growth and are therefore experiencing the effects on their results. New competition should spur further market growth and help Peru climb back up in the rankings.