Peru's Mobile Telephony to Surpass US$2.7 Billion in Revenues by 2013

Peru's Private Investment Promotion Agency (Proinversión) plans to auction off 821 - 824 MHz and 866 - 869 MHZ radio-electric spectrum for Lima and Callao along with 25 MHz on C-band (1.900 MHz) nationwide. This bidding process is designed to increase the level of competition in the local marketplace as well as expand the availability of mobile coverage in the country.

"Any new mobile operator making its entrance into the Peruvian market will be faced with a variety of difficulties. The most important among these are an estimated 70% mobile telephony penetration rate (by the end of 2008) and the low level of personal income of a large part of the local population. First of all, a potential new operator not only would have to compete against well known brand names like Claro, Movistar and Nextel. It would also have to deploy a network in a rural areas having irregular topography that would increase infrastructure costs in regions having very low levels of disposable income. This means it would take longer to achieve a positive return on the investments made," comments José F. Otero, President of Signals Telecom Consulting and author of a report on the market.

A new competitor like the Brazilian operator Oi might consider getting in to the Peruvian mobile marketplace via an MVNO type plan. "Signals believes that the Peruvian Government could propose a business model that would guarantee new operators preferential roaming prices on the networks of already established operators while they complete the deployment of their networks. This would accelerate the market entrance process for said new operators. Moreover, by approving a MVNO type plan, this could increase competition for specific markets niche areas while offering additional revenues sources to operators working in the local market," adds Otero.

The report also notes that although the deployment of UMTS/HSPA by Claro Peru has initially been focused on broadband wireless connection services, the proliferation of 3G networks is expected to invigorate local VAS offerings. Also, upcoming UMTS/HSPA (Movistar) and CDMA2000 EV-DO (Nextel Peru) launches will be followed by 3G publicity campaigns that will emphasize topics like coverage, service price, handset costs and the variety of multimedia applications supported by these new networks.

While Peru lacks an extensive VAS offering, adult content does show some interesting developments. The services offerings of operators, integrators and companies working exclusively in the adult industry are available in this market. Thus, competition among all local mobile operators in this segment is robust.

Peru has also yet to define its Terrestrial Digital TV (TDT) norm. This will delay the development of mobile TV. Lacking said definition, it is not known what the scale of technologically compatible handsets available will be or which handset models will be authorized for use by the Peruvian Government.

Posted to the site on 14th October 2008