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Telecoms operator growth boosts competition in Peru

Updated: Dec 24, 2022

The Peruvian telecommunications market has progressed considerably. Services are being expanded and a healthy level of competition is giving more choices to consumers. The future market development will partly depend on how well operators can monetize data services and raise the number of postpaid customers. More segmented offers will be key for operators to acquire and secure new customers.

The Peruvian telecommunications market has progressed considerably

Peru’s economic growth in recent years has spurred many changes to the country’s telecommunications sector. Traditional operators are being challenged by newcomers and preparing for the entrance of new low-cost players.

Meanwhile, private investment is being deployed into 4G network infrastructure across the country in response to the rising use of mobile data. Government plans to improve the reach of broadband through a new fiber-optic network are also helping to bring telecommunications services to the country’s more remote areas.

The Peruvian telecommunications market recorded total investments of 1.1bn soles in 1H21, year-on-year growth of 36.3%.

The spending of the Spanish multinational was up 13.5% over the same period in 2020. Telefónica del Perú was followed by Claro, part of Mexican group América Móvil, whose capex was 338mn soles in the period, an increase of 56.2%.

Among the four main players in the Peruvian telecom market, the one that most increased its investments in the period was Bitel, belonging to the Vietnamese group Viettel, which raised its spending by 98.3% to 76mn soles.

Chilean group Entel, in turn, invested 257mn soles through its Peruvian subsidiary, an increase of 47.5% year on year.

Telefónica leads the Peruvian mobile market, having ended the first half of the year with a 31.1% market share, followed by Claro (28.2%), Entel (21.4%), and Bitel (18.9%).

In Peru, Telefónica is also one of the leaders of the open Internet para Todos (internet for all) consortium, together with Facebook, CAF, and IDB.

The open-access wholesale rural mobile infrastructure project launched in 2019 is aimed at taking mobile broadband to remote populations where conventional telecom infrastructure deployment is not economically feasible.

Telefónica said it has connected 13,000 rural areas with internet for all so far this year, reaching 2.2mn people.

Among the companies that cut Capex were DirecTV, which was just sold by AT&T to Argentine Grupo Werthein, and Americatel, a B2B and corporate telecoms services subsidiary of Chile's Entel.

The telecoms industry has advanced in Peru and continues to grow at around 5-6%, while the country’s economy shrank by some 40% year-on-year in April.

The Peruvian telecoms market is among the most competitive in the region. Telefónica’s Movistar led the mobile market at end-2019, with a 33.4% share, followed by América Móvil’s Claro (29.7%), Entel (20.2%) and Viettel’s Bitel (16.7%).

However, telecom authorities expect a reduction in telecom expenditure this year due to the drop in carriers’ revenues because of the coronavirus.

The Peruvian government expects telecom operators to resume their investments in 2021, according to the country’s transport and telecommunications ministry (MTC).

“In the region, the telecom sector initially appears more exposed to potential COVID-19 impacts due to mobile prepaid exposure. However, the ongoing digital transformation, the continuous migration to high-value accesses, and achieved Capex efficiencies made us feel confident about the resilience and strength of our business,” chief financial & control officer Laura Abasolo said in the firm’s Q1 earnings call.

In addition, companies have been engaging in cost reduction programs while investing to improve their networks, according to the MTC, as well as offering accessible data plans to attract and retain customers amid the crisis.

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