Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
The Peruvian telecommunications market has shown significant growth during the last few years. Peru’s economy is in the developing stage, leveraging international and local investments from companies in all industries for geographic expansion and automation. Peru’s GDP growth has been in the 6% to 9% range for the last three years, due, to a great extent, to a rise in private investment, especially in the minerals and metals sector, which accounts for more than 60% of Peru’s total exports.
As for telecommunication services, the country had 3.7 million fixed telephony lines in 2011 as well as 32.5 million mobile lines and 9.2 million Internet users.
In 2011, the number of mobile lines in Peru increased 11% achieving a mobile penetration rate of 109%. Prepaid mobile lines represented 83% of this line base, according to telecom regulator Osiptel.
In spite of the apparently high mobile penetration, the Peruvian market is far from saturated; the challenge for mobile operators is to increase average revenue per line, and the best way to do this is to increase the installed base of postpaid subscribers and the wallet share among them.
The high price of postpaid subscription plans is the main reason for the dominance of prepaid lines in Peru. However, as Peruvians gain more buying power, owing to the overall improvement of local and regional economies, a significant number of clients are migrating from prepaid to postpaid plans. Consequently, postpaid lines grew 39% during 2011. Alternative price plans and a wide variety of more flexible bundles, such as bundling voice and data services with attractive discounts, are expected to drive postpaid line growth, thus intensifying the competition among operators in Peru.
>>> Be sure not to miss RCR Wireless News’ latest feature report about Peru’s emerging mobile market
The main telecom groups in Latin America have a presence in Peru: América Móvil (under the Claro brand), Telefónica S.A. (Movistar brand) and NII Holdings (Nextel brand). Telefónica S.A. is the fixed telephony incumbent, and faces competition from América Móvil and other local competitors in this market. In the mobile market, Telefónica S.A. is also the leader, followed by América Móvil. However, it is important to mention that Peru was the first country where Nextel launched a 3G network to compete with the other mobile carriers—an interesting case to watch.
Expanding 3G network coverage and improving quality of services are key challenges for Peruvian mobile operators, since these changes will open the gate to new and advanced applications and services as well as multiplying higher revenue options. Despite the challenges related to income inequality and population distribution in the country with many remotely located communities, the adoption rate of new technologies is increasing along with per capita GDP, which is resulting in greater disposable income that can be spent on non-essential mobile and telecom services, and therefore increasing investment in convergent telecommunications and IT services.
During 2013 and in the years to come, the Peruvian telecommunications services market is poised for significant growth and market sophistication, which are the main reasons why Frost & Sullivan has decided to include Peru in its strategic studies which monitor the development and performance of the most important Latin American markets, namely Argentina, Brazil, Colombia, Mexico, Chile and now Peru.
