Peru’s fixed-line teledensity is among the lowest in South America, at about 9.5%. Obstacles to fixed-line growth include widespread poverty, fixed-to-mobile substitution, expensive telephone services, and geographical inaccessibility in the rugged Andean mountains and lowland Amazon jungles. The Telecommunications Investment Fund FITEL provides subsidies for telecom services in rural areas and other places that are marginal for private providers. The government is addressing these shortcomings via ambitious investment plans to deploy telecom infrastructure and services in underserved areas. In 2015 two contracts were awarded to develop telecom services to four regions. The last of these contracts, undertaken in six stages, is expected to be awarded in June 2016, with most of the work to be complete by the end of 2017.

Trading as Movistar, Telefónica del Perú dominates the telephony market though its subscriber base has fallen in recent quarters. América Móvil’s Claro occupies a distant second place but its share is growing steadily, reaching 20% by mid-2015. Americatel Peru, a subsidiary of Entel Chile, is third with only about 1%.

Broadband subscriber penetration in Peru, at about 6%, is considerably lower than the Latin American average. In this sector the main problem is the lack of competition, which has made broadband in Peru one of the slowest and most expensive in the region. These difficulties are being addressed, and strong broadband growth is anticipated in coming years, feeding off the government’s national broadband project. In addition, the expanding LTE networks are providing mobile broadband to an increasing number of rural communities, as well as providing improved connectivity in urban areas.

Peru’s mobile penetration, approaching 110% in early 2016, is on a par with the regional average though this hides the fact that about a fifth of the population has no mobile phone at all, while many people especially urban dwellers have multiple mobile subscriptions. Four companies now compete in the mobile market: Movistar is the leading player with about 54% of the market, followed by Claro, Entel Perú and Viettel Peru, trading as Bitel. Bitel reported having signed up one million subscribers by the end of 2015, a year after launching services. Its extensive 3G network has been augmented by the launch of LTE services in late 2015. Market competition has also benefited from mobile number portability, which is hugely popular. During 2016 the anticipated entry of a number of MVNOs, including Virgin Mobile, will place further pressure on pricing and urge operators to improve their offerings.

Peruvian telecom regulator the Supervisory Agency for Private Investment in Telecommunications (Organismo Supervisor de Inversion Privada en Telecommuniciones, Osiptel) has approved the access contract signed by MVNO Virgin Mobile Peru with telecom operator Telefonica del Peru (Movistar). The agreement establishes the legal and economic conditions for the latter to open up its network to Virgin for its new MVNO service. The contract between the operators was signed on 15 October 2015 and amended on 2 February 2016, before being approved as part of the watchdog’s General Resolution No. 094-2016-GG. As previously reported by TeleGeography’s MVNO Monday, Virgin Mobile Latin America was formally granted a 20-year MVNO concession in December 2015, while Osiptel approved the final set of measures relating to the planned introduction of virtual operators on 24 January 2016.

Chilean telecoms group Entel has unveiled plans to raise CLP350 billion (USD511.4 million) through the issue of new shares. The group will hold an extraordinary shareholders meeting on 4 April to approve the capital increase. Whilst the company did not disclose how it intends to use the proceeds. The operator intends to strengthen the successful penetration strategy we are carrying out in Peru.

Key developments:
 Government signs contracts for four regional broadband projects as part of $1.16 billion fibre development program;
– Telefónica to invest $1.8 billion in infrastructure to 2016;
– Virgin Mobile Latin America aiming to set up as an MVNO by March 2016;
– Growth in mobile number portability stimulating competition;
– DirecTV launches LTE services;
– Government delays plans to auction 700MHz spectrum for LTE to early 2016;