Peru: A mobile market set for growth - Prepaid MVNO

FEATURE REPORT
Peru’s wireless market – dominated by Movistar and Claro – may
not be the most dynamic, but it may present new opportunities as the
country works to increase broadband penetration, expand 3G services
and data consumption.
Dominated by the two largest Latin
American telecom operators, Peru’s
wireless market still holds promise. As
observers have noted, there is room to
grow in Peru as mobile penetration is at
96%, 2G services accounts for 91% of the
total market and 76% of mobile lines are
via prepaid. Evolving technologies and
more carrier competition are potential
drivers of new opportunities.
Analysts noted that while Peru is currently
home to three established carriers
– Telefónica’s Movistar, América Móvil’s
Claro and NII Holdings’ Nextel – the
country lacks the depth of competition of
some markets such as Brazil.
“Two operators pretty much hold the
market, and the operators are in a very
comfortable competitive position. It is
not a dynamic market, nor is there high
competition,” said Daniele Tricarico, analyst
at Pyramid Research.
More activity is expected in the future.
In the mobile space, Vietnamese mobile
network operator Viettel Group recently
was awarded spectrum licenses and announced
the launch of technical operations
and trial services. Some niche companies
have also entered the market, such
as Olo, which is offering mobile Internet
services using WiMAX technology.
Despite the challenges, Tricarico noted
Peru is a growth market and is far from
saturated. Peru has also been going
through a period of robust economic
growth, which should spell opportunity
for the mobile space.
“There are opportunities for data services,
for both fixed and mobile broadband
providers mostly in the corporate
segment, and there are good opportunities
for mobile providers to offer broadband,
even Wi-Fi,” Tricarico said.
Although some analysts count Peru’s
mobile lines at 29 million, the latest official
data from Peru’s regulatory agency,
Osiptel, states that the country had
just over 34 million wireless customers
in mid-2012. Of those, Movistar counted
Peru snapshot
Mobile telephony penetration: 96%
2G : 91% of total connections
3G: 4% of total connections
Prepaid: 76% of total connections
Postpaid: 24% of total connections
Carrier market share:
Movistar: 51.5%
Claro: 43.2%
Nextel: 5.3%
Source: Informa Telecoms & Media/Q312
20.8 million customers, Claro served 11.9
million subscribers and Nextel’s customer
base numbered just over 1.3 million.
According to an Informa Telecoms &
Media report, Movistar led the Peruvian
telecom market with a 51.5% market
share in the third quarter of 2012. Claro
followed with 43.2% of the market and
Nextel with 5.3%.
Although still leading, Movistar has
lost some of its market share. In 2010,
Telefónica’s unit in Peru controlled
about 54% of the market, with Claro
having grown its share from 41% in
2010. Nextel’s share of the market has
remained stable.
Elia San Miguel, principal analyst with
Gartner Research, believes that Movistar
will keep its leadership and make more
aggressive moves following the unification
of its fixed and mobile operations.
“Peru is a very concentrated market, with
Movistar and Claro leading not only in mobile
lines but also in fixed telephony and
pay-TV services,” said Sebastián Menutti,
analyst at Signals Telecom Consulting.
Although Nextel is a niche player focused
on the corporate market, by deploying
its 3G network, the carrier is
expanding its reach, noted Menutti. He
also highlighted that Nextel’s average
revenue per user is almost double that of
Movistar and Claro.