Boston, MA -- (ReleaseWire) -- 03/10/2014 -- The outlook for the Peruvian telecoms market improved again this quarter, following the first launch of 4G services by Movistar in January 2014. While we expect take up to be limited at first, the deployment of the technology demonstrates a strong step forward for the market. Uptake in 4G would benefit from stronger competition from Claro and Entel (Nextel), but neither is expected to launch until late 2014. There continue to be high levels of postpaid growth among mobile subscriptions, accounting for 31.9% of the market in Q313, one of the highest rates in the region. This demonstrates a demand for highervalue services among Peruvians, which should allow operators to continue growing their revenues as the market approaches 100% penetration.
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Positive developments occurred in the broadband sector as well, with the government granting a contract to TV Azteca for the installation of the fibre optic backbone network. This should create additional competition, and we have updated our broadband forecasts this quarter as a result.
- Another strong quarter of growth for Movistar's postpaid subscriber base has further improved the outlook for growth in the market. Postpaid accounts for 31.9% of subscriptions, one of the highest rates in the region.
- Movistar's smartphone base reached 1.6mn, representing a penetration rate of around 11% of its mobile customers and is growing strongly.
- The fixed-line market is continuing to decline, with lines in service declining 7.6% in 2012 to 2.725mn. BMI continues to predict a decline in subscriptions, as demand for mobile becomes ever greater.
Key Trends And Developments
Movistar Peru plans to invest more than US$250mn developing and expanding its LTE network in Peru during the next five years, and was to roll out its LTE services commercially on January 2. Initially, the offer will be available in seven districts of the Lima region: Cercado de Lima, San Miguel, Surco, San Borja, Miraflores, San Isidro and La Molina. Movistar also announced its 4G tariff plan offering, which comprises packages with tariffs varying between PEN99.9 (US$35.5) and PEN319.9 (US$113.7) a month.
Mexican-based broadcaster TV Azteca has been awarded a contract by the Peruvian government to build and operate a nationwide fibre optic network, covering around 80% of the country's territory. TV Azteca will start the deployment of the fibre optic backbone network (RDFO) project at the beginning of 2014 and it is expected to be completed within two years, costing the government an estimated US$760mn over 20 years. BMI highlights TV Azteca's growing presence in the Latin American region and believes the company has significant upside potential with its ability to provide media content through an over-the-top IPTV platform.
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