Thursday, September 29, 2022

Peru telecom investments to bounce back in 2021

Peru telecom investments to bounce back in 2021

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 offer accessible data plans to attract and retain customers amid the crisis.

As such, some companies report that “Data traffic on mobile networks grew 36% in August compared to February, before social isolation measures were implemented.”

Therefore, traffic via applications such as Zoom and Skype grew 5,938%, while Tik Tok witnessed 266% growth, Netflix use increased 199% and internet and mobile gaming was up 193%.

Despite this growth, deputy telecoms minister Virginia Nakagawa said that the health crisis has exposed the digital divide that persists not only in Peru, but in other countries as well.

“The current situation clearly shows how much remains to be done, which is a challenge that the MTC has been facing through its projects,” according to Nakagawa.

Telecom investments in Peru grew by 172% between 2000 and 2019, reaching 4.53bn soles (US$1.28bn) last year, the ministry reported.

The Entel Perú’s mobile strategic plan for this year, according to the telco, is focused on combining businesses in Peru, expanding the offer of fixed network services to homes, and providing connectivity services for companies.

Meanwhile, demand for connectivity and digitization in a country still marked by a strong digital divide has kept telecom operators ticking over.