The Peruvian telecom market

1 of 26Proyecto WiMax TISel: plan de negociosInforme final. Setiembre 2007 1 de 26

The Peruvian telecom market

Lima, November 20st 2008

Investor presentation

Agenda

•The Peruvian telecom market• Economic overview• Industry overview• Trends

2 of 18The Peruvian telecom markets in the Latin American context: a “glocal” perspective.Investor presentation. Lima, October 10th 2008

0%

5%

10%

15%

20%

Per

Ecu

Pan

Chi

Méx Esa

Bra

Col

Bol

Uru

Hon

Gua Pa

r

Arg

Nic

Cos

Ven

0%

2%

4%

6%

8%

10%

12%

Ven

Pan

Arg Per

Cos

Uru

Hon

Col

Chi

Gua

Par

Bol

Bra Nic

ESv

Ecu

Mex

Consistently stable growthEconomic overview

Source: World Bank, IMF, Central Banks

Peru vs. Latin America. Key economic indicators 2005-2007

+6,6%

+5,9%


2005-2007

2007

GDP real growth (%)

Inflation (%)

LatAm 2005-07 avg

Crecimiento consistente de las inversionesDesarrollos recientes

23%

20%

18%18%18%18%

0

5 000

10 000

15 000

20 000

25 000

2002 2003 2004 2005 2006 2007e

10%

15%

20%

25%

US$ miles m % sobre PBI

Perú. Inversiones 2002-2007e (US$m, % sobre

PBI)

Fuente: BCRP, MEF

Impulso especialmente fuerte en los

últimos 2 años

TCC1: +17%

1 Tasa de crecimiento anual compuesta (TCC %) para el período


Agenda



199

178

299

231

239

515

127

106

129

185

823

256

504

129

64Otros

TV paga

Datos &

internet corp

Internet

masivo

Larga

distancia

Telf móvil

Telf pública

Telf fija

Fuente: SIT A. Latina

13%

6%

6%

53%

8%

5%

4%

5%

10%

7 x cada mil hab.

84 min/mes

66%

3%

n.a.

n.a.

3%

2,7m líneas

184 mil líneas

1 542 m min

18,2 m líneas

797 mil suscriptores

16,9 mil enlaces

n.a.

861 mil suscriptores

Densidadde

mercado

Magnitud operativa

1%

-3%

9%

44%

40%

23%

32%

20%

TCC % 05-08

% del total

Consistent growth, mobile and broadband services drive growth

Industry overview

Ingresos por servicio2005-2008e (US$m, %

TCC)

Mercado telecom PerúUS$ 3 835m

(2,9% de PBI)

2 046

Indicadores operativos 2T08

Ingresos totales 2008e del mercado telecom Perú

2005

2008e


Crecimiento consistente de las inversiones telecom

Desarrollos recientes

17%17%

15%

17%15%

0

100

200

300

400

500

2002 2003 2004 2005 2006

5%

10%

15%

20%

Inversiones telecom I / ing telecom (%)

Perú. Inversiones telecom 2002-2006 (US$m, % sobre

ingresos telecom)

Fuente: Osiptel, BCRP, estimaciones propias

Superiora estándarA. Latina:

~12-15%

TCC: +15%

1 Tasa de crecimiento anual compuesta (TCC %) para el período


26%

98%22%

51%

1%1%

L atAm P eru

26%

99%26%

48%

0,3%0,4%

L atAm P eru

28%

61%

39%

36%33%3%

L atAm P eru

5%

82%

15%

4%

80%

13%

L atAm P eru

Market concentrationIndustry overview

Peru & Latin America. Market share, by telecom service 2007 (%)

Source: TIS Latin America

Broadband Pay TV

TEF TMX / AMX Other


Fixed Mobile

0%

2%

4%

6%

8%

2,000 8,000 14,000

Per capita GDP (US$ PPP)

% o

f GDP

Bra

Ven

Per (3%)

Col

LA 4%Mex

ChiCentralAm

Par

Ecu

Arg

Bol

Uru

Consistent growth, but still room for further expansion

Industry overview


Peru vs. Latin America. 2007

Peru & Latin America (% of

GDP)


10%3%2%

56%

Fixed Mobile Broadband Pay TV

Penetration (%)

Average LatAm

69%

15% 2,6

%6,4%

1. Competition

a.Pricing deregulation in LD (Automatic subscriber segment).

b.Mobile operator obligations for number portability

c. Revision of interconnection charges (capacity charge).

d.New maximum pricing for leased lines (going into effect).

e.Changes in the Quality Rules Manual (new indicators and administrative sanctions have been included).

f. Infrastructure expansion: coordination with local governments to simplify administrative activities.

g.Policy changes driven by the Peru-US FTA: infrastructure sharing, LLU, interconnection among others

h.Minimize number of regulated services (“desclasificación”)

i. Voice over IP


Regulation agenda (1 of 2)Industry overview

1. Universal access

a. Promote the development of a national backbone and broadband services.

b. Promote technological innovation

c. Payment of fees (“canon”) and contribution to FITEL according to minimized classification of services

d. Obligations to the Emergency Communications System.


Regulation agenda (2 of 2)Industry overview

Agenda



In 2010, la mayoría de los operadores globaleshabrá concluido su migración hacia un mundo de convergencia.

TrendsConvergence technology, regulatory, commercial:

everything over IP

Source: Pyramid Research


Key takeaways


Trends

Convergence strategies. Mobile telephony in LATrends

TEF y AMX (11 countries)

Only TEF (2 contries)

Only AMX (2 countries)

None (2 countries)


Deployment of 3G networks

Revenue from “data” representing approx 14% of totalRevenue from “data” representing approx 12% of total


Convergence strategies. Fixed telephony in LATrends

Fuente: SIT América Latina, análisis propio

TEF y TMX (8 countries)

Only TEF (0 countries)

Only TMX (1 country)

None (8 countries)

Convergence in services, Telefónica and Telmex drive competition

Triple play package

Triple play package


Convergence strategies. Mobile telephony in PeruTrends

Fuente: www.movistar.com.pe; www.claro.com.pe

Voice

Time

Now What comes next?

Texting

Smartphone devices

Broadband mobile


http://www.movistar.com.pe/

http://www.claro.com.pe/

Convergence strategies. Fixed telephony in PeruTrends

Fuente: www.telefonica.com.pe; www.telmex.com.pe

Voice

Time

Now What comes next?

Broadband

Convergence in

services

Convergence

tecnologhy


http://www.telefonica.com.pe/

http://www.telmex.com.pe/

Key takeaways• The last few years have been quite favorable for the economy and the telecom

sector in Peru.

• Service coverage and penetration rates have grown considerably and in a sustained manner. This is reflected in revenues. The highest growth services are broadband and mobile telephony, in that order.

• Despite the growth of recent years, the penetration rates in Peru are still low, resulting in a high degree of inequality, particularly between Lima and the rest of the country.

• Strong growth in the industry is foreseen over the next few years due to sustained economic growth of the country, technological convergence (giving rise to disruptive services: VoIP), and government policy promoting universal access and competition.

• Such growth will come through convergent business models developed by operators and promoted by the government.

• The arrival of these business models under the umbrella of a national broadband development model will contribute to the reduction of the digital gap in Peru, thus bringing about further development of the country.

Industry overview


Business

The Peruvian telecom market