The Peruvian telecom market

The Peruvian telecom market of 26 Proyecto WiMax TISel: plan de negocios Informe final. Setiembre 2007 de 26 Lima, November 20st 2008 Investor presentation

Agenda
The Peruvian telecom market
Economic overview
Industry overview
Trends
of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

Consistently stable growth Economic overview Source: World Bank, IMF, Central Banks Peru vs. Latin America. Key economic indicators 2005-2007 +6,6% +5,9% of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008 2005-2007 2007 GDP real growth (%) Inflation (%) LatAm 2005-07 avg

Crecimiento consistente de las inversiones Desarrollos recientes Perú. Inversiones 2002-2007e (US$m, % sobre PBI) Fuente: BCRP, MEF Impulso especialmente fuerte en los últimos 2 años TCC 1 : +17% 1 Tasa de crecimiento anual compuesta (TCC %) para el período of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

Agenda
Economic overview
Industry overview
Trends

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 Densidad de 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 servicio 2005-2008e (US$m, % TCC) Mercado telecom Perú US$ 3 835m (2,9% de PBI) 2 046 Indicadores operativos 2T08 Ingresos totales 2008e del mercado telecom Perú 2005 2008e of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

Crecimiento consistente de las inversiones telecom Desarrollos recientes Perú. Inversiones telecom 2002-2006 (US$m, % sobre ingresos telecom) Fuente: Osiptel, BCRP, estimaciones propias Superior a estándar A. Latina: ~12-15% TCC: +15% 1 Tasa de crecimiento anual compuesta (TCC %) para el período of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

Market concentration Industry overview Peru & Latin America. Market share, by telecom service 2007 (%) Source: TIS Latin America Broadband Pay TV TEF TMX / AMX Other of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008 Fixed Mobile

Consistent growth , but still room for further expansion Industry overview Source: TIS Latin America Peru vs. Latin America. 2007 Peru & Latin America (% of GDP) of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008 Penetration (%) Average LatAm 69% 15% 2,6% 6,4%

Competition
Pricing deregulation in LD (Automatic subscriber segment).
Mobile operator obligations for number portability
c. Revision of interconnection charges (capacity charge).
New maximum pricing for leased lines (going into effect).
Changes in the Quality Rules Manual (new indicators and administrative sanctions have been included).
Infrastructure expansion: coordination with local governments to simplify administrative activities.
Policy changes driven by the Peru-US FTA: infrastructure sharing, LLU, interconnection among others
Minimize number of regulated services (“desclasificaci ón”)
Voice over IP
of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008 Regulation agenda (1 of 2) Industry overview

Universal access
Promote the development of a national backbone and broadband services.
Promote technological innovation
Payment of fees (“canon”) and contribution to FITEL according to minimized classification of services
Obligations to the Emergency Communications System .
of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008 Regulation agenda (2 of 2) Industry overview

Agenda
Economic overview
Industry overview
Trends

In 2010, la mayoría de los operadores globales habrá concluido su migración hacia un mundo de convergencia. Trends Convergence technology, regulatory, commercial: everything over IP Source: Pyramid Research of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

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

Convergence strategies. Mobile telephony in LA Trends TEF y AMX (11 countries) Only TEF (2 contries) Only AMX (2 countries) None (2 countries) Source: TIS Latin America Deployment of 3G networks Revenue from “data” representing approx 14% of total Revenue from “data” representing approx 12% of total of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

Convergence strategies. Fixed telephony in LA Trends 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 of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

Convergence strategies. Mobile telephony in Peru Trends Fuente: www.movistar.com.pe ; www.claro.com.pe Voice Time Now What comes next? Texting Smartphone devices Broadband mobile of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

Convergence strategies. Fixed telephony in Peru Trends Fuente: www.telefonica.com.pe ; www.telmex.com.pe Voice Time Now What comes next? Broadband Convergence in services Convergence tecnologhy of 18 The Peruvian telecom markets in the Latin American context: a “glocal” perspective. Investor presentation. Lima, October 10th 2008

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

The Peruvian telecom market

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The Peruvian telecom market — Presentation Transcript