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Telecommunications as a tool for

development and social inclusion


Telecommunication Projects for Regions of Per
Technical Secretariat of FITEL
FONDO DE INVERSIN EN TELECOMUNICACIONES
FUND FOR INVESTMENTS IN TELECOMMUNICATIONS
FITEL
2
Economic and
Political
environment
4
Broadband projects
3
Telecommunications
market environment
5
Conclusions: Why investing in Peru?
ndice
1
Introduction: FITEL
FONDO DE INVERSIN EN TELECOMUNICACIONES
Introduction
FITEL
FITEL
lmontes@mtc.gob.pe
www.fitel.gob.pe
MISSION
Promote access to and use
of telecommunications
services in rural areas and
places of social interest
VISION
To achieve Country
connectivity by means of
high quality
telecommunications
services and articulating
sustainability
FITEL
Projects formulation and
financing for the provision of
telecommunications
services in rural areas or in
places of social interest
Promote and coordinate
strategic partnerships with
the private and public sectors
to ensure sustainability of
telecommunication projects
OBJECTIVES
FONDO DE INVERSIN EN TELECOMUNICACIONES
Economic an political
environment
Stability and business climate
Peru: economic growth (recent) high and stable
Growth and stability (I)
A. Central
Ecuador
Argentina
Bolivia
Brasil
Chile
Colombia
Mxico
Paraguay
Per
Uruguay
A. Latina
0%
2%
4%
6%
8%
10%
2% 3% 4% 5% 6% 7%
A
v
e
r
a
g
e
I
n
f
l
a
t
i
o
n
(
%
)
High and
stable
Low and
stable
Low and
unstable
High and
unstable
During the period 2004-2013
Peru has grown at 6.6%, above the
average for Latin America at 4.9%
Peru had an average inflation of 2.9%,
lower than the South American
average of 5.4%
ACGR GDP % 2004-2013
Annual compound growth rate of GDP (%) vs. Inflation (%)
Peru 2004 -2013
Source: BCR, FMI, BM
FONDO DE INVERSIN EN TELECOMUNICACIONES
ACGR: Annual compound growth rate
Peru: economic growth (future) high and stable too
Growth and stability (II)
Real GDP. Peru 2014-2019
(annual growth,%)
Peru average 2014-2019
4%
6%
Latin America average 2014-2019
Inflation. Peru 2014-2019
(average annual change,%)
Peru average 2014-2019
4%
2%
Latin America average 2014-2019
4.4%
6% 6% 6% 6% 6%
3,6%
4%
4%
4% 4% 4%
2014 2015 2016 2017 2018 2019
Per A. Latina
2%
2%
2% 2% 2% 2%
4%
4%
4%
4%
4% 4%
2014 2015 2016 2017 2018 2019
Per A. Latina
Source: BCRP, FMI, FITEL
FONDO DE INVERSIN EN TELECOMUNICACIONES
Peru: attractive country for investment
Investment grade
Grado de
inversin
Pases
Grado de
inversin
Pases
Grado de
inversin
Pases
Aaa AAA AAA
Aa1 AA+ AA+
Aa2 AA AA
Aa3 Chi l e AA- AA-
A1 A+ Chi l e A+ Chi l e
A2 A A
A3 Per A- A-
Baa1 BBB+ Per BBB+ Per
Baa2 Brasi l , Col ombi a BBB Col ombi a BBB Col ombi a
Baa3 Uruguay BBB- Brasi l , Uruguay BBB- Brasi l , Uruguay
Ba1 BB+ BB+
Ba2 Paraguay BB Bol i vi a, Paraguay BB
Ba3 Bol i vi a BB- BB- Bol i vi a, Paraguay
B1 B+ B+
B2 B Ecuador B Venezuel a
B3 B- Venezuel a B- Ecuador
Caa1 Venezuel a C+ C+
Caa2 Ecuador C C
Caa3 CCC+ C-
Sin calificacin Argenti na Sin calificacin Argenti na Sin calificacin Argenti na
Moodys S&P Fitch
Countries above the line have investment grade
Source: Moodys, S&P, Fitch
C
o
u
n
t
r
i
e
s
w
h
i
c
h
h
a
v
e
i
n
v
e
s
t
m
e
n
t
g
r
a
d
e
Chile
FONDO DE INVERSIN EN TELECOMUNICACIONES
Economic an political
environment
Political - Regulatory
Widespread and increasing access, use and population ownership of broadband
Source: Own analysis
Law 29904
"Law for the Promotion of Broadband and
Construction of the National Fiber Optic
Backbone (RDNFO) and its Regulations
Deployment of Optical Fiber Infrastructure
RDNFO and Regional Projects
Network Neutrality
Freedomto use
Foster E-Government
ICT connection between the state and citizens
Foster the creation of contents, applications and
digital skills training
Focused in areas as education, health, security
Impulse to the National Network of State (REDNACE)
More
- National Plan for E-Government / e-Inclusion Plan
- The Peruvian Digital Agenda
Districts-localities
Regions
Per
Provinces
Broadband policy
FONDO DE INVERSIN EN TELECOMUNICACIONES
Favorable regulatory and political environment
Regulatory Legal framework
Measures to promote private investment in
infrastructure; removes barriers to carry it out
There are signed agreements with Regional
Presidents which undertake to facilitate
procedures.
Agreements with each of the regional
governments to ensure payment for services to be
provided to Local Schools and Health facilities will
be signed
Agreements with power companies for use of
their infrastructure
Law30228
Agreements
Law for the
expansion of
telecommunications
infrastructure
Agreements with
key stakeholderss
FONDO DE INVERSIN EN TELECOMUNICACIONES
Market environment
Internet Business
Performance
Fixed Internet market of Peru: level of development "emergent"
Market: Internet Business Performance
Paraguay
Ecuador
Uruguay
Colombia
Per
18%
A. Central
Brasil
Venezuela
Argentina
Bolivia Mxico
Chile
A. Latina
18%
0%
10%
20%
30%
40%
50%
60%
70%
0% 5% 10% 15% 20% 25%
A
v
e
r
a
g
e
g
r
o
w
t
h
2
0
0
9
-
2
0
1
3

(
%
)
Fixed Internet Penetration (%)
Explosive Emergent
Incipient Mature
A. Central
Argentina
Bolivia
Brasil
Chile
Colombia
Ecuador
Mxico
Paraguay
Per
5%
Uruguay
Venezuela
A. Latina
9%
0%
5%
10%
15%
20%
25%
0 5.000 10.000 15.000 20.000 25.000
F
i
x
e
d
I
n
t
e
r
n
e
t

P
e
n
e
t
r
a
t
i
o
n
(
%
)
GDP per capita (US$)
GDP per capita vs. Fixed Internet penetration (%).
Peru 2013
Internet penetration (%) vs. average growth (%)
Peru 2009 -2013
Source: UIT, MTC, FMI
FONDO DE INVERSIN EN TELECOMUNICACIONES
1
Penetration: measured by the number of subscriptions to fixed Internet service on the total population
2
Growth: average growth rate of ubscriptions to Internet service from 2009 to 2013
Internet access per household: gaps for growing in rural areas A great
opportunity! , A lot of work to do!
Market: Business Performance by area
Households with at least one PC.
Peru 2012
Source: Statistics National Institute (INEI)
Households with fixed internet connection. 2012
In rural areas 95% of households
do not have PC
35%
19%
2%
20%
65%
81%
98%
80%
Lima
Metropolitana
Resto urbano Rural Per
In rural areas there is a gap of
98% of households without
Internet service
Households with
PC
Households
without PC
46%
33%
5%
29%
54%
67%
95%
71%
Lima
Metropolitana
Resto Urbano Rural Per
Households with
Internet connection
Households without
Internet connection
FONDO DE INVERSIN EN TELECOMUNICACIONES
Telecommunications market
environment
Consumption pattern
Peru fixed Internet market: development level "emergent"
Market: Data consumption pattern
Average Internet speed (Mbps). Peru 2009-2013
Source: Akamai, OSIPTEL, FMI, Telecom operators
Argentina
Brasil
Chile
Colombia
Mxico
Per
2.4
Promedio
3.1%
2
2,5
3
3,5
4
4,5
10.000 12.000 14.000 16.000 18.000 20.000
A
v
e
r
a
g
e
s
p
e
e
d
(
M
b
p
s
)
GDP per capita (US$)
GDP per capita (USD) vs. Average Internet Speed (Mbps).
Peru 2013
0,9
1,3 1,3
1,8
2,4
2009 2010 2011 2012 2013
32
31 31 31
2010 2011 2012 2013
27%
Internet ARPU (US$/conecction/month).
Per 2010-2013
Average annual growth 2009-2010
FONDO DE INVERSIN EN TELECOMUNICACIONES
Telecommunications Market
environment
Existing gap and growth
opportunity
To promote the development of telecommunications infrastructure nationwide
Broadband Divide and opportunities
Opportunity:
Investment
Business
Internet
subscribers
(thousands):
1,600
Fixed internet penetration
1
per Region.
Per 2013
Internet
Per
5%
Penetration
Source: MTC, OSIPTEL
FONDO DE INVERSIN EN TELECOMUNICACIONES
1
Penetration: measured by the number of subscriptions to fixed internet service over the
total population. Figures from the Ministry of Transport and Communications - MTC
Impact of the Internet on economic growth. Countries with the highest
penetration level has a greater impact
Broadband Divide and opportunities
Source: Katz (2011)
FONDO DE INVERSIN EN TELECOMUNICACIONES
I
m
p
a
c
t

o
f

B
r
o
a
d
b
a
n
d

o
n

G
D
P

g
r
o
w
t
h
Broadband penetration 2011
Broadband Projects
National Fiber Optic Backbone -
RDNFO
Source: MTC, FITEL, PROINVERSIN
State Vision:
Expanding high-capacity network
Details of RDNFO:
Kilometers of Fiber Optic: 13,500 Km
Investment amount: USD 333 Millones
Buena Pro granted: December 23, 2013
- Contractor/Operator:
AZTECA COMUNICACIONES
- Contract signed: june 17, 2014
- Termconcession: 20 years
Start of installations: December 2014
End of installations of RDNFO: June 2016
National Fiber Optic Backbone- RDNFO
FONDO DE INVERSIN EN TELECOMUNICACIONES
Broadband projects
FITEL's Projects for Regions
For having transport and access communication networks of high
transmission capacity to contribute to the integral development of
the towns.
Integration of State (sectors of education, health, security), Local
Governments.
Deployment of ICT broadband high capacity applications and
services (e-government, tele-health, tele-education, etc.)
To promote the development of telecommunications infrastructure nationwide
Objectives of the Projects for Regions (I)
FONDO DE INVERSIN EN TELECOMUNICACIONES
Widespread and increasing access, use and population ownership of
broadband
Objectives of the Projects for Regions (II)
Deployment of a
Transport Optical Fiber
Network from
Provinces (Nodes of
RDNFO) to district capitals
of
Regions.
Deployment of a
Wireless Access Network
from district capitals to
provide connectivity to
rural areas of
regions.
Internet
Intranet
Infrastructure (Networks) Services and beneficiaries
Transport Access Services
Beneficiaries
:
Schools
Health facilities
Police stations
And other institutions and users
Regional Projects have three foundations: network, services and beneficiaries.
FONDO DE INVERSIN EN TELECOMUNICACIONES
Regional Projects: Regulation
Law 29904
"Law for the Promotion of Broadband and
Construction of the National Fiber Optic
Backbone (RDNFO)
Article 3 of Law : Declaration of public necessity and national interest
Declare of public necessity and national interest:
Building a National Optical Fiber Backbone that integrates all the capitals of the provinces and the deployment of high-
capacity networks that integrate all the districts in order to make possible the fixed and/or Mobile broadband
connectivity and aggregation across the country, in terms of competition.
i)Access to and use of the infrastructure associated with the provision of public services of electricity and hydrocarbons,
including collocation, and the use of the right of way of the national road network, in order to facilitate the deployment of
telecommunications networks required for the provision of fixed or mobile broadband.
Terms and definitions: (.) Transport networks of Regional networks are part of RDNFO
()
FONDO DE INVERSIN EN TELECOMUNICACIONES
Regional Projects: Legal Aspects
General Legal Requirements
License for being Telecommunication Operator in Per granted by the Ministry of
Transport and Communications is required for signing the Financing Contract. In
case of an operator which is new in Per or in case of a new consortium, if granted
with the buena pro, the License must be obtained for signing the Financing
Contract.
Share capital subscribed and paid-in minimum 25%
Not to be prevented by law or temporarily or permanently disabled in the
exercise of their rights to contract with the State. If consortium, applies to each
partner.
Experience in the provision of public telecommunications services.
FONDO DE INVERSIN EN TELECOMUNICACIONES
Regional Projects: Contract (I)
Financing
Contract
Object: a) Implementation of the transport network
and the access network of the project; b) Operation
and maintenance of the access network; c) Provide
access to internet and intranet to Beneficiaries
(Health, schools, police stations)
Duration: Inversion Period (Installations, testing), Transport and Access networks + Period of
Operation (Access network) = 11 years.(1 year + 10 years).
The operation of the transport network of all regional projects, will be performed by a single
operator which will be granted with a concession contract after another selection process.
FONDO DE INVERSIN EN TELECOMUNICACIONES
Regional Projects: Contract (II)
General aspects
Ownership of assets:
- Transport Network: State
- Access Network: State (Infrastructure of sites) and operator (Telecommunication
equipments). Refer to Technical Specifications and Contract.
Extension of the project, will require at most 20% of the amount awarded:
Access: new localities (during inversion period)
Transport: new districts (during inversion period)
Warranties: Advancement and Performance Bond
Obligations of the Operator: to comply with the execution of the awarded project; payment of
contributions to the special right to FITEL
Duration of contract:
Access network: Inversion Period (Installation and testing period) (1 year)* + Operation and
maintenance period (10 years)
Transport network: Inversion Period (Installation and testing period) (1 year)* + Trial period
(to 1 additional year). Refer to the Contract.
* The period of installation and testing of the project is one year for both networks, run in parallel.
FONDO DE INVERSIN EN TELECOMUNICACIONES
Regional Fiber Optic Networks with
districts connections
6.1
millions
1,516
district
capitals
6,633
localities
Districts connected
to the OF
beneficiary
localities
Beneficiary
Population
State
Insitutions
Educational (Schools)
6,979
Health
3,471
Police stations
566
21 Projects
Regional Projects: Dimension of the total scope
FONDO DE INVERSIN EN TELECOMUNICACIONES
Fiber Optic
Backbone (RDNFO)
Possibility of interconnection with operators in Lima or in any of the 180 capitals
of province where reaches the RDNFO
Possible Output to Internet from Lima, supported by transport Network of
RDNFO.
Deployment of the Transport Network
Regional Projects: Networks (I)
FONDO DE INVERSIN EN TELECOMUNICACIONES
HUANCAVELICA LAMBAYEQUE AYACUCHO APURIMAC
CONSORCIO ENERGETICO HUANCAVELICA PRIVADO 21.13
Proyecto Especial Olmos Tinajones PUBLICO 82.16
ELECTRO CENTRO S.A PUBLICO 125.32
ELECTRICIDAD DEL PERU ELECTROPERU S.A. PUBLICO
ELECTRO NOR OESTE S.A PUBLICO
HIDRANDINA PUBLICO
COMPAIA ENERGETICA VERACRUZ S.A.C. PUBLICO
ELECTROPERU S.A PUBLICO
RED DE ENERGA DEL PERU S.A PRIVADO
21.13 82.16 125.32 0
ELECTRO SUR MEDIO PRIVADO 240.85
ELECTRO CENTRO S.A PUBLICO 692.46 750.22
ELECTRO NORTE PUBLICO 416
ELECTRO SUR MEDIO PRIVADO 430.43
ELECTRO SUR ESTE PUBLICO 92.4 850
ELECTRONOROESTE - ENOSA PUBLICO
GOBIERNO NACIONAL PUBLICO
HIDRANDINA PUBLICO
933.31 416 1273.05 850 TOTAL RED DE MEDIA TENSIN
REDES ELECTRICAS
ALTA TENSIN
TOTAL RED DE ALTA TENSIN
MEDIA TENSIN
Electrical networks supporting Fiber Optic Cable
FONDO DE INVERSIN EN TELECOMUNICACIONES
Regional Fiber Optic
Project
Deployment of the Access Network
Regional Projects: Networks (II)
FONDO DE INVERSIN EN TELECOMUNICACIONES
Regional Projects: data rates
Description Data rate
Schools Type 3
Health Type 3
Police stations Type 3
other public entities and
households
Type 1
Data rate
(speeds)
Description by
type of
Institutions
40% of the rate contracted
by institutions in regional
projects will be ensured
Description
Downstream
Nominal
(Kbps)
Upstream
Nominal
(Kbps)
Guaranteed
(Kbps)
Assured
Downstream
(Kbps)
Assured
Upstream
(Kbps)
Type 1 In evaluation
Type 2 1,024 256 40% 410 102.4
Type 3 2,048 512 40% 819 204.8
Type 5 4,096 1,024 40% 1,638 409.6
Refer to technical
specifications
FONDO DE INVERSIN EN TELECOMUNICACIONES
Regional Broadband Projects
Currently 4 Projects
promotion
Regional Fiber Optic Network
connecting districts
765
Thousand
295
District
capitals
1,169
Localities
Districts connected
to the OF
Beneficiary
localities
Beneficiary
population
State
Institutions
Educational (Schools)
1,543
Health
759
Police stations
107
04 Projects
04 Regional Projects: Dimension of the scope
FONDO DE INVERSIN EN TELECOMUNICACIONES
Lambayeque Regional Project
District capitals with Optical Fiber: 35
Length of Optical Fiber: 567 Km
Beneficiary localities: 309
Beneficiary population: 320 thousand inhabitants
Beneficiary Institutions: 478
Access network: PEN 66 millions
Transport network: PEN 38 millions
FITEL total subsidy: PEN 109 millions
The project has been granted with the approved
environmental instrument: Environmental Impact
Statement (DIA) which means that the project do not
involve significant environmental and social impacts.
FONDO DE INVERSIN EN TELECOMUNICACIONES
P
r
o
m
o
t
i
o
n
Year Year Year
1 5 10
Total
Households 79111 81253 84012
Internet
Broadband 2,84% 5,85% 11,22%
Beneficiary
households 2247 4752 9422
Description
Huancavelica Regional Project
District capitals with Optical Fiber : 86
Length of Optical Fiber : 1,327 Km
Beneficiary localities: 308
Beneficiary population: 142 thousand inhabitants
Beneficiary Institutions: 658
Access network: PEN 79 millions
Transport network: PEN 76 millones
FITEL total subsidy: PEN 210 millones
The project has been granted with the approved
environmental instrument: Environmental Impact
Statement (DIA) which means that the project do not
involve significant environmental and social impacts.
FONDO DE INVERSIN EN TELECOMUNICACIONES
P
r
o
m
o
t
i
o
n
Description
Year Year Year
1 5 10
Total
Households 34607 35276 36131
Internet
Broadband 1,03% 2,97% 8,43%
Beneficiary
households 355 1047 3046
Apurimac Regional Project
District capitals with Optical Fiber : 73
Length of Optical Fiber : 1,409 Km
Beneficiary localities: 248
Beneficiary population: 119 thousand inhabitants
Beneficiary Institutions: 602
Access network: PEN 68 millions
Transport network: PEN 72 millions
FITEL total subsidy: PEN 185 millions
The project has been granted with the approved
environmental instrument: Environmental Impact
Statement (DIA) which means that the project do not
involve significant environmental and social impacts.
FONDO DE INVERSIN EN TELECOMUNICACIONES
P
r
o
m
o
t
i
o
n
Description
Year Year Year
1 5 10
Total
Households 26243 26464 26743
Internet
Broadband 1,45% 3,58% 8,84%
Beneficiary
households 381 946 2363
Ayacucho Regional Project
District capitals with Optical Fiber : 103
Length of Optical Fiber : 1,890 Km
Beneficiary localities: 304
Beneficiary population : 164 thousand inhabitants
Beneficiary Institutions: 671
Access network: PEN 86 millions
Transport network: PEN 95 millions
FITEL total subsidy: PEN 240 millions
The project has been granted with the approved
environmental instrument: Environmental Impact
Statement (DIA) which means that the project do not
involve significant environmental and social impacts.
FONDO DE INVERSIN EN TELECOMUNICACIONES
P
r
o
m
o
t
i
o
n
Description
Year Year Year
1 5 10
Total
Households 46304 48070 50372
Internet
Broadband 1,14% 3,26% 8,93%
Beneficiary
households 527 1568 4499
Regional Projects: Timeline
Period Description
2014 2015 2016
Jul Ago Sep Oct Nov Dic Ene Feb Mar Abr May Jun Jul Ago Sep Oct Nov Dic Ene Feb Mar Abr May Jun
P
R
O
M
O
T
I
O
N
Fitel instructs PROINVERSIN to carry out
public contests for granted regional projects to
operators
Preparation of 1st version of Bases
Preparation of 1
st
Version of Contract
Announcement and Publication of Bases
Publication of 1
st
Version of Contract
Reception and responses to questions
regarding the Bases
Reception of suggestions to the Contract
Reception of envelope Number1
Reception of envelopes Number 2 and 3
Aperture of envelope Number 3
Signing od Financing Contract
I
N
V
E
R
S
I
O
N
Engineering studies
Procurement
environmental impact studies
Agreements with power companies for use of
their infrastructure and the use of the right of
way of the national road network
Implementation of Transport and Access
networks
Commisioning
December
2015
December
2014
FONDO DE INVERSIN EN TELECOMUNICACIONES
Conclusions
Why investing in Per?
Key ideas
Summary Why investing in Peru?
Fixed broadband market in Peru: development level "emergent"
Fixed broadband penetration: emergent at the regional level due to the concentration of
telecommunications infrastructure on the coast
Potential data consumption growth (Mbps) with a stable ARPU
Structure of fixed broadband market: emerging operators as potential customers of the
regional operator
Market structure of Mobile Broadband: emerging operators as potential customers of the
regional operator
Economic
attractiveness for
investment in a
favorable environment
Business Opportunities
in wholesale and retail,
emerging segments
Per: high and stable economic growth
Investment grade: Peru, attractive country
Political and Regulatory Environment: Favorable
Economic and political environment
Market environment
FONDO DE INVERSIN EN TELECOMUNICACIONES
Fund for Investments in Telecommunicactions
Luis Montes Bazalar
Secretario Tcnico del FITEL
E-mail: lmontes@mtc.gob.pe
Fijo: (511) 6157815
www.fitel.gob.pe

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