Telefonica del Peru (TdP)

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Telefonica del Peru was created from the assets of Compania Peruana de Telefonos (CPT) and Empresa Nacional de Telecomunicaciones (Entel Peru). CPT, 19 percent owned by the Peruvian government, provided basic local phone services in Lima city and surrounding areas. Entel peru, a state-owned company, provided basic local phone services in provinces as well as national and international phone services in the whole country under exclusive basis. The privatization of CPT and Entel Peru began in February 1994 when a 35 percent stake in each company was jointly sold through competitive bidding for US$2,002 million to a consortium led by Telefonica Internacional, an international subsidiary of Telefonica de Espana. Of the winning bid, US$1,392 million was paid to the government for its stake in Pta nd Entel Peru, while US$610 million was paid to CPT as capital increase. CPT’s acquired capital was used to finance its investment program. At the close of 1994, CPT and Entel Peru merged into Telefonica del Peru (TdP). The Peruvian government maintained a 29 percent stake in TdP. In a second transaction, the Peruvian government sold a 26.65 percent stake in Telefonica del Peru for US$1,239 million through international and domestic public offerings of 1996. The domestic offering was made through “programa de participacion cuidadana”, a mass privatization program in Peru. Under the program, Peruvian citizens bought small share packages at market prices, but paid for them over three years. In a third transaction, the Peruvian government soled the remaining 2 percent stake in Telefonica del Peru for US$88.4 million through an international public offering of 1999. Telefonica del Peru received a 20-year concession that included a 5-year exclusivity period to operate basic local, national, and international phone services. In exchange, TdP committed to install new fixed lines and improve service. Specific project details for TdP’s fixed access (local and long distance) can be seen in the project description of “Telefonica del Peru”. The right to operation as granted by the Peruvian government in 1994 also included the right to one of the two bands to provide cellular phone services. Telefonica del Peru (TdP) operated as a fixed and mobile operator from the inception of its contract in 1994 until June 2001 when the parent company, Telefonica de Espana, separated the services. Consequentially, Telefonica del Peru was responsible for fixed access whereas the spin-off subsidiary Telefonica Moviles Peru was responsible for mobile telephone services. Telefonica Moviles agreed with other members of the Telefonica Group to exchange shares in the companies in order to complete the spin-off. Investment information for the combined operations (mobile and fixed services) is found below as a distinction between the investment programs before 2001 was not made. Investment information after 2001 reflects investment exclusively in the fixed line services. Competition in the Peruvian long distance market was expected to increase as a result of the 2003 law passed by the Peruvian telecommunications regutalor, OSPITEL. The passing of the 2003 law enabled multicarrier dial-up service for long distance services. On April 2005, the Peruvian government approved the takeover of BellSouth Corp by Telefonica del Peru upon the condition TdP returns one of its bandwidths within two years. 2010 capacity fixed line only (no broadband). CAPEX impossible to separate. Telefónica Latinoamérica provides Telefónica del Peru with management and technical support in exchange for management fees equivalent of 1% of Telefónica del Peru’s total revenues. 2005 investments were calculated as indicated in the CAPEX_Telefonica_Suggested.xls File.