Telefonica Moviles Peru

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Telefonica Moviles Peru was created in 2001 as a spin-off of Peruvian telecom operator Telefonica del Peru (TdP). 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 mobile services. As of 2003, Telefonica Moviles Peru provided nationwide service to an estimated 1.5 million customers and had 52 percent of the Peruvian mobile market. The group provided services under the brand name MoviStar. The ownership structure was composed of Telefonica Moviles (90.6 percent) and small shareholders (9.4 percent). Telefonica Moviles Peru encountered problems with the Peruvian government in 2003 as the government proposed to eliminate some subscriber fees and later declared Telefonica Moviles Peru’s rates as unconstitutional. The company responded by implementing a new tariff plan. In 2004 the sponsor Telefonica SA acquired the Latin American telecom assets of BellSouth, including the mobile operator BellSouth Peru. Upon the acquisition in 2004, Telefonica sought regulatory approval to merge its two mobile operating companies in Peru - the former BellSouth Peru and Telefonica Moviles Peru - but did not receive full approval until mid 2005. In April of 2005, Telefonica Moviles Peru launched the brand Movistar. In December 2007, Movistar beat the only other prequalified bidder, America Movil (Claro), to win a concession to provide fixed wireless services on the 900MHz spectrum band. Under the 20-year concession, Movistar was to provide fixed wireless and mobile services in capital Lima and in neighboring Callao province in the 894-899MHz frequency, and to the rest of Peru in the 894-902MHz and 939-947MHz bands. The company committed to deploy 350,000 lines in Lima and Callao, and 350,000 lines in the provinces, in a four-year period. In January 2008, Movistar beat two other prequalified bidders, Telmex Peru and STM-Valtron consortium, to win another 20-year concession contract to provide fixed wireless and mobile services in the capital Lima, and in Callao, in the 452.5-457.5MHz and 462.5-467.5MHz bands. The company committed to deploy 501,000 lines within a three-year period. 2005 investments were calculated as indicated in the CAPEX_Telefonica_Suggested.xls File. There is one note dated 03/01/2006 (from data processing information architects- Factiva) that mentions Movistar investments in Peru for US$57.1 mn, but the rest of the investments differ with the figures presented in the Social Responsibility Report of the company, therefore the estimation was used instead of this note.