Telefonica SA (TEF) reached an agreement with the Peruvian government to renew its mobile-phone concession for almost 19 years after the company agreed to invest 3 billion soles ($1.18 billion) to expand rural coverage.
The Telefonica Moviles unit will halve rates for pensioners and state workers in rural areas, provide coverage in 1,842 villages and give free Internet service for rural state schools, Transport & Communications Minister Carlos Paredes said. The agreement ends 18 months of negotiations days before the visit of Spanish Prime Minister Mariano Rajoy on Jan. 24.
“Having received the company’s unconditional acceptance of all the government’s terms, we will renew the concession,” Paredes said today at a press conference in Lima. The lowered rates will benefit “more than a million” Peruvians, he said.
President Ollanta Humala took office in 2011 on pledges to extend greater social benefits to Peru’s population of 30 million, a third of whom live on $1 a day, according to the World Bank. Madrid-based Telefonica, which bought state Cia. Peruana de Telefonos in 1994, operated 20 million mobile phone lines in Peru through 2012, according to its website.
The company, which competes with America Movil SAB (AMXL), NII Holdings Inc. (NIHD) and Viettel Group, accepted the government’s “tough” conditions, Telefonica Moviles said today in an e-mailed statement.
“The conditions represent unprecedented efforts to extend coverage,” Telefonica del Peru SAA Chief Executive Officer Javier Manzanares said in the statement. “We’re going to continue investing in Peru and work faster with the authorities to expand telecommunications as a tool for development.”
Telefonica del Peru rose 1.2 percent to 2.55 soles in Lima trading. Telefonica SA gained 0.4 percent to 10.91 euros in Madrid.
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