Peru to resolve its National Fiberoptic Backbone Network contract termination

Peru will today seek to resolve its National Fiberoptic Backbone Network operations contract termination. In 2013, the government awarded a

Tony Dunnell

Photo: Tony Dunnell

Peru will today seek to resolve its National Fiberoptic Backbone Network operations contract termination.

In 2013, the government awarded a concession to Mexico’s Azteca Communications to build and operate the 8,000mi fiberoptic network. The project was designed to connect Peru’s 22 regional capitals and 180 of its 196 provincial capitals to bring high-speed internet access to provinces at lower costs. As of 2018, the network has been 100% deployed. However, after seven years of the project’s existence, the contract termination is imminent since the network has underutilized its infrastructure. Currently, only 3.2% of the installed network is in use, and the Peruvian government’s income from the project barely reaches 7.7% of its $323m investment.

After the contract resolution, expect Lima to implement a plan to relaunch the network. Newly elected president Pedro Castillo will choose a temporary operator until the new utilization model is defined. However, adopting a state network deployment model is likely as Castillo’s infrastructure objectives are based on reviewing concessions and changing the distribution of profits so that Lima receives 70% instead of 30%. Medium-term, Peru will boost public sector investment and leverage its ability to meet the connectivity needs arising from the pandemic.

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