Fitch Upgrades Telefonica del Peru FC IDR to 'BBB' following Sovereign Upgrade

Business Wire, April 3, 2008

MONTERREY, Mexico & RIO DE JANEIRO, Brazil -- Fitch Ratings has taken the following rating actions for Telefonica del Peru S.A.A. (TDP) as follows:

--Local currency Issuer Default Rating (LC IDR) affirmed at 'BBB ',

--Foreign currency (FC) IDR upgraded to 'BBB' from 'BBB-';

--PEN754 million senior notes due 2016 upgraded to 'BBB' from 'BBB-'.

The Rating Outlook is Stable.

In addition Fitch's Peruvian affiliate Apoyo & Asociados has a national scale rating of 'AAA(pe)' for TDP.

The rating action follows Fitch upgrade of Peru's long-term FC IDR to 'BBB-' from 'BB ', its long-term LC rating to 'BBB' from 'BBB-' and its Country Ceiling to 'BBB' from 'BBB-'. TDP's FC IDR continues to be constrained by Peru's Country Ceiling.

TDP's ratings are supported by its solid business position as the largest Peruvian telecommunications company, diversified revenue stream from its various business segments, healthy cash flow generation, relatively low capital-expenditure needs and a strong financial profile. The ratings incorporate regulatory risks, continued pressure on local service traffic and heightened competition. Fitch expects TDP will continue to maintain a financial profile consistent with the rating category. The ratings incorporate the acquisition of approximately 17% of Telefonica Moviles del Peru Holding S.A.A. by TDP during December of 2007. The 'BBB' rating of the PEN754 million senior notes incorporates transfer and convertibility risks associated with the settlement of the notes, as they are issued in Peruvian nuevo soles but paid in U.S. dollars at market exchange rates; however, the notes do not add foreign exchange risk to the company's balance sheet.

TDP is the leading telecommunications provider in Peru, revenues during 2007 of approximately US$1.4 billion and pro-forma EBITDA of US$606 million (excluding non recurrent charges associated to the voluntary leave program). The company provides fixed local services (35% of 2007 revenues), public and rural phone services (15%), long distance (9%), Internet (15%), cable television (10%), business communications (6%) and other services (10%). As of Dec. 30, 2007, the company had approximately 2.6 million lines in service, 571 thousand broadband lines and 640 thousand pay-tv subscribers. TDP is 98% owned by Spain's Telefonica S.A.

For more information on Fitch's upgrade of Peru's FC IDR, see the Fitch Ratings web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.