Domingo Drago made Tele2000's phone booths a familiar sight in Peru. DOMINGO DRAGO TELE2000

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LIMA-When Tele2000's Marketing Director Domingo Drago got the go-ahead to give away his company's cellular telephones in June 1993, no one realized his phones would tie up circuits for months.

"We didn't realize demand so greatly exceeded supply," he remembers.

But when he tapped into direct mail, a little-used marketing resource in Peru, he hit a goldmine of new customers-5,000 in three months, equal to Tele2000's average annual sign-ups. The influx of new customers filled Tele2000's current switching capacity, and a moratorium on new customers had to be imposed.

Tele2000 is Peru's upstart cellular communication company. As the company's advertising puts it, Tele2000 first broke the state's monopoly on telecommunications in 1989 and is dedicated to providing Peruvians with the "constitutional right of the freedom to communicate."

Since then, Tele2000 has been a Latin American telecommunications leader: Renting and selling cellular phones, connecting buildings with cellular communications and providing Lima's only cable TV access. The company is also pioneering public phone booths using cellular connections.

For Mr. Drago, 29, the challenge of bringing cellular phones to Peru was like offering ice cream in the Sahara. The problem wasn't finding a willing audience-for every 100 people in Peru there are only 2.4 telephones and the wait for a hookup is two years. Instead, the problem was finding buyers with enough economic clout to satisfy their cellular phone pangs.

The solution was targeted direct mail that provided customers who could and did pay the bills. To generate his list, he went to Peru's four biggest banks and offered a deal. Tele2000 would provide free cellular telephones-normally priced at $800-to the banks' biggest clients which participated.

"We found the sector that had the economic capacity and a need for our product," says Mr. Drago.

The mailer that went out had the bank as the sponsor, giving away the cellular phones to their clients, who had only to sign up for 24 months' cellular service with Tele2000. Monthly payments are made at the sponsoring bank, which keeps a small percentage. The campaign was handled by Target Publicidad.

"The banks did the analysis to determine who was a good customer," says Mr. Drago. "It was less work for us. Plus, we had our bets hedged-deadbeats don't go into banks."

By October of last year, after 5,000 people had responded to the offer, Tele2000's circuits filled to capacity, and the company has had to postpone the addition of new customers to the network. The bottleneck has sped the installation of a state-of-the-art AT&T digital switcher, equipment found in few countries outside the U.S.

Compared to other Latin American countries, cellular penetration remains low in Peru-0.5% of the population own or use cellular phones, compared to 1.0% in countries like Argentina, Brazil, Chile and Mexico-which makes Mr. Drago optimistic for Tele2000's future.

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