Rodrigo, Elías & Medrano advises Peruvian telecom regulator in the constitution of public trust

OSIPTEL, the Peruvian telecom regulator, has recently constituted one of the first trusts involving public funds in Peru: the FITEL Trust. The Trust Agreement was executed on early September by OSIPTEL, as trustor, and Banco Wiese Sudameris, as trustee.

Under Peruvian telecom laws, OSIPTEL manages a fund so-called FITEL (Fund for Investment in Telecommunications) which main objective is to invest in the development of telecom projects mainly in rural areas of Peru. FITEL is funded by way of mandatory contributions from telecom companies operating in Peru. With such resources, FITEL organizes auctions among private telecom entities for the development of telecommunications systems and networks on several areas of Peru; the winning bidders of each auction are paid by OSIPTEL with the resources of FITEL.

Currently FITEL has approximately US$36 million committed to funding the development of several telecom projects in rural areas in charge of companies such as Gilat to Home and Rural Telecom. OSIPTEL main goal was to transfer the management of the committed funds to a private entity specialized in administering funds while the supervision of the project development remains in the hands of OSIPTEL.

?OSIPTEL wanted to transfer to a private entity the administration of the funds of FITEL already committed to specific projects? says Rafael Alcazar, partner at Rodrigo, Elías & Medrano the Peruvian firm that advised OSIPTEL in the constitution of the FITEL Trust. ?For such purposes, a trust organized under Peruvian law was the best option?.

OSIPTEL, as a public entity, is subject to the laws and regulations governing the use of public funds, a public auction was summoned in order to select the trustee of the FITEL Trust and Banco Wiese Sudameris was appointed.

?One of the major tasks in this project was to overcome the legal hurdles imposed by laws governing pubIic entities that are not designed for structures such as trusts which are uncommon in the Peruvian public sector? adds Juan José Cárdenas from Rodrigo, Elías & Medrano.

Rodrigo, Elías & Medrano advised OSIPTEL with a team led by Partner Rafael Alcázar (partner) and Juan José Cárdenas. Partner Alex Córdova and associate José Chiarella (Tax Law), Partner Carlos Carpio and associate Hugo Silva (Administrative Law) and associates Augusta María de la Puente (Telecom), Jorge Trelles (Banking Law) were also part of the Rodrigo team in the project.

Alejandro Moscol and Moraima Ferradas acted as in-house counsel to OSIPTEL and Banco Wiese Sudameris, respectively.