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Philippines Telecommunications Report Q4 2010
Business Monitor International, Aug 2010, Pages: 105
Business Monitor International's Philippines Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Philippines' telecommunications industry.
BMI has taken the opportunity to revise upwards its forecasts for the mobile telephony services market in the Philippines this quarter. Q110 showed stronger than expected growth in terms of subscriber additions and the media reports that even stronger growth may have been achieved in Q210. The market is being propelled ever upwards by growing demand for 3G and mobile broadband services. The key operators – Smart Communications, Globe Telecom and Digitel (Sun Cellular) are all aggressively marketing their nextgeneration services, accompanied by a blitz of pricing promotions and the inclusion of must-have handsets and related devices as a means of enticing customers onto their networks.
In the meantime, they are also slashing the prices of basic voice and data services, to the extent that ‘bucket’ offerings now predominate and account for the majority of ‘new’ customers. Thanks to the launch of a number of new unlimited call packages, Smart and Digitel are thought to have done exceptionally well in Q210, although actual data were not forthcoming at the time of writing. We now expect that this trend will continue for the next few years, at least until basic ARPUs fall below acceptable levels. By 2014, we expect there will be 117.5mn mobile subscribers. 3G connections will account for 12.9% of the market by that time. There may even be two new operators on the scene, assuming the regulator can extricate itself from a potentially messy court battle that places the entity’s controversial 2005 3G licensing contest at the heart of the issue.
We remain concerned that the apparent strong growth is actually built on the cannibalisation of the existing mobile subscriber base. In other words, 2G customers are taking advantage of very low cost 3G services yet keeping their 2G phones active. Multiple SIM ownership is less of a problem than subscriber inactivity and we believe that many millions of inactive subscriptions remain on the operators’ databases, artificially inflating reported subscriber numbers.
The real growth story in the Philippines, though, is that of broadband, with uptake of both fixed and wireless offerings a very long way from running out of steam. The fixed broadband market is constrained by the limitations of the fixed-line operators’ networks (from both a technological and a geographic coverage perspective), but interest in xDSL and fixed WiMAX services appears to be strong. Mobile broadband, however, appears to have attracted a great deal of interest, and market leaders PLDT (along with its Smart Communications subsidiary) and Globe Telecom are reporting rapid subscriber growth for 3G/3.5G-based wireless broadband offerings, fuelled by very attractively-priced offers.
BMI forecasts that, by the end of 2014, there will be around 5.044mn broadband subscribers, reflecting a penetration rate of 5%.
The Philippines remains in 12th place in this quarter’s Business Environment Ratings analysis; its score was down by 0.8pps quarter-on-quarter (q-o-q). Despite better than expected mobile subscriber growth, average mobile ARPUs remain low at around US$3.74 in Q110 and the likelihood is that this will remain the case (or maybe even fall to a flat US$3 before too long) as the three major operators unveil further heavily-discounted services and unlimited call-and-text buckets.
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