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Philippines Telecommunications Report Q2 2011
Business Monitor International, Feb 2011, Pages: 107
The Philippines Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Philippines's telecommunications industry.
In this quarter’s update for our Philippines Telecommunications Market report, we have revised several of our forecasts - namely the country’s mobile subscriber forecasts and our ARPU growth expectations - downwards after taking into account new data released by the Philippines mobile operators for the quarter ended September 2010.
At the end of September 2010, the Philippines mobile market grew by 0.6% quarter-on-quarter (q-o-q) to reach a total subscriber base of 84.635mn. The industry last saw a similar weak performance in June 2009 when the market contracted by 0.5% q-o-q. Globe Telecom and Digitel (Sun Cellular) reported positive net additions and performances that surpassed the previous quarter, but a net loss posted by mobile market leader Smart Communications resulted in the industry’s weak performance in Q310. The operator’s decline was led by a significant fall in Smart’s Red Mobile unit, which saw its prepaid subscriber base fall by 752,313 to reach 381,477 in September 2010. However, this was likely a result of an inactive subscriber deduction exercise by Smart after the operator previously introduced unlimited calling and texting promotions to attract consumers.
Meanwhile, operators’ ARPU levels continued to trend downwards as competition in the Philippines’ mobile industry intensified. Although Globe reported a higher mobile subscriber net addition than Smart, Globe’s blended ARPU fell by 7.6% to PHP159, with its postpaid ARPU dipping below the PHP1,200 mark to reach PHP1,168. By contrast, Smart’s postpaid ARPU held steady at PHP1,257. We do not expect a reversal in the ARPUs’ downtrend as operators have engaged in aggressive price competition even in the 3G sector in order to grab market share. We envisage the industry’s average ARPU to fall below PHP150 in 2011, but expect the decline to decelerate in the next five years as market conditions stabilise and operators introduce value-added services to boost their profitability.
That said, Smart and Globe continued to report strong growth in their broadband business segment. Total broadband subscribers for the two operators crossed the 2mn and 1mn mark respectively, and wireless broadband take-up is the main subscriber growth driver for Smart and Globe. BMI expects the highgrowth momentum to continue in the next five years as the industry is in its infancy unlike the other telecoms sector in the Philippines.
The Philippines rose to 11th place in BMI’s latest Business Environment Ratings as the country’s booming broadband industry offset the weak performance in the mobile sector and operators’ ARPU levels. While the broadband industry presents significant potential for investors, we believe that President Benigno Aquino III's war against corruption will be a long one, negatively affecting investor confidence in the country.
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