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Monday, May 20, 2024

Telecom industry buoyant on rising demand for data

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The Philippine telecom industry remains buoyant as demand for broadband and data continues to rise.

The sector posted total revenues of P207.3 billion in the first half of 2023, up by 4 percent from P198.66 billion in the same period last year.

Data showed that of the total, PLDT Inc. recorded P104.31 billion in revenues, followed by Globe Telecom Inc. with P80.4 billion, Converge ICT Solutions Inc. with P17.36 billion and DITO Telecommunity Corp. with P4.96 billion.

PLDT and Smart Communications Inc. president and chief executive Alfredo Panlilio said while the group saw some “softness” in revenues in the first half, he was expecting a “better” performance in the second half.

Panlilio blamed the modest growth in sales to the higher inflation and the shift of Filipinos from home broadband to mobile due to the full opening of the economy.

He estimates that PLDT’s revenue would grow by “low-single-digit” this year from its earlier projection of “mid-single-digit”.

He said PLDT was not affected by the SIM registration requirement under the law, as 99 percent of its active subscribers were able to register.  Compared to end-2022 when Smart had 39.5 percent of all SIMs in the market, Smart ended the SIM registration campaign with 46.1 percent of SIMs, he said.

Data from the National Telecommunications Commission showed that the total SIM cards registered by Smart reached 52.5 million, or 79.18 percent of its total subscriber base of 66.31 million as of December 2022.

Smart said it would continue to drive activations and deliver more value-for-money offers to retain subscribers and drive ARPU further.

“It takes a while to gain ground and it is going to be a long, drawn-out battle. We will continue to push, to innovate and to look at growth areas. We cannot stand still, especially in the telco space,” Panlilio said.

Headwinds in H2

Rival Globe Telecom also expressed optimism about its growth this year despite the impact of SIM registration and the anticipated economic challenges in the second half.

“We are very pleased with the financial performance of our telco business for the second quarter. It goes to show how much people value connectivity and how people value the need to have data plans on their phones,” said Globe president and chief executive Ernest Cu.

He said sometimes, Filipinos prefer to use data over food, “a manifestation of the continuing demand for data services.”

Globe’s mobile data revenues went up 5 percent to P44.36 billion in the first half, while Home broadband revenue reached P12.8 billion and sales from corporate data amounted to P9.07 billion .

“I have to say that in the coming quarters there could be some headwinds primarily due to the slowdown of the economy. We are seeing the GDP [gross domestic product] growth to slow down,” Cu admitted.

Globe revised its 2023 service revenue guidance to mid-to-low single digit growth from last year’s  mid-single digit growth due to “extended macroeconomic pressures”.

Cu said the SIM registration law had no impact on its revenues as close to 100 percent of its active subscribers registered.  “At the 54 million mark our revenues were not affected,” he said.

Globe recorded 53.72 million SIMs registered out of 86.74 million subscriber base as of December 2022.

“Globe’s mobile leadership is indisputable on all fronts, from revenue market share to subscriber count. We have sustained our supremacy over the last seven years, through the pandemic and the SIM registration process, because of our inclusive and life-enabling Mobile services, first-to-market innovations, and our ecosystem of digital solutions that bring unbeatable value to our connectivity offers,” said Globe consumer mobile business head Darius Delgado.

“This is true, holistic mobile leadership that only Globe can deliver,” he said.

Prepaid fiber

Delgado expects prepaid fiber to be the next battleground for broadband, as this market remains underserved. In the mobile business, Delgado said 97 percent of the subscribers were prepaid.

In June 2023, Globe launched GFiber Prepaid, which aims to democratize access to fiber connectivity, offering a No Lock-Up, Unli Pay-Per-Use promos, and Buy Now, Pay Later options with GCash.

Globe’s Home broadband revenue fell 7 percent to P12.8 billion in the first half from P13.8 billion last year. The number of broadband subscribers also dropped 31 percent to 2.2 million from 3.1 million.

“We expect the broadband penetration in the Philippines to come from the underserved mass market,” Delgado said.

According to the Philippine Statistics Authority’s 2021 Family Income and Expenditure Survey, the country had about 26.4 million households with 70 percent at the lower income segments, which were still highly underpenetrated with reliable fixed broadband.

Converge has been working on a multi-segment strategy with tailored brands to cater to the unique needs of each segment of the residential market, while still maintaining the more premium features of the FiberX brand targeting upper- and middle-income households.

Converge launched Surf2Sawa—a prepaid fiber-to-the-home plan with various top-up options for as low as P50 load for one-day service up to P700 for a 30-day unlimited connectivity.

The company’s Surf2Sawa prepaid offering is targeting the Class D2 market of about 9 million households.  Alternatively, lower income households with more consistent income can choose to avail of BIda Fiber, Converge’s economical postpaid brand targeting the Class D1 market, which is composed of about eight million.

As of end July, S2S was serving customers in 554 cities and municipalities from Luzon, Visayas and Mindanao.

“For 2023, we hope to open in new areas in Luzon such as Kalinga and Occidental Mindoro, Visayas, including Negros Oriental and Leyte, and Mindanao provinces like Sarangani, South Cotabato and Bukidnon,” said Converge senior executive vice president and chief operations officer Jesus Romero.

Converge is aiming to hit its goal of reaching 120,000 prepaid Fiber subscribers this year from the current 60,000 subscribers.

“Converge continues to reap impressive results in our effort to bolster the availability and affordability of our fiber internet solutions. We anticipate more opportunities to grow our subscriber base as we innovate products to cater to the demand from specific socioeconomic segments,” said Converge chief executive and co-founder Dennis Anthony Uy.

“ This is evident in the second quarter subscriber growth—with the prepaid market gaining significant traction,”he said.

Converge President and Co-Founder Grace Uy said, “Our goal with the full product portfolio is to ensure that all subscribers are connected with the most appropriate plan that they can afford in the long-term.”

As of the first half of 2022, Converge had 1.97 million fiber-to-the-home subscribers, including 1.92 million postpaid subscribers and 54,161 prepaid subscribers.

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