The Philippines’ mobile sector showed signs of a strong recovery in the third quarter, with data usage soaring and the two major players adding more than 45 million new subscribers over the close of Q3 2018.
Ahead of the entry of the third major operator, Dito Telecommunity, in 2020, the operators recorded double-digit increases in mobile service revenue: Globe Telecom’s rose 13 per cent year-on-year to PHP28.4 billion ($558 million) while Smart Communication’s grew 12 per cent to PHP22.2 billion (see chart, below, click to enlarge).
The period marked a continued recovery for Smart Communications, which recorded its third consecutive quarter of mobile revenue growth.
Mobile data revenue grew 44 per cent at Globe Telecom and 41 per cent at Smart Communications. On the down side, both experienced sizeable declines in prepaid and post-paid ARPU.
A major driver of the overall service revenue growth was substantial improvements in network quality and coverage, following sharp increases in capex over the past two years.
Globe Telecom earmarked a full-year budget of PHP62 billion for 2019, up from PHP43.3 billion in 2018, while Smart Communications parent PLDT plans to spend an additional PHP20 billion compared with PHP58.8 billion.
Fitch Ratings stated in a research note the operators are competing at higher price points of more than PHP50 plans (up from PHP30 previously) to boost 4G income, driving data usage through video streaming and mobile games.
The ratings agency, which has a negative outlook on the Philippines telecoms sector, forecast average capex intensity for the sector to stabilise at 35 per cent to 37 per cent of revenue in 2020, down from the low 40 per cent level in 2019, and to be debt-funded.
It expects competition to intensify in the medium term with Dito Telecommunity’s entry (the company is targeting 37 per cent population coverage after its first year) and 5G capex to be limited over the next 18 months, with the incumbents depending on their expanded 4G networks to provide sufficient speeds to cater for rising data demand in the next three years.Subscribe to our daily newsletter Back