South Korean mobile operators launched consumer 5G services on 5 April, with market leader SK Telecom (SKT) claiming to have already deployed 34,000 5G base stations across the country.

As the hyper-connected country of some 51 million people moves into an era of gigabit mobile speeds, it’s interesting to compare SKT’s site density with mobile operators in the Philippines, which has more than twice as many people (107 million) and nearly three-times the land mass.

SKT’s 5G base station count is more than twice that of Smart Communications’ 4G total, which was 16,200 at end-2018. That’s after an 86 per cent jump from the previous year made possible by a 46 per cent boost in capex by its parent company PLDT to PHP58.8 billion ($1.1 billion).

As a percentage of revenue, capex rose from 27 per cent in 2017 to 38 per cent in 2018 and is expected to increase to more than 40 per cent this year.

Site density
Despite Smart Communications’s added investment, it has just 1.5 4G base stations per 10,000 people, while SKT has deployed 6.7 5G sites for the same population.

Meanwhile, Philippine’s market leader Globe Telecom had about 17,000 4G base station sites (out of a total of 40,500) at end-September 2018 (it offered no update in its most recent earnings report). Its capex in 2018 increased less than 2 per cent year-on-year to PHP43.3 billion, but is forecast to jump 46 per cent to PHP63 million in 2019. The hike was likely prompted in large part by Smart Communication’s rising spend and the pending entry of a third major player, the Mislatel consortium.

The investments are starting to have an impact. Mobile broadband speeds and coverage have improved rapidly over the past year, with LTE availability as measured by OpenSignal improving from less than 64 per cent in Q1 2018 to about 71 per cent in first quarter of this year. But the country still lags in the region, ranking behind India and Vietnam in 4G availability.

Costly coverage
The Philippines’ much larger land mass (about 300,000 sq km compared with South Korea’s 100,210 sq km) makes deployment more challenging and costly. The former has a population density of 337 persons per sq km versus 503 in Korea. This certainly is another key factor impacting the cost of deploying radio access networks.

Adding mobile cell sites is expensive, particularly for the larger sites needed in markets which are more sparsely populated, where a single tower can cost several hundred thousand US dollars.

Phil Marshall, chief research officer at Tolaga Research, told Mobile World Live operators are under tremendous pressure to deliver broadband capacity and near ubiquitous coverage, noting “this is much easier to achieve in densely populated markets like South Korea, Hong Kong and Japan, but unrealistic in other markets where the population is more dispersed and where the incremental revenues gained from new cell sites are insufficient in offsetting capital investment costs”.

Sharing
Little wonder the Philippines government has been pushing since September 2018 to attract investment from international tower companies by promising to streamline the cumbersome procedures required to build and connect towers.

Eliseo Rio, acting secretary of the Department of Information and Communications Technology, said in January the country requires 50,000 more towers in addition to the roughly 16,000 already deployed.

Once tower companies are given the green light to build and the incumbents agree to start network sharing, the question is how long will it take for the country’s base station density to start approaching that of a developed market like South Korea?

In the short-term, the more important issue will be ensuring the independent companies give the Mislatel consortium the necessary access to fixed and mobile infrastructure to compete effectively against the current duopoly, encouraging all players to boost still lagging data speeds and spotty coverage outside the three major cities.

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.