Вы находитесь на странице: 1из 10

Our definitive telecommunications market reports help

clients stay updated on the latest developments in the

Philippines dynamic telecommunications sector. Our reports include an


overview of the market, market sizing, market forecasts,
insights and key trends.

Telecommunications
Industry Report,
2019-2025

Published: November 2019


Philippines Telecommunications Market Report, 2019-2023

1
Philippines Telecommunications Market Report, 2019-2023

1 KEY STATISTICS

1.1 PHILIPPINES POPULATION


Philippines’ population passed the 108m mark in 2019, represents 1.4% of the
world population and is the 13th most populated country in the world. Only 47%
of the population lives in an urban environment while the population density is a
363 people /km2 for a total landmass of 298,170 km2.
The Republic of the Philippines is an archipelagic country in Southeast Asia.
Situated in the western Pacific Ocean, it consists of about 7,641 islands that are
broadly categorised under three main geographical divisions from north to south:
Luzon, Visayas and Mindanao. It is the world's 5th largest island country. The
eleven largest islands contain 95% of the total land area and only approximately
1,000 of its islands are populated.
This archipelagic geography coupled with diverse population densities presents a
huge challenge to the country’s mobile network operators as they try to expand
and maintain reliable networks.
The Philippines is subdivided into 17 regions with the three largest Central Luzon,
Southern Luzon and Manila, each with more than 10m inhabitants while Luzon is
the most populous island representing 52% of the Filipino population.
Philippines Statistics Authority (PSA) expects a population of 116.8m people by
2023 adding about 1.4 to 1.5m people per annum as shown in Table 1. The
population average growth over the 2014-2018 period was 1.4% and is forecasted
to still grow strongly on average by 1.31% per year over the forecast period of
2019-2025.

Table 1 – Philippines – Key Statistics


2018 2019 2020 2021 2022 2023 2024 2025
Population (m)
% YoY Growth
Household (m)
Household Growth %
GDP (US$bn) nominal
Telco Sector as % of GDP
Source: PSA, UN

2
Philippines Telecommunications Market Report, 2019-2023

1.2 PHILIPPINES HOUSEHOLDS


The Philippines’ number of households grew at an average annual rate of 1.8% per
annum, in the 2014-2018 period, the country had 22m households in 2018 with
the PSA expecting 24.8m households by the end of 2025.
The number of Filipino households is growing faster than the population as the
average number of people per household will decline from 4.83 in 2018 to 4.7 in
2025.

1.3 PHILIPPINES’ GDP


Despite the strong growth of 12.5% of the Filipino telecommunications sector in
2018, the ratio of the telco sector revenue to GDP is declining which began on our
estimates in 2005 as illustrated in Figure 1. Since then, the ratio declined from a
peak of 3.05% in 2005 to 1.48% expected by 2020 compared to an average of 2.1%
for the Asia Pacific region according to the International Telecommunications
Union (ITU). Some of this lag between the telco wallet and the broader economy
reflects the erosion of price and margin through greater competition.
Technology and behavioural changes continue to erode the traditional voice and
data market, and competition is intensifying as mobile networks operators are
expanding 4G coverage and capacity. The mobile market is growing strongly ahead
of newcomer DITO Telecommunity due to launch as 3rd mobile player in 2020.

Figure 1 – Telco sector revenue as % of GDP in the Philippines


Telco sector as % of GDP

3.5%

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%
1990 1995 2000 2005 2010 2015 2020
Source: UN, Research estimates

3
Philippines Telecommunications Market Report, 2019-2023

2 OVERALL TELECOMMUNICATIONS
MARKET, 2014–2025
2.1 MARKET OVERVIEW
The Philippines's telecommunications industry has been dominated by the PLDT-
Globe duopoly over the last two decades. Telecommunications infrastructure
investments have been underwhelming while recent reforms and the launch of a
third mobile operator will bring competition and innovation in the sector.
In November 2018, the National Telecommunications Commission officially
confirmed Mindanao Islamic Telephone Company (Mislatel), Chelsea Logistics
Holdings Corp, Udenna Corp and China Telecom as the winning bid for the
country’s third mobile operator. The Mislatel consortium is now expected to
challenge the de facto duopoly enjoyed by the Philippine Long Distance Telephone
Company (PLDT) and Globe Telecom. However, the Mislatel consortium is unlikely
to begin subscriber registrations before July 2020 after it only received its license
in July 2019 to become the third mobile player, it will operate under the “Dito
Telecommunity” brand.
Research forecasts that mobile subscriptions will grow at an annual
average rate of 6.5% in 2019-25 and fixed broadband subscribers at an average
rate of 6.4% over the same period. Internet user penetration will increase at an
annual average rate of 4% in the 2019-2025 forecast period with an estimated 66%
of the population connected to the Internet in 2018 growing to 76% by 2025.
The Philippines ranked 101st out of 176 countries in the ICT Development Index
2017, published by the International Telecommunication Union (ITU), compared
with Singapore at 18th, Malaysia at 63rd, Indonesia at 111th and Vietnam at 108th.
Expanded coverage, greater affordability, service improvements, increased data
usage and smartphone penetration are the main drivers of growth in the telecoms
sector. The country continues to expand its fibre-optic network and 4G coverage,
backed by strong investment in capital expenditure. Investment in the telecoms
sector grew at an annual average rate of 13.1% in 2014-18 and is expected to
maintain growth momentum at an average rate of 6.1% in 2019-25, albeit slowing
from 2022 onwards.
Mobile subscribers numbers are growing strongly and the back of population
growth, increasing affordability and new regulation, while Research
forecasts growth to accelerate to 6.5% in 2019-25. Fixed lines remain broadly flat
at 2.7m lines.
We estimate that the country’s incumbent PLDT had .c82% share of telco revenue
in 2000 versus c.66% by 2018. Technology shifts are eroding the industry’s revenue

4
Philippines Telecommunications Market Report, 2019-2023

by providing consumers with alternatives to traditional fixed and mobile metered


voice (SMS, Apps, VOIP, email etc.).

2.2 HISTORICAL TELECOMMUNICATIONS MARKET


REVENUE, 2014-2018
PLDT generated P152.4 billion of revenue in 2018, Globe Telecom came 2nd with
P150 billion, as shown in Table 2, while other operators generated combined
revenue of P6 billion not represented below.
In 2014, PLDT generated 62% of total telecommunications market revenue,
declining up to 50.3% in 2018, while Globe grew from 32% to nearly match PLDT’s
market share at 49.7% for the first time.

Table 2 – Telecommunications Market Revenue by Operators


(PHP m) 2014 2015 2016 2017 2018
PLDT
Globe
Source: Company reports, Research Estimates

Globe’s growth drove a shift in revenue mix with 71% of telecommunications


revenue came from the mobile segment in 2014, while by 2018, it represented
57% of total telecommunications revenue with fixed broadband revenue growing
strongly.
The average telecommunications revenue growth rate for the 2014-18 period was
at 3.2% driven by PLDT declining voice revenue in 2016 and 2017 both in the fixed
and wireless segments. PLDT’s revenue slightly recovered in 2018 while Globe’s
revenue grew steadily at an average annual rate of 10% between 2014 and 2018.
Philippines Telecommunications Market Report, 2019-2023

Figure 2 illustrates the 2018 telecommunications revenue distribution with PLDT,


Globe representing 97% of the market revenue. Others operators such as ABS CBN,
Converge ICT and other smaller providers share 3% of the combined revenue share.

6
Philippines Telecommunications Market Report, 2019-2023

Figure 2 – Telecommunications Market Revenue, 2018

Source: Company reports, Research

In 2018, PLDT’s EBITDA margin declined to 42% of revenue compared to 47% in


2014 largely due to voice and SMS pricing pressure while Globe’s EBITDA margin
shrank from 38% of revenue down to 33% over the same period. Figure 3
represents a treemap graph of the telco industry EBITDA pool.

Figure 3 – Telecommunications Market EBITDA, 2018

Source: Company reports, Research

In 2018, PLDT generated 57% of total telecommunications market EBITDA, up from


66% in 2014, a dominating position gradually eroded by Globe’s foray in fixed and
wireless broadband as well as voice decline management and mobile data growth
as shown in Figure 4.

7
Philippines Telecommunications Market Report, 2019-2023

Figure 4 – Telecommunications Revenue & EBITDA Share, 2018

Source: Company reports, Research


Philippines Telecommunications Market Report, 2019-2023

3 TELCO TRANSACTION DATABASE


Table 3 shows select telecommunications transactions completed over the last
two decades. The transactions list highlights how PLDT and Globe bought out
struggling competitors, potential new entrants to fence off any incoming
competition. This strategy is now over as DITO is the new entrant and all three
mobile operators will have to compete on network leadership, speed, coverage
and distribution.
The analysis of the deal register represents about US$5 billion worth of
transactions across 5 mobile operators to “scale” Globe and Smart and $175m
worth of transactions to increase “scope”. predicts the next wave of
transactions is likely to be about “scope” and largely about infrastructure. New
tower build accompanied by fiberisation of the latter will boost the country’s
telecoms infrastructure and will most welcome in the market after two decades of
under-investments in the Philippines market.

Table 3 – Telco Transaction Database, 2001-2019


Deal Target Business Type Deal Size (US$)
Acquirer
Date

Source: Company reports, Research