Companies and markets: Philippine operators to intensify competition - and new 3G player?

Details: Category: Trends & Forecasts; 16 March 2010; 10258 views

Companies and markets has released a new report analysing in great detail the telecoms market in The Philippines. Any loss in growth in 2009 is likely to be compensated for this year. There is also likely to be another entrant in the 3G sector...

2009 was an eventful year in the Philippines, with all three core markets - fixed-line, mobile and broadband internet access - all seeing notable developments that will have a marked impact in 2010. Companies and markets has issued a key analysis of The Philippines at a crucial time.

New data for 2008 and earlier from the regulator and the ITU have been incorporated into the new forecasts, and they have prompted the authors to rein in some of their expectations for the next five years. Although the country's third largest mobile network operator, Sun Cellular (owned by Digitel), has again declined to supply detailed operating data for 9M09, it is clear that the number of mobile subscribers decreased during 3Q09 on the back of slower customer growth at market leader Smart Communications. This latter came as Globe Telecom disconnected approximately 1.8 million inactive customers.

Further disconnections seemed likely in 4Q09, although the operator could not report any new figures at the time of writing. Companies and markets therefore believes the mobile market grew less strongly than predicted in 2009, ending the year with 74.43 million subscribers. Growth ought to be stronger in 2010 as Globe Telecom completes its programme of eliminating inactive customers and operators intensify their price war.

A fifth 3G operator could be licensed in 2010-11, with the regulator saying it is keen to make progress with offering a new concession. Fixed-line operator BayanTel would be a strong candidate, having missed out in the original tender to newcomer CURE. Philippine Long Distance Telephone (PLDT) has now acquired CURE, and “we have reason to consider that it may have to return CURE's 3G spectrum, which could then be reassigned to existing operators or a new entrant.”

2G licensee Extelcom has received a fresh injection of capital and suggests it may re-enter the mobile market within the next two years. Wireless spectrum is an increasingly sought-after commodity in the Philippines as operators such as PLDT, Globe, BayanTel and others demonstrate considerable success in signing customers up to their new fixed and mobile wireless broadband services. Consequently, former paging and value-added services providers such as EasyCall Philippines and Liberty Telecoms are looking to offer wireless broadband services themselves; Liberty Telecoms plans to offer WiMAX services in 2010.

In the fixed-line market, San Miguel Corporation continues to pursue its acquisition of Extelcom (a transaction that has been delayed while minority Extelcom shareholder BayanTel tries to get the deal annulled) while at the same time gaining control of Liberty Telecoms and floating the idea of buying into independent fixed-line operator Bell Telecommunications (BellTel). If successful, San Miguel could quickly become one of the largest multi-service players in the country.
The National Telecommunications Commission (NTC) has asked the country's principal fixed-line operators to prepare Reference Access Offers, ie, catalogues of the terms and conditions (including pricing) they apply to each other when interconnecting their networks. This move is also being opposed by the players involved, and a lengthy legal challenge could ensue.

Given the NTC's perceived ineffectiveness when it comes to imposing new or controversial regulatory mechanisms, Companies and markets is far from certain that transparency will come to the fixed-line market anytime soon.