Although the Philippines has seen strong mobile subscriber growth this year, saturation looms and competition could soon be damaged by a major acquisition...
Although the Philippines has seen strong mobile subscriber growth this year, saturation looms and competition could soon be damaged by a major acquisition, according to BMI.
By the end of June 2011 there were almost 91.3mn mobile subscribers in the Philippines, up from just over 86mn at the end of 2010 and 84.17mn in June 2010. The industry added over 3.23mn mobile subscribers in the three months to June 2011, making Q211 by far the strongest quarter for growth since Q210.
Despite the strong growth in Q211, the market is approaching saturation point. As the market becomes more saturated, the operators will be compelled to focus more on the post-paid segment. The average annual growth in mobile subscribers is forecast at around 4.4% over the next five years, reaching 117m; this would be equivalent to a mobile penetration rate of almost 114%.
In August 2011 a Philippines Senate committee approved PLDT’s plan to acquire a majority stake in rival operator Digitel for around PHP70bn, saying the deal was ‘consistent with its legislative franchise and in the interest of the public’. In a 12-page report, the committee concluded that the merger constitutes part of the normal course of action between two businesses in the local telecoms industry.
Further, concerning the issue that the PLDT-Digitel merger breaches local laws on monopolies and cartels, the report found that ‘there is effectively no comprehensive anti-trust legislation in the Philippines’. Despite parliamentary approval, the acquisition of Digitel by PLDT could result in a market which is dominated by a single major operator.
Other noteworthy developments in the Philippines telecoms market includes the announcement in September that broadband operator Bayan Telecommunications had its permit to operate a cellular mobile telephone system (CMTS) network extended up to November 7 2013 by the country’s regulator. The extension will allow the operator to continue installing cell sites to meet permit obligations and prepare for the launch of next-generation LTE services following major rivals Smart Communications and Globe Telecom.
