Growth set to continue in the Philippines despite looming saturation

Although the mobile penetration rate in The Philippines is expected to breach the 100% mark by end- 2012, growth momentum is expected to be relatively strong in the next few years due to the prevalence of prepaid subscribers - this helps to inflate the headline figure through multiple SIM ownership and inactive subscriptions, according to BMI.

By end-2016, it is forecast that there will be more than 117mn mobile subscribers in the Philippines, representing a penetration rate of 114%. While most countries are experiencing declining demand for fixed-line services, the number of fixed lines in the Philippines continues to increase, which can be attributed to operators’ efforts to expand into underserved rural regions.

The Philippine broadband industry will likely outperform alternative segments due to increasing consumer demand and operators’ determination to tap into the growth potential by expanding and upgrading their fixed and mobile broadband networks. At the end of 2016 there will be around 10.233mn broadband subscribers in the country, with mobile broadband the key growth driver.

At present, nothing much has changed since the merger between the Philippine Long Distance Telephone Company and Digital Telecommunications Philippine was approved by the regulator. However, drastic developments are expected in the future - the imminent entry of San Miguel Corporation (SMC) and the issue of Connectivity Unlimited Resources Enterprises’ 3G spectrum, as well as the fifth 3G licence, which has been vacant for a number of years. Besides SMC, Globe Telecom and Multi-Media Telephony will likely be interested in the 3G licences.

The Philippine economy grew at a disappointing rate of 3.2% y-o-y in Q311, falling well below the government's estimate of 3.8-4.8% on stubbornly low government spending and falling exports, and marking the second straight quarter of largely disappointing data. However, personal consumption posted strong growth, which highlights the resilient nature of the Filipino consumer, due to remittance inflows that have held up well despite a deteriorating external economic environment.

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