2011 Philippines - Telecoms, Mobile, Broadband and Forecasts

The surge in broadband internet in the Philippines is continuing as the mobile market slows

After years of solid growth, the mobile segment of the telecom market in the Philippines has slowed significantly, reflecting, among other things, a general downturn in the Philippine economy. Although the economy has certainly picked up, growth in mobile subscribers continued at a generally slower pace, with mobile revenue growth also down. Into 2011 the Philippines mobile market had around 90 million mobile subscribers. Penetration was approaching the 100% milestone and continued modest growth (5%-10%) looked likely.

Following a down year in 2009, the country’s GDP growth had bounced up again in 2010 reaching 7.3%, matching the 31-year high of 7.3% in 2007. The recession in the US, its main trading partner, had hit exports hard in 2009 but the country seemed to have overcome this setback. In the meantime, the telecom industry shifted to an overall pattern of more modest growth, with the core mobile services business looking more like it was approaching maturity and the fixed-line market stagnating.

Whilst mobile expansion had certainly slowed by 2011, the operators were continuing to talk positively about the market’s potential. Despite the slowing pace, the mobile market remained central to the wider development of the Philippines telecom sector, just as it has done over the last decade or so. Although the sector was facing challenges there was clearly some energy remaining in it as the two leading operators continued to roll out their Third Generation (3G) mobile offerings and look for improved revenue streams.

In the meantime the brightest news has been growing interest in broadband services, with the major players in the local telecom market starting to invest heavily in the expansion of broadband access and looking at both wired and wireless broadband platforms to provide coverage. The demand for faster internet access was increasing rapidly by 2011. Despite the fresh new round of growth, overall broadband penetration remains relatively low; there were less than seven broadband services for every 100 people in the country by mid-2011.

The country’s fixed-line subscriber penetration, which has been well and truly living in the shadow of mobile services, remained essentially stagnant, even slightly declining. It has certainly been a long period of difficult times for the fixed-line operators. Despite the concerted effort of both the government and the operators to expand the national fixed network, fixed-line teledensity stood at less than 4% in 2010 and only a little more than half of all Philippine towns and cities had a basic telephone service.

The Philippine telecom and IT market continues to contribute more than 10% to the country’s GDP, having obviously been given a massive boost by the mobile segment over the last decade.

Key highlights

• Growth in mobile subscribers has slowed dramatically in the Philippines but despite a dip in the national economy still managed to grow 9% in 2009 followed by 16% in 2010;
• Growth in 2011 was likely to be less than 10%;
• Mobile penetration was approaching 100%;
• Although the SMS market has peaked, Filipinos were still sending an estimated 1.8 billion SMS messages every day coming into 2011;
• Social networking websites were becoming increasingly popular and changing the shape of the telecoms market;
• Broadband Internet access in the Philippines was showing strong growth, with a five year surge in subscribers in that market segment;
• There were an estimated 6.1 million broadband subscribers by mid-2011, however this still only represented less than 7% of the population;
• PLDT remained the country’s leading broadband operator;
• Growth in the fixed-line market remained sluggish; fixed teledensity stood at less than 4% with no growth expected in the short term;
• The Philippine telecom sector continued to be an important element in the local economy, contributing over 10% to the country’s GDP.

Philippines: - key telecom parameters – 2010 - 2011

(Source: BuddeComm)

Note: Estimates for both 2010 and 2011

Data in this report is the latest available at the time of preparation and may not be for the current year.