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Philippines Telecommunications Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: April 2008 Product Code: R302-2768 Description The performance of the Philippines’ two leading mobile operators Smart Communications and GlobeTelecom for the nine months ended September 2007 yielded some impressive results. Smart announced4.1mn net additions in the nine month period, surpassing its YE06 figure of 3.8mn net additions. Similarly, Globe reported 3.56mn net additions for the January to September period, against 3.26mn netadditions for the whole of 2006. The reasons behind this are clear. The country’s economy is performingwell, with record remittances reported in November 2007 (money sent home by Filipinos working abroadtotalled US$13.05bn). There is also a booming call centre industry, which is fuelling the local economyand leading to a growing wealthy youth section of society. Finally, operators have themselves beenraising marketing expenditure over advertisements and a range of promotions to acquire greatersubscriber numbers. BMI believes its YE07 mobile subscriber figure of 55mn to be realistic, rising to 63mn by the end of thisyear. Growth will increasingly arrive from low-income households based in remote and rural areas of thePhilippines, as is being experienced in other high growth mobile markets in Asia. However, our concernrelates to a slower than anticipated US economy in 2008. This will likely see a slowdown in remittanceand export growth, weighing negatively on the peso and impacting economic development and thetelecoms industry. 3G service take-up will continue to be sluggish. Handsets will be expensive and theirlack of affordability will only be heightened if the economy does slow this year. The entrance of new mobile operator Bell Telecommunications (BellTel), licensed by the NTC to buildand operate a mobile network, is not expected to carry any real threat to existing mobile operators.BellTel is to deploy a CDMA2000 1x network in the 1800MHz band, but will require an estimatedPHP238.5mn of capital expenditure between 2008 and 2009 to get its service up and running. Theoperator estimates that in the first year of service, it will have a subscriber base of 85,000. In view of this,the operator is not expected to make any significant impact to the development of the mobile sector in theimmediate term. No changes have been made to our fixed-line and broadband forecasts. The government at the time ofwriting is said to be mulling over plans to reintroduce its previously failed national broadband network.Plans had to be scrapped following allegation of corruption practices that allowed Chinese equipmentvendor ZTE to win the deal. The Department of Transportation and Communication (DOTC) hasrenamed the idea as the Government Broadband Network project. However, rather than benefiting thepopulace, the project is to be used to improve communication among government agencies. In thismanner, it is unlikely to contribute to the overall growth of the broadband sector. Table of Contents
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