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The Philippines Is Better Off With Only 2 Major Telcos – Ericsson PH Executive

An interesting perspective from a telco industry bigwig; read first before venting out your views, folks!

The Philippines is better off with only two, profitable, major telecommunications companies, said a telco industry executive.

Sean Gowran, president and country manager of telco network operator Ericsson Philippines weighed in on the issue, noting that while additional telco players in the country would benefit consumers with more choices, having only two major players allows revenue to be concentrated enough to support the massive expenditures and investments that come with the business.

Gowran commented that in the Philippine telco landscape, PLDT and Globe Telecom are currently “engaged in [a] fierce competition that forces them to pour massive investments to improve their network infrastructure as they seek to improve the quality of their service to consumers.”

Thirty percent of their revenue were spent on network infrastructure, so that means they are competing, and they are competing for the same number of subscribers,” Gowran said in his presentation on “Investment and Bandwidth Management” at the recent Philippine Telecoms Summit at the PICC in Pasay City.

We don’t have an investment problem, we have a revenue problem. Philippine operators’ CAPEX (capital expenditures) intensity has been among the highest,” he added. In the presentation, Gowran mentioned that local telco providers have been investing their revenue in infrastructure and technology at a significantly higher rate than the global average.

According to Philstar: “Neighboring ASEAN countries such as Thailand and Myanmar put back 20 percent of their revenues into capex over the same period, while Vietnam’s ratio was at 17 percent. Countries such as Singapore and Malaysia were even lower, with a capex level of less than 15 percent. Only Indonesia spent more than the Philippines at 27 percent.

The Ericsson country manager also shared his doubts on the financial viability of a third player entering the Philippine market at this point in time. According to their estimates, a third major telco would need to invest at least P500 billion just to catch up with PLDT and Globe and get a fair share of the consumer market. Even if the new telco company manages to set up within five years, it’ll have to weather many more years of operation before it can finally recover the half-trillion investment.

Gowran further expanded that at the recently-concluded Mobile World Congress 2017 in Spain, there was a discussion on the disadvantages of having four or more telcos in a country. In the panel, GSMA chairman and Indian telco tycoon Sunil Bharti Mittal said that a country only needed at most three major telco operators. Smaller countries should only have two, at best.

Mittal’s statement, according to Gowran, refers to the ideal telco industry scenario, where there is still enough revenue to be shared among the players – enough for the companies to be profitable, and be able to reliably maintain and regularly improve their services. 

Read Also: 3 Things We Need To Fix The Philippines’ Crappy Internet

Source: Philstar

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  1. “invest at least P500 billion just to catch up with…” ” before it can finally recover the half-billion investment….”
    Maybe you mean HALF TRILLION investment.

    Okay, so much for confusing statements. Mr. Gowran has a point. A 3rd telco for the last mile may have difficulties in recovering their investments. But we need these connections (wired and/or wireless) for the benefit of the less fortunate people (like me). If we are to stuck with 2 major telcos, then these two should do the last mile.

    1. Syempre si ericson may tie up sa G-cash ng globe at sa broadband ng pldt/smart kaya ganun ang statement….. Bias talaga…

  2. I seriously disagree with the statement of Sean Gowran. He is assumign that these companies are virtous and is actually willing so upgrade it’s bandwidth/range whenever you have the funds to keep growing.

    What instead happens is that since there is only two, why improve more? They pocket the massive profits and keep the same decrepit speeds.

    1. “I seriously disagree with the statement of Sean Gowran. He is assumign that these companies are virtous and is actually willing so upgrade it’s bandwidth/range whenever you have the funds to keep growing.”

      True. Their LTE speeds are only equivalent to HSPA+ speeds abroad. With only two telcos here, they have become complacent with their offers and it has led to stagnation. Does anyone remember when Sun first entered the market? They were the first to offer unlimited calls and text and despite the spotty connection, it thrived and forced Smart and Globe to offer similar deals. We need someone like that to force Smart and Globe to either go back to their unlimited internet deals (for 999 and up postpaid plans) or at least make the data volume allowance more reasonable and enticing. Give us true data/minutes rollover! if we haven’t used all our data for this month, just keep on adding it instead of it being a one time rollover that expires. Abolish load expiry for prepaid users. Give them better data volume promos, etc. It would take a long time for PLDT and Globe to consider that if they control all communication here in the PH.

        1. Sun was owned by Digitel, PLDT’s biggest rival in Central and Northern Luzon during the early 2000s if I’m not mistaken. They even have a Regine Velasquez ad which you might find in YouTube (Giving voice to Luzon). Years after Digitel launched Sun, PLDT bought Digitel making Sun another PLDT subsidiary. Globe (Islacom and now Bayantel) and PLDT (Digitel) has been eating up their competitors for years now and we only have a few alternative local options for wired Internet access and NONE for mobile Internet access.

          1. So much for competition. Seems our businesses don’t like competitors undercutting them. So they take over them instead.

  3. So why then do we have the most expensive and yet the slowest internet speeds in Asia, if they’re so great at investing infrastructure?

    Why are we shelling out 100% for internet bills while only getting 50% what we’re paying for?

  4. tbh wala naman akong complaint sa speed ng internet dito sa Pinas eh (siguro sometimes kung di lang stable ang connection ayun ang nakakainit ng ulo). Ang gusto ko lang eh murang internet at bigger data allocation. Yan yung nakakabwisit na 50 pesos mo worth 800MB lang per day. Kainis kaya. Hindi kami makapagkunek ng internet kasi halos kagaya ng lahat ng poblema ng bawat pamilya, wala tayong sariling permanenteng bahay na hassle kung sakaling lilipat kami, paano na yung connection namin? So ang ending eh pocket wifi lang kami then 3 kaming gumagamit sa tingin nyo kasya yung 800MB/day sa tatlong tao?! -_-

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