Philippine telecoms firms have spent about 25 percent of their revenues on capital expenditures in the past few years. Global ICT firm Ericsson said this figure is higher than the investments in other members of the Association of Southeast Asean Nations (Asean) and is way above the global average of 16 percent.
In a report at the recent Philippine Telecoms Summit of the Department of Information and Communications Technology (DICT), Ericsson Philippines and Pacific Islands President and Country Manager Sean Gowran said that from 2012 to 2015, local telecom services providers invested in network infrastructure at a level significantly higher than the global average in terms of Capex/revenue.
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. 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.
Both PLDT and Globe increased their Capex to revenue ratio even further in 2016, as they spent 30 percent of their total revenues on network improvements and expansion.
Gowran said that the significant investments in PH networks are a result of the enormous growth in data traffic, which is driven in large part by video demand and the increased adoption of smartphones.
“Migration to newer technologies such as LTE is the key to providing an efficient network and better customer experience to subscribers, said Gowran, adding that “service providers must also capitalize on various business industries’ digitalization revenue opportunities.”
Despite the struggle to overcome the increasing demand for data, Gowran noted that the Philippines’ network performance in terms of Median DL Throughput and Median Latency is actually at par with most Asean countries.
Recognizing the need for government support in expanding the network infrastructure, President Rodrigo Duterte recently approved the creation of a national broadband network to deliver fast internet service to far-flung areas. The program will establish a National Government Portal and a National Broadband Plan, as well as accelerate the deployment of fiber optic cables and wireless technologies.