Philippine telecommunication firms have spent about 25 percent of their total revenues on capital expenditures (capex) in the past few years.
This figure is higher than most Asean countries and is way above the global average of 16 percent, data from global ICT firm Ericsson showed.
In a report at the recent Philippine Telecoms Summit of the Department of Information and Communications Technology, Ericsson Philippines and Pacific Islands president and country manager Sean Gowran said that from 2012 to 2015, local telecom service providers had been investing in network infrastructure at a level significantly higher than the global average in terms of capex to revenue ratio.
Other Asean countries such as Thailand and Burma (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 Telecom 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 the significant investments in PH networks were a result of the enormous growth in data traffic in the country, which was driven in large part by video demand and the increased adoption of smartphones.
“Migration to newer technologies such as LTE (long term evolution) is the key to providing an efficient network and better customer experience to subscribers,” Gowran said, adding that “service providers must also capitalize on various business industries’ digitalization revenue opportunities.”
Despite the struggle to overcome the rising demand for data, Gowran noted that Philippines’ network performance was actually at par with most Asean countries.
Recognizing the need for government support in expanding the network infrastructure, President Duterte recently approved the establishment of a national broadband network to deliver fast internet service to far-flung areas.
The program would establish a national government portal and a national broadband plan, as well as accelerate the deployment of fiber optic cables and wireless technologies.