No price war seen in mobile internet space even with Dito’s March launch
Globe Telecom CEO Ernest Cu does not expect a “price war” erupting on mobile internet with the expected March 2021 commercial launch of Dito Telecommunity, the telco startup of Dennis Uy of Davao and China Telecom.
“My own opinion is that probably there won’t [be a price war] given the fact that prices are very low,” Cu said on Wednesday during a media briefing on the company’s 2020 financial results.
A price war roiled the industry in 2003 when Sun Cellular, then owned by the Gokongwei family’s JG Summit Holdings, entered the market and offered unlimited call and text promos.
This continued until rival PLDT Inc. bought Sun in 2011.
Cu said they had yet to feel the impact of Dito. The startup is expected to release this month the results of a technical audit showing its network capabilities and coverage of at least 37 percent of the country’s population.
“They have 1,800 sites, as they say, and close to 11,000 each for the two incumbents,” Cu said. “Let’s see how that works out.”
Globe faces competition in another emerging business segment, fixed-line internet, where rivals PLDT and Converge ICT are ramping up network investments.
Cu said Globe was also spending more on its fiber internet rollout for the year.
“What was once a free area for Converge to play has now become a crowded area,” Cu said during the briefing.
This will also support the company’s home broadband business, which saw a “banner year” in 2020. Globe’s home broadband revenue grew 23 percent to P26.8 billion people amid movement restrictions during the COVID-19 lockdowns.
It was the only major segment that posted growth in 2020 as the COVID-19 pandemic and heightened competition affected all businesses, including its flagship mobile unit. Globe said mobile revenue in 2020 slid 7 percent to P103.1 billion.
For the full-year, core profit dropped 13 percent to P19.5 billion as service revenues declined 2 percent to P146.4 billion.
Cu said they were targeting growth even as capital spending requirements went up. For this year, Globe is budgeting a record P70 billion, mainly for infrastructure, such as new cell towers and fiber lines. Globe reinvested 41 percent of gross service revenue, or a total of P60.3 billion in capital expenses in 2020.
