Philippines Philippines: T Telec Elecommunica Ommunications R Tions Report Eport

Q4 2021
www.fitchsolutions.com
Philippines
Telec
elecommunica
ommunications
tions R
Report
eport
Includes 10-year forecasts to 2030
Philippines Telecommunications Report | Q4 2021
Contents
Key View............................................................................................................................................................................................ 4
SWOT .................................................................................................................................................................................................. 6
Telecommunications SWOT..................................................................................................................................................................................................... 6
Industry Forecast........................................................................................................................................................................... 7
Industry Risk/Reward Index ....................................................................................................................................................12

New Focus On Enterprise Connectivity Pushes Mature Asian Markets Up Index.............................................................................................12
Philippines Risk/Reward Index..............................................................................................................................................................................................22
Market Overview..........................................................................................................................................................................24
Regulatory Development ..........................................................................................................................................................31
Competitive Landscape.............................................................................................................................................................36
Company Profile...........................................................................................................................................................................39
Globe Telecom.............................................................................................................................................................................................................................39
PLDT.................................................................................................................................................................................................................................................42
Philippines Demographic Outlook .........................................................................................................................................45
Telecommunications Glossary................................................................................................................................................48
Telecommunications Methodology.......................................................................................................................................49
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Key View
Key View: While the regulator continues to push for greater competition in the sector, newcomers continue to face challenges in
their service launches as a result of regulatory constraints. Dito Telecommunity, the new telecoms entrant backed by China
Telecom, has launched commercial services, although coverage remains limited and its rollout has been hampered by stringent
technical standards set by the National Telecommunications Commission (NTC). However, by June 2021, the new operator had
reached the 1mn subscribers milestone on the local market, only three months after its commercial launch on March 8. While the
addressable market in the Philippines telecoms sector is substantially large, incomes remain depressed and the uptake of advanced
services, such as fibre and 4G, is still at its early stages. 5G seems to have started to gain traction, as PDLT indicated that already 1%
of their Q121 subscribers were 5G and we can only assume Globe has been very active on this front. While the opportunity beyond
fixed-wireless services still relatively unknown, we have adjusted our 5G forecast to cover this new dynamic.
Uptake Of Advanced Mobile Services To Be Gradual

Philippines - Mobile Forecasts
f = Fitch Solutions forecast. Source: Fitch Solutions
Latest Updates And Industry Developments
• The two principal mobile operators, PLDT and Globe Telecom reported a total of 151.57mn mobile subscribers in Q121 - this is
a loss of over 10.8mn subscriptions relative to the 162.4mn recorded at the end of Q120. The penetration rate stood at 136.5%,
with connections heavily skewed towards prepaid services (97% of total connections). While multi-SIM ownership remains
prevalent, with many subscriber utilising dual-SIM devices in order to take advantage of lower intra-network tariffs, we also
believe that subscription numbers are severely inflated as a result of directives from the regulator in July 2018 to accord one-year
validity for all prepaid reloads.
• In March 2021, mobile newcomer Dito Telecommunity launched limited services, centred around key metro areas.
The company passed its technical audit in February 2021. Media reports suggest that the company signed up 20,000
subscribers at launch. By May 2021, it had already launched its 5G network on the local market and by June 2021 it announced
that it reached the 1mn subscribers milestone on the local market, only three months after its commercial launch on March 8.
• In January 2021, the NTC announced that MNP will come into effect by September 2021. In June 2019, the NTC issued new rules
for the Mobile Number Portability Act, which came in force in July 2019. The three telcos have established a joint company to
handle number porting requests, and have selected US-based, Syniverse, as the MNP service provider. Reportedly, porting
services will be provided to subscribers free of charge. We view that this could improve competitive dynamics in the market and
reduce multi-SIM ownership to an extent. Globe Telecom has done the first step and launched its MNP service in April 2021. The
service is available for both pre-paid and post-paid customers.
• In September 2020, Philippine telecom incumbents PLDT and Globe Telecom separately announced plans to upgrade their fixed
and mobile networks. PLDT will upgrade all last-mile copper broadband connections to fibre over the course of 18 months, while
Globe will upgrade all its cell sites to support LTE by end-2021 and speed up FTTH rollouts.
• In May 2020, the DICT stated that it published its first guidelines for independent tower operators, allowing qualified entities to
apply for five-year permits to construct, manage, and operate towers. The DICT, by October 2019 had signed 24 memorandums
of understanding with various tower companies, including edotco and LCS Holdings.
• In October 2019, a draft bill seeking to expand the power of the NTC was introduced in parliament. The bill will give the NTC the
power to impose a fine of at least PHP1mn for each day a telco breaches the requisite terms and conditions in the Public
Telecommunications Policy Act. The amendment will also allow the regulator to force telcos to refund customers. By January
2020, it appears that the bill has not been passed.
SWOT
Telecommunications SWOT
SWOT Analysis
Strengths • Demand for mobile data services continues to rise, with subscribers demonstrating a growing appetite for
content alongside communication services.
• 4G LTE networks have been launched, allowing operators to introduce more advanced over-the-top (OTT)
services.
• Large addressable market with a significant youth population, with high levels of social media utilisation.
• Government remains keen to reform the sector in order to attract greater foreign investment.
Weaknesses • Topographical difficulties increase cost of network deployment.

• Operators' practice of keeping data prices artificially high and the regulator's call for operators to reduce SMS
rates impede 3G/4G adoption.
• Ineffective regulatory powers have allowed other players to be forced out of the telecoms market and has
left the mobile sector a powerful duopoly.
Opportunities • Third national operator has started commercial activity and can potentially introduce meaningful
competition to the powerful duopoly.
• Potential for launch of mobile number portability (MNP) in 2021 could trigger service innovation and
improvements.
• Growth of mobile video streaming and m-commerce could lead to high data revenues.
• Introduction of common tower policy, and issuance of licenses to tower companies (towercos) will improve
roll-out of mobile networks.
• Potential passing of Open Access In Data Transmission Act could allow more companies to enter the data
transmission business.
Threats • Rising costs, as operators increase spending on marketing and promotional campaigns in order to gain new
subscribers.
• Fixed local exchange carrier growth opportunities limited by popularity of texting, emailing and voice over
internet protocol, threatening fixed international long-distance services.
• Weak regulatory environment and foreign ownership cap of 40% to deter potential investors.
Industry Forecast
Key View: The growth potential for the Philippines' telecoms sector remains substantial, although growth will continue to be driven
by the uptake of low-cost services, given the relatively lower income household profile there. As a result of the Covid-19
pandemic, fixed-wireless (FWA) broadband services have received a strong boost, as more users took up broadband connections to
support remote working and learning. While operators have outlined new plans to deploy last-mile fibre, we do not expect the
improvements to pave the way for the rapid adoption of FTTH services. Fibre services remain prohibitively expensive for a majority of
Internet users, who have found mobile data and FWA solutions ‘good enough’ for most use cases. 5G also remains a distant prospect
for most mobile users, given that 4G penetration and service availability still remains low.
Latest Updates
• By the end of our 10-year forecast period in 2030, we expect the market to host about 171.51mn mobile connections,
equating to a penetration rate of 138.6%. The market appears to be expanding rapidly in recent quarters due to the extension of
prepaid validity periods. Deactivations of these SIMs by operators and the regulator is a key downside risk to our forecasts.
• We have revised upward our forecasts for 5G adoption in the Philippines. While uptake is expected to be rather slow in the short
term, this will gradually accelerate toward the medium to long term. By 2030, we expect roughly 94.77mn 5G subscribers,
accounting for roughly 55% of the mobile market at that time. 4G subscribers will number 76.74mn and will make up for almost
45% of the market. We are bearish on the prospects of 5G in the Philippines given that operators still struggle with low ARPUs,
and the devices ecosystem for 5G has not matured sufficiently to bring prices down for wider market affordability. Also, the
Philippine government has yet to formally identify the 5G spectrum band for telcos.
• The operators stopped selling 3G SIM cards in Q420. We have therefore adjusted our forecasts and accelerated the 3G shut
down. However, we foresee 2G technology to keep going for a few more years, given that it is still heavily used for texting and
rural coverage.
• In 2021, operators will likely double down on investments into LTE and fibrerisation of their core networks. Upselling subscribers
to 4G will remain the key source for operators to drive value growth. Both operators continue to report encouraging adoption of
3G and 4G enabled smartphones, though they have now stopped offering 3G connections, as they turn their focus on 4G and
5G, even if utilisation of mobile data services remains relatively low when compared to regional peers including Thailand and
Indonesia.
• We expect the number of wireline subscriptions to fall significantly over the next 10 years and by the end of 2030, we expect
there will be 1.32subscriptions in the country, with penetration declining to 1.1%.
• The fixed broadband segment had a strong growth in 2020, as operators renew their commitments to invest in fibre
infrastructure and improving the last-mile in urban- sub-urban areas. The launch of 5G could also give a positive boost to the
fixed-wireless segment. Broadband subscriptions are now expected to total 8.75mn by 2030 for a penetration rate of just over
7.0%.
Structural Trends
Mobile
Facing the prospect of increased competition, we expect operators to double down on investments into infrastructure in order to
improve service quality and delivery. Globe and PLDT spending approximately PHP51bn and PHP54bn respectively in 2019 in
terms of capital expenditure, and a further PHP60bn and PHP18bn respectively in 2020. Competitive pressures remained elevated
in 2019 and 2020, driven by regularly promotional campaigns, such as steep data discounts, and preferential intra-network call and
SMS tariffs. As a result, multi-SIM ownership is high in the market, and this could be further exacerbated given new DICT directives in
mandating that operators offer a one-year validity period for all prepaid reloads, regardless of amount. In 2019 alone, the market
added 32.7mn connections, of which only 168,700 were post-paid net additions. However, 2020 came with a 17.7mn decrease in
the number of connections, with 418,600 of them being post-paid, leading to a 8.2% decrease in post-paid connections y-o-y, thus
Q420 recording the lowest post-paid connections since Q214.
While both Smart and Globe have successfully stifled putative new entrant Liberty Telecom at birth, their buyout of its assets
finally forced the regulator to intervene and demand that excess spectrum be reserved for a third player. The new telecom
entrant, Dito Telecommunity has been accorded with substantial spectrum assets, as the regulator tries to arm the new China
Telecom-backed player to introduce meaningful competition to the market and force the incumbents to innovate and offer better
services. The new telecom entrant will likely trigger a round of organic growth in the market, as many Filipinos will most likely be
keen to at least try the services of the new operator or take up a subscription to take advantage of preferential intra-network
tariffs. Media reports said that the new operator launched limited services in March 2021, centred around key metro areas,
suggesting that the company had already signed up 20,000 subscribers at launch.
Mobile Forecasts
Total Mobile Subscribers & ARPU
f = Fitch Solutions forecast. Source: Operators, national sources, Fitch Solutions
With the regulator's decision made, the incumbent duo have ramped up their LTE investments and called upon customers to
upgrade to 4G devices. As we foreseen in our previous reports, this was a precursor to sunsetting their older networks, seeing that
already in Q420, the operators stopped selling 3G SIM cards in Q420. We have therefore adjusted our forecasts and accelerated the
3G shut down. However, we foresee 2G technology to keep going for a few more years, until around 2028, given that it is still heavily
used for texting and rural coverage. Under our revised forecast scenario, 4G subscriptions are forecast to account for about 45% of
the mobile market by the end of our forecast period in 2030, while 5G becomes the dominant technology will just over 55% of
subscriptions. We view that investments into 5G networks will start picking up already in the middle part of our forecast, when
operators monetise their 4G networks sufficiently. Nonetheless, 4G will remain the primary access technology for
many mobile users for much of our forecast period.
Despite this greater usage of mobile data services, ARPU will decline in the short term before a reversal, owing to the ARPU-dilutive
effects of bundling, the prospect of the new operator competing on price and possible delays before service improvements are
rolled out. However, migration to post-paid service and growth of better wireless data subscriptions will counter the pressure on
prices in the longer term.
Mobile Forecasts
2G, 3G, 4G & 5G Subscribers
e/f = Fitch Solutions estimate/forecast. Source: Operators, national sources, Fitch Solutions
Wireline Voice And Broadband
Our forecast for the fixed-line sector is based largely on data published by PLDT, Globe Telecom, and Sky Cable and we have now
added insights from the newly published data from Converge ICT Solutions, which has been offering fixed broadband services since
2016, and is now heavily focused on FTTX. The company had their IPO in late 2020, so this is the first time they have ever issued
financials or operational data, which we have now added to our analysis. We believe fixed-voice subscriptions will significantly
decline in the long term, as wireline broadband bundles become more attractive than standalone mobile broadband options.
A number of trends are expected to put further pressure on the traditional fixed-line market. These include the spread of internet
telephony, which is often provided free, and the rising use of fixed-wireless connections, with mobile operators allowing fixed access
to their wireless networks. However, some fixed operators are launching their own fixed-wireless services and the ongoing
expansion into rural parts of the country should continue to provide some growth support over the short-to-medium term.
The fixed broadband market in the Philippines remains underdeveloped, with market growth being hindered by several key barriers
which have proved to be difficult to overcome. Underinvestment in wireline infrastructure, which has been a long-standing trend
due to the oligopolistic nature of the telecoms market providing little incentive to operators to invest into networks, coupled with
the proliferation of ‘good enough’ mobile data connections, have kept growth of fixed broadband connections low. At the same
time, slow growth in disposable incomes across the broader population have also made fixed connections unaffordable for many
Filipinos, making it difficult for operators to achieve sufficient scale to recoup investments into last-mile infrastructure. The process
of obtaining construction permits is also difficult given that it is largely managed by various local government units; this barrier has
long been cited by operators as a key reason in delayed network construction. Opposition from hostile homeowners' associations
has also been a stumbling block to last-mile rollouts.
Indeed, in order to circumvent the process of securing construction permits, Globe Telecom has been focusing on using FWA
services to serve its home broadband segment, rather than focus on laying out fibre for the last-mile. In June 2019, the company
further launched a 'Home Air Fiber 5G' FWA product targeted at customers in the relatively wealthier Metro Manila area. Over the
years, Globe and rival PLDT have also decommissioned their older CDMA wireless local loop and WiMax networks, and transitioned
these customers onto their fixed LTE products.
Converge ICT Solutions, the newly listed fixed operator, showed significant growth for is heavily FTTX-focused broadband services,
reaching 1.2mn fixed broadband users (965,000 of them being FTTX customers) by Q121, up from a total of 325,000 users just 2
years before. The player is still far behind PLDT (with 3.3mn wireline broadband users in Q121) and Globe Telecom (4.1mn users at
the same date), but its growth is significant and constant and we will follow closely its evolution.
The combination of factors mentioned above has kept the fixed broadband market in the Philippines relatively small, even when
compared with regional peers. By the end of 2020, we estimate that there were 7.73mn fixed and fixed-wireless broadband
connections in the Philippines, suggesting a penetration rate of just over 7%. The market has grown rapidly in 2020 as a result of
the Covid-19 pandemic, which has boosted the demand for fixed internet connections. While we forecast steady growth in
connections out toward the end of our forecast period driven by renewed operator investments into their networks, gains are
expected to be registered largely in the lower-value fixed-wireless access (FWA) segment.
Wireline Voice And Broadband Forecasts

Total Fixed Voice & Total Broadband Subscriptions
e/f = Fitch Solutions estimate/forecast. Source: Operators, national sources, Fitch Solutions
PHILIPPINES TELECOMS MARKET - HISTORICAL DATA AND FORECASTS (2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Total mobile phone subscribers ('000) 167,322.4 149,579.4 152,870.2 155,621.8 157,800.5 159,536.3
2G subscriptions ('000) 42,421.7 32,602.5 32,636.5 29,861.2 20,922.9 7,281.3
3G subscriptions ('000) 53,807.3 33,969.0 18,411.2 6,775.3 88.1 0.0
4G subscriptions ('000) 71,081.4 82,880.9 95,478.8 105,790.5 113,830.6 117,587.0
5G subscriptions ('000) 127.0 6,343.6 13,194.8 22,958.9 34,668.0
Monthly blended ARPU, PHP 104.7 106.4 109.4 109.2 109.1 109.7
Total fixed voice subscribers ('000) 4,256.3 3,179.1 2,819.9 2,591.5 2,280.5 2,100.3
Total broadband subscriptions ('000) 7,236.7 7,730.0 8,270.0 8,418.5 8,476.1 8,530.0
PHILIPPINES TELECOMS MARKET - FORECASTS (2025-2030)

Indicator 2025f 2026f 2027f 2028f 2029f 2030f
Total mobile phone subscribers ('000) 165,917.8 171,061.2 173,285.0 172,938.5 172,709.2 171,506.9
2G subscriptions ('000) 1,622.2 599.9 173.5 0.1 0.0 0.0
3G subscriptions ('000) 0.0 0.0 0.0 0.0 0.0 0.0
4G subscriptions ('000) 118,880.5 114,600.8 106,693.3 96,557.5 86,322.4 76,740.6
5G subscriptions ('000) 45,415.1 55,860.5 66,418.2 76,380.9 86,386.8 94,766.3
Monthly blended ARPU, PHP 110.5 112.2 115.6 120.8 128.0 135.0
Total fixed voice subscribers ('000) 1,995.3 1,853.6 1,736.9 1,597.9 1,434.9 1,320.1
Total broadband subscriptions ('000) 8,582.4 8,629.9 8,672.5 8,704.2 8,730.5 8,751.3
Industry Risk/Reward Index

New Focus On Enterprise Connectivity Pushes Mature Asian Markets Up
Index
Key View
• Asia Pacific scores 47 points out of a potential 100 in this quarter's update of our Telecommunications Risk/Reward Index (RRI).
• This is a slight improvement over last quarter's survey and reflects the region's return to its pre-Covid state, with mobile
subscriptions lost during lockdowns and supply chain disruptions now mostly restored, and wireline broadband profiles generally
unaffected but still underwhelming in most markets.
• There have been important 5G licencing and network deployment agreements announced since our last update but there has
currently been no impact to subscription trends.
As in other regions, there is a growing recognition of the importance of digital infrastructure in mitigating future crises, and efforts to
replace legacy low-speed broadband networks with next-generation access platforms have taken on a fresh urgency. However,
these networks will take time to build and will be capital intensive, distracting operators from the difficult business of regaining
control over the mass-market consumer services business that has supported them for decades. That struggle is all but lost as
platform-agnostic, over-the-top service stacks developed by third parties are monetising consumers far more effectively than
operators' less own, and far less compelling, 'me too' offerings.
The enterprise market is about to become more attractive, as businesses seek to reposition to agile working and as governments
pursue digital agendas, and infrastructures based on new technologies such as 5G, fibre and cloud/edge computing will open up
new opportunities for telcos. Players like Telstra — which has just secured its largest ever Industrial Internet of Things contract with
a water utility — show that there is ample scope for reinvention; telcos' streamlining and sidelining of traditional reporting metrics
(for example, numbers of consumer mobile subscriptions) reflect the changing focus.
Covid Containment Success Sees Mature Asian Markets Return To Growth

Asia Pacific Telecommunications RRI Scores, Q4 2021
Note: Scores out of 100; higher score = lower risk. Source: Fitch Solutions' Telecommunications Risk/Reward Index
Taiwan — like regional leader South Korea — is moving rapidly to deploy 5G and expand its last-mile fibre coverage. Recent robust
growth in fixed and mobile subscriptions has enabled us to take a more optimistic view of the market, and improved forecasts drove
a 3.1-point increase to the country's Industry Rewards score. This was enough to propel it past New Zealand to occupy sixth place
on the Index, but only just. We expect New Zealand's vigorous investment in fibre — particularly in rural areas — will see it perform
better later this year, as the country's operators have all moved to a six-monthly reporting cycle.
Mature markets are generally performing as they were pre-Covid and are only beginning to implement new business models and
operating paradigms needed to deliver digital transformation across multiple industries. However, less developed markets can still
offer opportunities for investors and Nepal is a good example, seeing its overall score improve by 2.3 points and the country itself
jumping four places to 18th position in this quarter's update.
A 5.1-point increase to Nepal's Industry Rewards score is attributed to a sharp upward revision to our last-mile fibre (FTTx)
subscription growth forecast for the country. Fibre is being deployed faster than copper and other low-bandwidth media are being
retired, leading to a net increase overall in the medium term. Meanwhile, the closure of 3G networks is accelerating 4G uptake and
there is a notable increase in average revenue per users of late that will continue over the next five years, boding well for the existing
mobile network operators, who still have effective control over the value-added services market.
Not all developing markets are faring so well, with Papua New Guinea ceding 20th position to Mongolia in this update. Sharp
downward revisions to both markets' Country Risks scores show that political stability and robust economic growth are key to
ensuring continued take-up of basic services, while their low Industry Risks scores highlight the undesirability of state influence in
key service providers and regulatory bodies. Neither is conducive to inspiring investment in new technologies and applications, and
these are challenges that affect most of the other markets making up the lower half of the Index.
Mature Markets Gravitating To Higher-Value Services

Selected Asia Telecoms RRI Scores, Q4 2021
Note: Scores out of 100; higher score = lower risk. Source: Fitch Solutions
ASIA TELECOMMUNICATIONS RISK/REWARDS INDEX, Q4 2021

Industry Country Industry Country Regional Global
REWARDS RISKS RRI
Rewards Rewards Risks Risks Rank Rank
South Korea 85.6 53.9 74.5 88.4 92.0 90.2 79.2 1 6
Australia 75.2 69.2 73.1 92.1 86.8 89.4 78.0 2 7
Singapore 68.5 65.0 67.3 88.4 93.1 90.8 74.3 3 18
Japan 73.7 59.1 68.6 85.8 86.8 86.3 73.9 4 21
Hong Kong 70.2 62.0 67.3 89.4 83.8 86.6 73.1 5 23
Taiwan 69.0 53.4 63.6 91.6 90.6 91.1 71.8 6 25
New Zealand 62.2 68.3 64.4 83.0 95.0 89.0 71.8 7 26
Macau 73.9 66.3 71.3 36.1 75.6 55.8 66.6 8 42
China 60.9 46.7 55.9 82.3 80.3 81.3 63.5 9 47
Malaysia 53.3 61.3 56.1 74.9 79.1 77.0 62.4 10 52
Indonesia 53.0 45.7 50.4 74.9 64.9 69.9 56.3 11 69
Brunei 45.6 66.0 52.7 21.9 71.3 46.6 50.9 12 84
Thailand 58.7 37.5 51.3 25.9 66.1 46.0 49.7 13 88
Vietnam 61.4 31.5 51.0 16.0 72.2 44.1 48.9 14 90
India 43.4 32.2 39.5 44.8 67.8 56.3 44.5 15 107
Maldives 46.3 41.5 44.6 41.6 36.8 39.2 43.0 16 118
Philippines 35.6 45.6 39.1 40.5 61.9 51.2 42.7 17 119
Nepal 56.0 31.0 47.2 37.4 25.7 31.6 42.5 18 122
Bangladesh 39.2 35.5 37.9 46.6 49.8 48.2 41.0 19 133
Mongolia 38.1 55.1 44.1 14.7 49.3 32.0 40.4 20 136
Papua New Guinea 55.4 34.7 48.1 23.5 20.9 22.2 40.4 21 138
Fiji 42.5 50.9 45.4 23.5 33.0 28.2 40.3 22 139
Pakistan 44.5 37.0 41.9 31.3 32.1 31.7 38.8 23 144
Solomon Islands 47.4 38.7 44.4 11.6 37.3 24.4 38.4 24 146
East Timor 34.9 40.9 37.0 50.9 29.0 39.9 37.9 25 151
Cambodia 41.4 31.8 38.0 25.9 40.8 33.3 36.6 26 154
Sri Lanka 37.3 29.3 34.5 22.5 59.9 41.2 36.5 27 155
Tuvalu 33.1 55.3 40.9 11.6 40.6 26.1 36.4 28 157
Bhutan 32.3 37.0 33.9 41.6 36.5 39.0 35.5 29 162
Laos 43.3 38.5 41.6 7.9 33.9 20.9 35.4 30 163
Tonga 37.2 41.7 38.8 9.4 39.9 24.6 34.6 31 170
Kiribati 34.5 45.1 38.2 11.6 39.5 25.5 34.4 32 171
Vanuatu 32.0 40.9 35.1 11.6 52.8 32.2 34.2 33 172
Myanmar 45.8 27.5 39.4 9.3 14.5 11.9 31.1 34 182
Micronesia 31.7 35.7 33.1 11.6 40.6 26.1 31.0 35 183
Samoa 31.7 38.7 34.2 7.9 38.1 23.0 30.8 36 184

Afghanistan 25.8 34.7 28.9 2.8 6.9 4.8 21.7 37 199
North Korea 15.7 33.7 22.0 1.4 24.0 12.7 19.2 38 200
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~

Regional Average 48.3 45.2 47.2 39.3 53.9 46.6 47.0 ~ ~
ASIA TELECOMMUNICATIONS INDUSTRY REWARDS, Q4 2021

Subscriber Competitive INDUSTRY
ARPU (USD) Post-paid Share REWARDS
Growth Landscape REWARDS
South Korea 60.8 93.0 99.5 89.2 85.6 74.5
Australia 32.7 88.9 85.4 93.7 75.2 73.1
Singapore 20.6 81.4 87.9 83.9 68.5 67.3
Japan 14.1 97.0 100.0 83.9 73.7 68.6
Hong Kong 24.6 92.0 74.9 89.2 70.2 67.3
Taiwan 17.6 79.4 89.9 89.2 69.0 63.6
New Zealand 8.0 89.4 76.9 74.6 62.2 64.4
Macau 86.9 90.5 72.9 45.5 73.9 71.3
China 27.6 53.3 68.8 93.7 60.9 55.9
Malaysia 4.0 65.3 69.3 74.6 53.3 56.1
Indonesia 63.3 19.6 35.2 93.7 53.0 50.4
Brunei 34.7 52.5 61.8 33.4 45.6 52.7
Thailand 29.1 55.3 66.3 83.9 58.7 51.3
Vietnam 70.9 33.9 47.2 93.7 61.4 51.0
India 52.3 6.5 40.2 74.6 43.4 39.5
Maldives 3.0 72.9 63.8 45.5 46.3 44.6
Philippines 37.7 11.6 31.7 61.3 35.6 39.1
Nepal 89.9 8.5 36.2 89.2 56.0 47.2
Bangladesh 40.2 5.0 27.6 83.9 39.2 37.9
Mongolia 12.1 58.0 55.8 26.6 38.1 44.1
Papua New Guinea 80.9 58.0 37.2 45.5 55.4 48.1
Fiji 48.7 80.4 27.1 13.6 42.5 45.4
Pakistan 83.9 3.5 6.5 83.9 44.5 41.9
Solomon Islands 74.9 58.0 43.2 13.6 47.4 44.4
East Timor 9.5 53.8 30.7 45.5 34.9 37.0
Cambodia 42.2 16.1 32.7 74.6 41.4 38.0
Sri Lanka 33.7 7.5 46.7 61.3 37.3 34.5
Tuvalu 29.6 58.0 31.2 13.6 33.1 40.9
Bhutan 19.6 63.8 32.2 13.6 32.3 33.9
Subscriber Competitive INDUSTRY

ARPU (USD) Post-paid Share REWARDS
Growth Landscape REWARDS
Laos 69.3 40.2 18.1 45.5 43.3 41.6
Tonga 32.2 58.0 45.2 13.6 37.2 38.8
Kiribati 11.1 80.4 20.1 26.6 34.5 38.2
Vanuatu 11.6 58.0 44.7 13.6 32.0 35.1
Myanmar 75.9 2.5 15.6 89.2 45.8 39.4
Micronesia 5.5 52.5 42.2 26.6 31.7 33.1
Samoa 9.0 58.0 46.2 13.6 31.7 34.2
Afghanistan 64.3 7.0 5.0 26.6 25.8 28.9
North Korea 18.1 42.0 2.0 0.8 15.7 22.0
Global A
Avver
erage
age 50.0 50.0 50.0 50.0 50.0 50.0
Regional A
Avver
erage
age 38.2 51.4 47.8 55.9 48.3 47.2
ASIA TELECOMMUNICATIONS COUNTRY REWARDS, Q4 2021

Youth Population
COUNTRY
Urban/Rural Split (Aged 24 And GDP per capita REWARDS
REWARDS
Under)
South Korea 75.4 1.0 85.4 53.9 74.5
Australia 82.9 30.7 94.0 69.2 73.1
Singapore 98.0 2.0 95.0 65.0 67.3
Japan 90.5 0.5 86.4 59.1 68.6
Hong Kong 98.0 0.0 87.9 62.0 67.3
Taiwan 73.9 2.5 83.9 53.4 63.6
New Zealand 83.4 32.7 88.9 68.3 64.4
Macau 98.0 3.5 97.5 66.3 71.3
China 51.3 23.6 65.3 46.7 55.9
Malaysia 72.4 48.7 62.8 61.3 56.1
Indonesia 42.7 52.3 42.2 45.7 50.4
Brunei 73.4 41.7 82.9 66.0 52.7
Thailand 35.2 22.1 55.3 37.5 51.3
Vietnam 21.1 40.7 32.7 31.5 51.0
India 16.6 56.3 23.6 32.2 39.5
Maldives 23.6 34.2 66.8 41.5 44.6
Philippines 31.2 66.3 39.2 45.6 39.1
Youth Population
COUNTRY
Urban/Rural Split (Aged 24 And GDP per capita REWARDS
REWARDS
Under)
Nepal 5.5 65.3 22.1 31.0 47.2
Bangladesh 22.1 58.3 26.1 35.5 37.9
Mongolia 59.3 61.3 44.7 55.1 44.1
Papua New Guinea 0.5 74.4 29.1 34.7 48.1
Fiji 43.7 61.8 47.2 50.9 45.4
Pakistan 19.1 73.9 18.1 37.0 41.9
Solomon Islands 10.1 82.9 23.1 38.7 44.4
East Timor 15.1 80.4 27.1 40.9 37.0
Cambodia 9.0 66.8 19.6 31.8 38.0
Sri Lanka 4.5 46.7 36.7 29.3 34.5
Tuvalu 54.3 69.8 41.7 55.3 40.9
Bhutan 26.6 51.3 33.2 37.0 33.9
Laos 20.1 68.8 26.6 38.5 41.6
Tonga 6.5 75.4 43.2 41.7 38.8
Kiribati 41.7 73.4 20.1 45.1 38.2
Vanuatu 9.5 78.4 34.7 40.9 35.1
Myanmar 14.6 54.3 13.6 27.5 39.4
Micronesia 7.0 69.3 30.7 35.7 33.1
Samoa 2.5 76.4 37.2 38.7 34.2
Afghanistan 11.1 91.5 1.5 34.7 28.9
North Korea 49.7 36.7 14.6 33.7 22.0
Global A
Avver
erage
age 50.0 50.0 50.0 50.0 50.0
Regional A
Avver
erage
age 39.5 49.4 46.9 45.2 47.2
ASIA TELECOMMUNICATIONS INDUSTRY RISKS, Q4 2021

Regulatory Regulator Resources
INDUSTRY RISKS RISKS
Independence And Openness
South Korea 88.4 88.4 88.4 90.2
Australia 95.7 88.4 92.1 89.4
Singapore 88.4 88.4 88.4 90.8
Japan 88.4 83.2 85.8 86.3
Hong Kong 95.7 83.2 89.4 86.6
Taiwan 88.4 94.7 91.6 91.1
New Zealand 88.4 77.6 83.0 89.0
Macau 16.1 56.0 36.1 55.8
China 69.8 94.7 82.3 81.3
Malaysia 80.2 69.6 74.9 77.0
Indonesia 80.2 69.6 74.9 69.9
Brunei 22.9 20.9 21.9 46.6
Thailand 22.9 28.9 25.9 46.0
Vietnam 11.1 20.9 16.0 44.1
India 33.7 56.0 44.8 56.3
Maldives 69.8 13.3 41.6 39.2
Philippines 52.0 28.9 40.5 51.2
Nepal 33.7 41.2 37.4 31.6
Bangladesh 52.0 41.2 46.6 48.2
Mongolia 16.1 13.3 14.7 32.0
Papua New Guinea 33.7 13.3 23.5 22.2
Fiji 33.7 13.3 23.5 28.2
Pakistan 33.7 28.9 31.3 31.7
Solomon Islands 16.1 7.0 11.6 24.4
East Timor 88.4 13.3 50.9 39.9
Cambodia 22.9 28.9 25.9 33.3
Sri Lanka 16.1 28.9 22.5 41.2
Tuvalu 16.1 7.0 11.6 26.1
Bhutan 69.8 13.3 41.6 39.0
Laos 8.8 7.0 7.9 20.9
Tonga 16.1 2.8 9.4 24.6
Kiribati 16.1 7.0 11.6 25.5
Vanuatu 16.1 7.0 11.6 32.2
Myanmar 5.3 13.3 9.3 11.9
Micronesia 16.1 7.0 11.6 26.1
Samoa 8.8 7.0 7.9 23.0

Regulatory Regulator Resources

INDUSTRY RISKS RISKS
Independence And Openness
Afghanistan 2.8 2.8 2.8 4.8
North Korea 0.0 2.8 1.4 12.7
Global Average 50.0 50.0 50.0 50.0

Regional Average 42.5 36.0 39.3 46.6
ASIA TELECOMMUNICATIONS COUNTRY RISKS, Q4 2021

L-T Economic S-T Economic L-T Political S-T Political Operational Risk COUNTRY RISKS RISKS
South Korea 99.5 99.5 91.0 81.9 89.9 92.0 90.2
Australia 87.4 85.9 90.5 70.9 93.0 86.8 89.4
Singapore 85.4 85.4 87.9 100.0 100.0 93.1 90.8
Japan 80.9 74.9 93.5 90.7 90.5 86.8 86.3
Hong Kong 89.4 93.5 47.2 73.6 99.5 83.8 86.6
Taiwan 98.5 100.0 77.9 82.4 92.5 90.6 91.1
New Zealand 96.0 93.5 92.0 95.5 96.5 95.0 89.0
Macau 81.4 80.9 59.8 86.9 72.4 75.6 55.8
China 95.0 91.7 62.8 86.4 72.9 80.3 81.3
Malaysia 83.9 94.7 58.8 61.1 87.9 79.1 77.0
Indonesia 72.4 74.9 54.3 52.5 67.8 64.9 69.9
Brunei 64.8 56.0 52.3 98.0 78.4 71.3 46.6
Thailand 82.4 79.4 38.2 47.7 74.4 66.1 46.0
Vietnam 79.4 74.9 56.5 91.7 65.3 72.2 44.1
India 72.9 84.7 59.3 63.3 63.3 67.8 56.3
Maldives 23.4 36.4 42.2 45.2 36.7 36.8 39.2
Philippines 79.9 82.9 53.3 53.5 50.8 61.9 51.2
Nepal 36.7 34.7 21.1 11.6 25.1 25.7 31.6
Bangladesh 74.9 76.4 43.7 43.7 30.2 49.8 48.2
Mongolia 18.1 35.7 67.3 59.0 57.8 49.3 32.0
Papua New Guinea 27.6 43.5 22.6 14.8 8.5 20.9 22.2
Fiji 35.2 34.7 22.1 38.7 33.7 33.0 28.2
Pakistan 51.3 30.7 26.1 14.1 35.2 32.1 31.7
Solomon Islands 56.3 61.8 37.2 44.2 12.1 37.3 24.4
East Timor 26.1 60.6 19.1 28.1 20.1 29.0 39.9
Cambodia 30.2 42.2 45.2 51.8 37.7 40.8 33.3
Sri Lanka 63.3 61.8 54.8 56.8 61.3 59.9 41.2
Tuvalu 20.6 26.4 81.9 83.4 15.6 40.6 26.1
L-T Economic S-T Economic L-T Political S-T Political Operational Risk COUNTRY RISKS RISKS
Bhutan 9.0 15.3 44.7 42.5 53.8 36.5 39.0
Laos 18.6 15.3 27.6 80.4 30.7 33.9 20.9
Tonga 50.0 33.7 47.7 42.5 32.7 39.9 24.6
Kiribati 22.1 39.7 80.9 68.3 13.1 39.5 25.5
Vanuatu 60.3 51.8 83.4 82.9 19.1 52.8 32.2
Myanmar 24.6 19.3 5.0 2.0 18.1 14.5 11.9
Micronesia 38.7 50.0 33.4 75.4 23.1 40.6 26.1
Samoa 26.6 16.8 88.9 48.7 23.6 38.1 23.0
Afghanistan 10.1 17.8 1.5 7.0 2.5 6.9 4.8
North Korea 1.5 2.0 30.7 61.8 24.1 24.0 12.7
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0
Regional Average 54.6 56.8 52.7 58.9 50.3 53.9 46.6
Philippines Risk/Reward Index

Key View: The Philippines's overall score in our Risk/Reward Index for the telecommunications sector in Asia Pacific is below the
regional average. ARPUs are still low, although the penetration in the mobile sector is high, pulling down the Rewards score. The
country's Risk score has been kept low historically due to the weak regulator, which has failed numerous times to bring in a third
operator to challenge the incumbent duo. With Dito Telecommunity having now launched commercially as a third operator, we
have now lifted up the average risk scores for Philippines, bringing the country closer to average in terms of Risk/Reward Index
Ssore. While strong GDP growth creates an optimistic outlook, the Covid-19 outbreak will likely have ripple effects into the global
economy, threatening consumption, investment and exports of the Philippines.
Rewards
• Sustained economic activity will boost household income and generate more consumer spending on telecoms services. In
2021, real GDP is expected to grow by 5.3%. Downside risks are evident in our forecast, which has already been revised
downward. A new wave of Covid-19 infections, coupled with tighter fiscal headroom could affect
the country's economic recovery in the year.
• This is a significant risk to the already-low ARPU levels, as subscribers might not be keen to migrate toward higher value-added
services and postpaid plans in light of weaker disposable incomes resulting from job losses.
Risks
• The political outlook in Philippines is volatile and could deteriorate rapidly given the volatile nature of President Duterte and the
deepening division between the president and vice-president's camp in both the executive and legislative branches.
• Philippines's Industry Risk score was kept low at 40.5 in light of worsening investment risks in the market. The Philippine
government has directly intervened in franchise renewals - notably with that of broadcaster ABS-CBN - indicating a degree of
political bias. Further, the 2015 collapse of the Telstra-San Miguel Corp joint venture discussions and the regulator's inability to
intervene in favour of increased competition highlights regulatory weakness and the incumbents' power in the market. On the
upside, however, the regulator has also taken a more proactive role in introducing new shared infrastructure policy and to
incorporate the new third operator.
Philippines Versus APAC Risk/Reward Index

Q4 2021
Note: Scores out of 100; high score = low risk. Source: Fitch Solutions
Market Overview
Market Drivers And Trends
Recent Developments
• By the end of March 2021, the two mobile operators in the Philippines jointly had 151.57mn subscribers, a slight increase from
the 149.58mn connections reported a quarter earlier. This, however, remains lower than the 162.4mn connections reported at
the end of Q120. The market has likely lost significant amounts of SIMs as a result of Covid-19-related lockdowns which have
forced many to terminate their secondary SIMs in light of job losses and furloughs.
• The mobile penetration rate stood at 136.5% by the end of Q121, with connections heavily skewed towards prepaid services
(97% of total connections). While multi-SIM ownership remains prevalent, with many subscribers utilising dual-SIM devices in
order to take advantage of lower intra-network tariffs, we also believe that subscription numbers are severely inflated as a result
of directives from the regulator in July 2018 to accord one-year validity for all prepaid reloads.
• PLDT has begun its rollout of 5G mobile services in July 2020, and aims to upgrade at least 40% of its existing sites to 5G by the
end of 2021. Globe Telecom has already launched fixed-wireless 5G services since mid-2019, and mobile services in
mid-2020. PDLT indicated that already 1% of their Q121 subscribers were 5G and we can only assume Globe has been very
active on this front too.
• Already in Q420, the operators stopped selling 3G SIM cards in Q420. We have therefore adjusted our forecasts and accelerated
the 3G shut down. However, we foresee 2G technology to keep going for a few more years, until around 2028, given that it is still
heavily used for texting and rural coverage.
• Telecoms new entrant Dito Telecommunity has launched mobile services in March 2021. In September 2019, the regulator
disclosed that Dito will distribute SIM cards in Q419/Q120, paving the way for the operator to conduct trial services. Dito also
faced a raft of pressures, including disruptions to its equipment procurement process owing to the Covid-19 outbreak, as well as
pressures related to the cybersecurity of its network, given that it is partly owned by a state-owned Chinese telecoms operator.
The company passed its technical audit in February 2021. By May 2021, it had already launched its 5G network on the local
market and by June 2021 it announced that it reached the 1mn subscribers milestone on the local market, only three months
after its commercial launch on March 8. By July 2021, its network reach covered 140 cities/municipalities.
• Converge ICT Solutions, the newly listed fixed operator, showed significant growth for is heavily FTTX-focused broadband
services, reaching 1.2mn fixed broadband users (965,000 of them being FTTX customers) by Q121, up from a total of 325,000
users just two years before. The player is still far behind PLDT (with 3.3mn wireline broadband users in Q121) and Globe Telecom
(4.1mn users at the same date), but its growth is significant and constant and we will follow closely its evolution.
• In September 2020, Philippine telecom incumbents PLDT and Globe Telecom separately announced plans to upgrade their fixed
and mobile networks. PLDT will upgrade all last-mile copper broadband connections to fibre over the course of 18 months, while
Globe will upgrade all its cell sites to support LTE by end-2021 and speed up FTTH rollouts.
Mobile
The Philippines has a considerably high mobile penetration rate despite being an underdeveloped telecoms market. This is due to
the aggressive price competition among operators, which have made services relatively affordable. Consequently, there has been
significant downwards pressure on the sector's ARPU, which is about a quarter of the regional average. This is likely a result of
the predominantly prepaid market, which can be attributed to low consumer spending power. Mobile operators in the Philippines
have been forced to compete aggressively with price and various promotions in order to win customers and maintain market share,
while the regulator has done little to prevent further escalation in competition or balance the skewed competitive landscape, which
is dominated by two companies. We believe this has led to complacency and unwillingness to invest in new products and services,
reason for which we welcome news of Dito Telecommunity’s commercial launch in Q121. Multi-SIM ownership is also common:
users hold SIM cards of multiple carriers to take advantage of different promotional campaigns and preferential intra-network tariffs.
The market finally inducted a new telecoms operator in November 2018 after a prolonged period of going back and fourth on
selection criteria. A consortium consisting of Mindanao Islamic Telephone Company, China Telecom, Udenna Corporation,
and its subsidiary Chelsea Logistic Holdings was selected. The winner, now named Dito Telecommunity, has committed to
reaching 84% nationwide mobile coverage by 2023, and is committing to spend PHP256bn (USD4.9bn) on capex/opex over the
same five-year period. The company formally launched commercial services in March 2021 and its 5G network by May 2021. By
June 2021 the operator announced that it reached the 1mn subscribers milestone on the local market, only three months after its
commercial launch on March 8.
Several local and foreign telecoms players, such as the Philippines Telegraph and Telephone Company (PT&T), NOW
Telecom and Vietnamese state-owned operator Viettel have expressed their interest in the bidding process. Of the named parties,
only NOW and PT&T have a presence in the market; both provide fixed and fixed wireless broadband services and are largely focused
in the enterprise sector. Ultimately, only two other parties took part in the bidding:PT&T and Sear Telecom (a group consisting
of LCS Group, TierOne Communications, Southeast Asia Telecom, Miller Pte and Fujian Torch ElectronTech). Both
competing bids were dismissed owing to different reasons, leaving the China-backed bid as the only eligible one.
PLDT and Globe served 151.57mn mobile subscribers between them by the end of March 2021. This equates to a penetration rate
of 136.5%, The market has expanded by around 20% since Q318, when the DICT implemented directives for operators to offer a
one-year validity period for all prepaid reload amounts. The drop seen in Q220 is likely due to Covid-19-related deactivations of
secondary SIMs.
Market Stabilises After Covid-19 Hit

Philippines Mobile Market Growth
Source: Globe, PLDT, Fitch Solutions
While they have successfully crushed all opponents through acquisition and pricing superiority, both PLDT and Globe are gearing up
to increase spending to improve service quality owing to the threat of the third telco. In 2019, PLDT invested approximately
PHP53.8bn into its networks, while Globe spent a total of PHP51bn to finance the expansion of its network capacity. Both operators
recognise that poor service on their networks could give a new entrant the leverage needed to quickly disrupt the status quo. Both
players have progressively improved their 4G LTE services in 2019 and 2020; both companies have made broad three-year network
investment commitments to the National Telecommunications Commission (NTC) in return for approval to their joint purchase of
SMC assets in 2017. In December 2020, PLDT stated that it will commit a record USD1.92bn for capex in 2021.
We estimate that that mobile data traffic grew to approximately 8.9GB/month/subscriber in Q121. PLDT reported that total data
traffic reached 777petabytes (PB) in Q121, while Globe reported data traffic of 836PB. This suggests that PLDT, with its slightly
smaller user base, had higher data utilisation on a per subscriber basis. Indeed, PLDT, through its consumer brand Smart has been
focusing on video streaming data bundles to drive its subscription growth.
Both operators have stated that data revenues have been rising. For Globe, 48% of its service revenues came from mobile data in
2019, and 51% in 2020, while PLDT attributed 37% of its total service revenues in 2020 to mobile data applications; this is up from
33% at the end of 2019. Globe's higher proportion of data revenues is due to PLDT's higher reliance on its fixed services compared
to Globe, and its higher proportion of low-value voice and SMS subscribers, which it services through its Talk n' Text (TNT) brand.
PLDT stated that about 70% of its subscriber base utilised 3G and 4G capable handsets in 2019, although only half of its
smartphone users base subscribe to data services. By May 2021, PLDT stated that its smartphone users accounted for 85% of its
customers in Q121, up from the 78% recorded in December 2020. This translates into almost 40mn active data users for the
operator. In Q121, PDLT indicated that already 1% of their subscribers were on 5G. Globe did not disclose information about its
mobile data subscribers, but we can assume a similar dynamic.
Globe Continues To Lead PLDT

Market Shares (%), 2016-2021
Source: Globe, PLDT, Fitch Solutions
Limited 5G mobile services were launched by Globe Telecom in February 2020, catered to premium postpaid subscribers. The
company subsequently announced in August 2020 that it will gradually expand its services to prepaid customers. PLDT on the other
hand claimed that it had begun deploying 5G mobile services in July 2020, although in September it announced plans to deploy 5G
fixed-wireless services in the high frequency spectrum band.
Although the Philippines continues to record one of the largest volumes of text messaging traffic in the world, the future is clearly in
mobile data as consumers turn towards more affordable smartphone devices and 3G/4G services. Mobile internet has long-term
potential in the Philippines, with our estimates suggesting that 3G/4G subscribers accounted for 78% of the mobile market at the
end of 2020. However, anecdotal evidence from operators seem to suggest that there is still a significant proportion of users who
still use featurephones, or do not subscribe to data services despite utilising a smartphone. Further, we believe that as a result of the
DICT directives to allot prepaid SIMs a one-year validity period regardless of reload amount, previously inactive 2G and 3G SIMs were
activated again, inflating 2G and 3G numbers for 2018 and beyond.
MVNO ABS-CBN Mobile had also tried to differentiate itself through a unique mobile content proposition since launching its
commercial mobile service in December 2013 over the Globe Telecom network. The MVNO had 946,000 subscribers at the end of
September 2017, up from 493,000 in December 2015, but still down from the 1.7mn it claimed in mid-2014. It announced in July
2018 that it will not renew its partnership with Globe Telecom, citing competitive pressures, and a declining subscriber base, making
the venture financially unsustainable. Services were shut down in December 2018. It offered the full range of basic mobile services
such as call, text and mobile internet, and complemented them with entertainment and news media content from its parental ABS-
CBN TV network.
Wireline Voice And Broadband
The Philippines's wireline voice and broadband market is dominated by PLDT and Globe Telecom, but it also hosts a large number of
small, specialised players (mostly cable TV operators and Internet service providers providing limited broadband and VoIP services,
as well as the country's last municipally-owned telephone companies (grouped as PAPTELCO)). The NTC has proved incapable of
tracking the number of wireline voice and broadband customers in the market, but based on data from the largest operators, we
estimate there were 3.18mn wireline voice lines in service at the end of 2020.
In September 2016, PLDT reorganised its wireline operations around a new unit, PLDT Home. The unit's remit is to grow usage of
wireline services and halt the decline in wireline subscriptions by offering new multi-service product bundles. The company has
embarked on an ambitious gigabit broadband project, which leverages new technologies, such as fixed LTE and fibre-to-the-home
(FTTH) as well as augmenting its ageing copper network with enhancements such as vectoring and G.fast.
By the end of Q121, PLDT reported 3.11mn wireline voice subscriptions, a slight increase from 3.04mn reported a quarter earlier as
the operator continued to bundle fixed-line voice subscriptions with its broadband services, which enjoyed a bout of growth as a
result of the pandemic. In the same quarter, PLDT recorded 2.39mn wireline broadband accesses, up from 2.27mn a quarter earlier.
Additionally, the company also reported roughly 891,000 fixed-wireless broadband connections, of which a portion was based on
older technologies such as CDMA wireless local loop and WiMAX; after several quarters of decline, this segment had begun to grow
again as PLDT doubled down marketing for its fixed LTE services. A quarter earlier in Q420, PLDT reported 817,000 of such fixed-
wireless connections.
Globe Telecom reported having 4.1mn 'Home Broadband' subscriptions in Q121, with almost 81% (3.3mn) of these connections
being fixed-wireless subscriptions. Globe no longer includes its mobile broadband subscriptions in these totals, so this provides
considerable added clarity regarding its strength in the wireline market. Globe's total 'Home Broadband' user base had increased by
55% y-o-y. While growth can be mostly attributed to the Covid-19 pandemic driving increased demand for fixed internet services, it
can also partially attributed to interest in the company's new bundled broadband plans. It also launched fixed-wireless 5G services in
limited areas around metropolitan Manila in June 2019; the telco has stated that 5G will be key for it to further penetrate the home
broadband market.
PLDT The Undisputed Fixed-Line Leader

Wireline Voice Subscriptions ('000)
Note: Latest Globe wireline vice data is from end-2018; 2019 and 2020 data are Fitch Solutions forecasts. Source: Globe, PLDT, Fitch Solutions
Other major ISPs in the Philippines include Converge ICT Solutions and Sky Cable Corporation. Both companies have long
stated their intentions to expand their presence in the market, with Converge in July 2020 submitting plans to raise PHP35.9bn
(USD712mn) in an initial public offering (IPO). The company had in July 2019 raised as much as PHP12.8bn (USD250mn) from
private equity to fund a fresh foray through new fibre-optic deployments. That deal itself comes after the company, together with a
group of foreign partners including South Korean incumbent KT Corp, Filipino-Korean venture LSI-Fibrenet Konstruk Corp and
US-based telecoms equipment maker Tyco Electronics Subsea Communications agreed in August 2018 to a five-year,
USD1.8bn agreement to deploy a nationwide high-speed fibre broadband network. Converge has not ruled out further efforts to
raise funds through the sale of both equity and debt. By September 2019, the company reported that it had around 500,000
subscribers, and stated that it eventually hopes to procure about 30% of the market over the 'next few years’. It also claimed to be
the dominant 'high-speed residential broadband provider' by the end of March 2020, accounting for 54% of the market.
After its successful IPO late in 2020, the company is now releasing operational data. The player showed significant growth for is
heavily FTTX-focused broadband services, reaching 1.2mn fixed broadband users (965,000 of them being FTTX customers) by Q121,
up from a total of 325,000 users just two years before. The player is still far behind PLDT (with 3.3mn wireline broadband users in
Q121) and Globe Telecom (4.1mn users at the same date), but its growth is significant and constant and we will follow closely its
evolution. The operator adds that it has deployed around 500,000 new FTTH ports during Q121, almost 100% increase y-o-y.
In July 2021, Converge ICT Solutions said that it will double the data transmission capacity of its metro backbone from the existing
400 Gbps to 800 Gbps. Back in 2020, the operator had activated its first 400Gbps metro backbone.
Wireline Broadband Market Shares

Market Shares (%), Q1 2021
Source: Operators, Fitch Solutions
Fixed-Wireless Connections Support Subscriber Growth

Fixed Broadband Subscriptions By Key Operator ('000)
Note: Sky stopped reporting subscription data from Q118. Source: PLDT, Globe, Converge ICT Solutions, Fitch Solutions
Sky Cable, which provides pay-TV services as a unit of ABS-CBN Corp had 1.156mn total pay-TV subscribers at the end of 2017, with
cable-TV subscriptions accounting for 757,000 of the total. Cable TV ARPU was PHP606 in Q217, with packages priced from
PHP299 to PHP1,999. Approximately 208,000 broadband subscribers were registered as of the end of 2017, an increase of 0.48%
from the end of 2016. Broadband ARPU was PHP1,181 in Q217; packages were priced from PHP1,299 to PHP3,899. ARPUs are
lower than the lowest package price as we believe many subscribers are still contracted to Sky's old PHP999 plan, which has been
phased out; we expect ARPUs to increase slightly after eliminating its PHP999 plan. We estimate that the company had 150,000
double-play subscriptions in 2017, up from an estimated 127,000 in 2016.
Satellite TV (DTH) services were launched in May 2016. Sky Cable had signed up 399,000 subscribers by 2017, up 235.3% y-o-y.
ARPU was approximately PHP140 at Q217, an increase from the PHP122 reported at the end of 2016.It disclosed little about its
2018 performance, aside from noting that its cable subscription base slumped by 69,000 subscribers and its total subscriber
base increased by 489,000, driven mostly by gains in the DTH segment. This implied that it had 1.85mn total subscriptions, of which
688,000 were cable subscribers in 2018. In September 2016, Sky signed an agreement to make premium content available to
PLDT/Smart subscribers, meaning that the company can also reach 30mn customers through on-demand streaming and catch-up
applications that are run on smartphones, tablet computers, PCs and set-top boxes.
Sky Cable has also been investing heavily into growing its fibre network, although fresh regulatory scrutiny the company is facing
over the congressional franchise of its parent, ABS-CBN, could force the company to backtrack, given the uncertain outcome of its
future. The potential cessation of its cable TV broadcast business, should regulatory pressures escalate, could also make the
company’s offerings even less appealing.
On June 30 2020, the National Telecommunications Commission (NTC) issued a cease and desist order to Sky Cable Corporation,
forcing the company to stop its direct broadcast satellite service Sky Direct, as well as its broadcasts of its TV Plus channels in Metro
Manila. The order follows the May 5 decision where the NTC pulled off air the country’s leading television network ABS-CBN - the
parent company of Sky Cable - following its failure to secure a provisional franchise from the regulator.
Sky Cable claims that the shutdown will affect close to 1.5mn direct-to-home (DTH) subscribers; the company last reported 937,000
satellite subscribers at the end of 2018. Unlike in other markets where IPTV and cable TV services predominate, many households
residing in rural areas outside of Metro Manila remain reliant on DTH services for entertainment purposes. The country’s archipelagic
nature, coupled with relatively low levels of disposable incomes in regional areas, makes developing extensive and robust fixed
infrastructure commercially unviable, accentuating the low-margin nature of the business and limiting returns on investment.
The other DTH players in Philippines include Cignal and G.Sat while cable TV providers include Cable Link and Destiny Cable. Sizing
the Philippines’ pay-TV market has proven to be difficult in the absence of regulatory data and performance indicators, apart from
that reported by Sky Cable. Nonetheless, based on broader regional trends and estimates of TV set sales in the country, we estimate
that there were approximately 4.77mn pay-TV subscriptions in the country, with DTH services amounting to roughly 2.84m (60% of
the total).
Regulatory Development
The government maintains strong influence in the Department of Information and Communications Technology, together with the
National Telecommunications Commission, evidenced by the selection process of the third operator. The regulators are also highly
ineffective and have been largely unable to promote competition as Globe and PLDT both manoeuvred to keep new entrants out of
the market.
The regulation of the Philippine telecommunications sector is the responsibility of the National Telecommunications Commission
(NTC), which is under the purview of the newly-created Department of Information and Communications Technology (DICT). The
DICT and the NTC are the entities with jurisdiction over the supervision, adjudication and control of all telecommunications services
in the Philippines. They are also responsible for overseeing broadcasting and radio spectrum issues. The DICT and NTC have the
power to formulate rules and regulations in the public interest, encourage effective use of communications and broadcasting
facilities and maintain effective competition. The DICT is the successor to the Department of Transport and Communications, which
used to take a hands-off approach. The DICT takes a stronger and more direct influence over the day-to-day regulation of the
sector, regularly scrutinised by President Rodrigo Duterte.
In October 2019, a draft bill seeking to expand the power of the NTC was introduced in Parliament. The bill will give the NTC the
power to impose penalties and sanctions on telecommunications players. The amendment to the Republic Act 7925 (the Public
Telecommunications Policy Act) will allow the NTC to levy a fine of at least PHP1mn for each day a telco breaches the requisite
terms and conditions in the act. The amendment will also allow the regulator to force telcos to refund customers. By January 2020,
however, it appears that the bill has not been passed.
Industry Risks
In the Q421 update of our Asia Telecoms Risk/Reward index, Philippines achieves an Industry Risk score of 40.5, slightly higher than
the regional average of 39.6. We keep the country’s score still low due to increased regulatory risks in the country following the
issuance of a cease and desist order to Sky Cable Corporation in June 2020. The Philippines' score is also relatively lower when
compared to other South East Asia peers, such as Indonesia and Malaysia. Historically, the DICT and NTC, despite possessing broad
powers to control and regulate the market, has rarely intervened to promote competition, and has regularly allowed the existing
players to disrupt potential newcomers. The NTC, for instance, has no remit to annul licences of the spectrum concession of existing
players, even if services are not launched and spectrum not utilised. There is also no obligation on the NTC to demand that
frequencies be distributed more equitably among industry players following a decade's worth of consolidation, which has left some
players with stronger spectrum portfolios than others. Operators are required to provide interconnectivity to smaller competitors,
but the NTC rarely intervenes on incumbents' anti-competitive practices. A newly-presented amendment to the existing telecoms
laws, which was introduced in October 2019, would give the NTC extended powers to impose fines.
The lack of regulatory powers had allowed the duopoly to keep new entrants out. For instance, in May 2016, new entrant, San
Miguel Corporation (SMC), had to abandon its plans to enter the telecoms sector, citing high legal and commercial risks. Its assets
were divided between the two incumbents, cementing their dominant position. The NTC was unwilling to get involved with the
dispute, leaving SMC with little recourse but to capitulate. Subsequently, the NTC was thought to be clawing back excess spectrum
from Globe and PLDT with a view to auctioning these valuable resources to a third mobile operator. However, in March 2017, the
DICT announced that it will not conduct any auction for the excess spectrum unless ordered to by President Duterte. Consequently,
the auction has not materialised, and while we believe that interest in the concession will be high, few will have the nerve to risk
investing in this mature, saturated market where there is a clear regulatory vacuum. Sky Cable, which already operates as a reseller
of mobile services, could be persuaded to bid, leveraging its nationwide broadband network as a basis for fixed wireless services. In
March 2018, PLDT returned spectrum owned by its CURE subsidiary to the DICT, without any rights to compensation.
Nonetheless, the desire for more competition in the market has seen a wave of new developments surrounding the establishment
of a third telecoms player in the Philippines. While most efforts have been led by President Duterte, the DICT has been entrusted
with ensuring that the new operator sets up as soon as possible, and ensuring that it helps clear any regulatory roadblocks. Moving
forward, we are positive on the improvement of Philippines Industry Risk Scores within our Risk/Reward Index, given that the
regulator allows and assists the new operator to establish operations in the country.
Score Pulled Down by Heightened Investment Risks

Asia Pacific Telecoms Industry Risks Scores, Q421
Note: Scores out of 100; higher scores = lower risks. Source: Fitch Solutions
Main Development: Sky Direct Shutdown To Weigh On Philippines' Pay-TV, Industry Risks
On June 30 2020, the National Telecommunications Commission (NTC) issued a cease and desist order to Sky Cable Corporation,
forcing the company to stop its direct broadcast satellite service Sky Direct, as well as its broadcasts of its TV Plus channels in Metro
Manila. The order follows the May 5 decision where the NTC pulled off air the country’s leading television network ABS-CBN - the
parent company of Sky Cable - following its failure to secure a provisional franchise from the regulator.
Sky Cable claims that the shutdown will affect close to 1.5mn direct-to-home (DTH) subscribers; the company last reported 937,000
satellite subscribers at the end of 2018. Unlike in other markets where IPTV and cable TV services predominate, many households
residing in rural areas outside of Metro Manila remain reliant on DTH services for entertainment purposes. The country’s archipelagic
nature, coupled with relatively low levels of disposable incomes in regional areas, makes developing extensive and robust fixed
infrastructure commercially unviable, accentuating the low-margin nature of the business and limiting returns on investment.
The other DTH players in Philippines include Cignal and G.Sat while cable TV providers include Cable Link and Destiny Cable. Sizing
the Philippines’ pay-TV market has proven to be difficult in the absence of regulatory data and performance indicators, apart from
that reported by Sky Cable. Nonetheless, based on broader regional trends and estimates of TV set sales in the country, we estimate
that there were approximately 4.77mn pay-TV subscriptions in the country, with DTH services amounting to roughly 2.84m (60% of
the total).
It is unclear whether the order will result in all 1.5mn subscribers being wiped off Sky’s balance sheet. While households could likely
hold on to their set-top boxes in anticipation that services may eventually be restored, the termination could also be an opportunity
for subscribers to back out of their contracts prematurely, and potentially shift toward non-linear, on-demand services, such as over-
the-top (OTT) platforms like Netflix. A key impediment to this transition, however, will be the difficulty in availing such services
outside of urban areas where mobile and fixed network availability is extremely patchy. The NTC has also asked Sky Cable to refund
unconsumed prepaid loads, deposits on subscriber equipment, and charges from new applicants, as well as advance payments.
While the Filipino government has begun the process of reviewing a new congressional franchise for ABS-CBN, the outcome of the
review is uncertain.
The forceful termination of ABS-CBN and Sky’s broadcasts are highly politicised, and clearly linked to President Rodrigo Duterte’s
opposition toward ABS-CBN. Duterte has repeatedly stated his opposition toward the renewal of ABS-CBN's franchise, perceiving
that the broadcaster had unduly favoured a rival presidential candidate in the 2016 presidential election. The network has also been
faced with allegations of breaching foreign ownership rules; ABS-CBN is 22%-owned by foreign investors, while local laws dictate
that mass media must be wholly-owned by local entities. 40% of Sky Cable is held by Singapore-based investor ST Telemedia, in
line with government foreign ownership restrictions on domestic communications firms. It is also unclear whether Sky Cable’s other
services will be forced to cease operations, given that the government’s opposition toward ABS-CBN stems from the broadcast of
channels, rather than on the provision of communications services. Sky Cable operated 688,000 cable TV subscriptions at the end
of 2018.
Given the politicisation of media services and the challenging outlook of the Philippines’ telecoms sector, we have revised
downward the country’s Telecoms Industry Risk score. The regulator’s apparent ability to be influenced by the government
continues to be a key impediment to foreign investor sentiment, and has also made the telecoms landscape difficult for both new
entrants and existing players.
Additional Development: Mislatel Confirmed As Third Operator, Delays Commercial Rollout
A consortium consisting of Mindanao Islamic Telephone Holding (Mindanao), China Telecom, Udenna Corporation, and its
subsidiary, Chelsea Logistic Holdings, has been confirmed as the country’s third telco. The consortium, named Mislatel, beat out
two other bidders: Philippine Telegraph and Telephone (PT&T) and Sear Telecom, a group consisting of LCS Group, TierOne
Communications, Cambodia’s Southeast Asia Telecom, Singapore’s Miller Pte and China’s Fujian Torch ElectronTech. In
July 2019, the consortium was formally awarded a Certificate of Public Convenience and Necessity (CPCN) and subsequently
announced that the new telco will be named Dito Telecommunity Corp. However, the new entrant announced that it will delay
its commercial launch from late-2020 to 2021 following a raft of pressures, including disruptions to equipment procurement as a
result of Covid-19, as well as fears of espionage given its part-ownership by the Chinese state-owned telco.
MISLATEL'S OWNERSHIP COMPOSITION

Name Description Ownership
Mindanao Islamic Telephone Telco in Philippines, supplying fixed-line voice and broadband in the Congressional Franchise
Holding Mindanao region Holder
China Telecom Chinese state-owned telecoms company 40%
Udenna Corporation Holding company with interest in petroleum and logistics sectors 35%
Chelsea Logistic Holdings Wholly-owned subsidiary of Udenna Corporation 25%
Source: Fitch Solutions
Carving Out Market Share Will Prove To Be Difficult
The Mislatel consortium enters the Philippines telecoms sector with few existing assets, excluding Mindanao Telecom’s limited local
access network infrastructure. It will rely on roaming arrangements of the two incumbent carriers in the near-term to provide
services while it focuses on its own roll-out. The new telco says it is willing to work with incumbents, PLDT and Globe Telecom, to
accelerate their network deployment, and is also open to working with other telecoms players, stating that it will focus on
partnerships with companies which own towers, as well as local broadband providers.
The competitive dynamics in the sector will be altered. While service quality will be the key focus as the consortium has to meet
coverage and service requirements that it presented in its bid papers, it will have to offer very competitive pricing to grasp market
share. It has committed to reaching 84% nationwide mobile coverage by 2023, and is committing to spend PHP256bn (USD4.9bn)
on capex/opex over the five-year period. Separately, China Telecom has also signed a letter of intent with the Filipino government to
conduct a feasibility study to connect a subsea cable, which we believe to be the Hong Kong-Americas Cable, to the Philippines.
This is set to increase international bandwidth and lower access costs for the telco as well as the other incumbent operators,
supporting data growth across the country.
The Filipino populace, motivated by the expectation that a new operator will provide superior services at lower prices, will be
interested in at least trying out the newcomer's offerings. However, we believe that the scale of market disruption is unlikely to
mirror the scale of the impact that newcomer, Reliance Jio, has had in India. The lack of existing fibre assets gives the new telco an
uphill task in a market that has manoeuvred for years to keep new entrants out and has continuously undermined the supervisory
power of the telecoms regulator. To succeed, the new entrant will need to have continued regulatory support from the government
to operate.
Ownership Cap Dissuaded Other Bidders
The government did not budge on the 40% ownership cap, which we believe dampened interest from foreign investors. Operators,
which included KT, Telenor, Viettel and Vodafone had earlier expressed interest in the licence, but none presented any bid
documents by the deadline. KT, together with partners Converge ICT Solutions and Teltech stated that conditions for its
participation were ‘commercially unviable’, although they acknowledged the financial growth prospects within the country’s
telecoms sector.
Little Legal Challenge Ahead
Several flashpoints have emerged surrounding the selection. The other two bidders were disqualified on differing grounds: PT&T
was declared to have insufficient technical experience, while Sear Telecom did not provide the participation security of PHP700mn
(USD13mn). TierOne is alleging that Mindanao has existing contractual obligations with the company to jointly engage in the
provisioning of broadband and mobile telephony services, among others. Mindanao has, in its filing to the National
Telecommunications Council (NTC), alleged that the contract only covered provisioning of VSAT services. PT&T is in the process of
filing an appeal in the Supreme Court against the NTC’s decision to disqualify it, although we expect the process to be protracted,
and Mislatel will continue its roll-out, regardless of the outcome.
Additional Developments
Full Internet Connectivity Unlikely Before 2025
The ‘five-year road map’ launched by the authorities was designed to use a mixture of fibre, mobile and satellite systems to cover
unserved and underserved areas across the country. The government expects to support private sector initiative within the
program, as most probably operators will not focus on these areas due to low ROI. Giving the status of the works in mid-2021, the
government expects that the bulk of the work will be carried between 2022 and 2025.
Common Tower Policy
In May 2020, the DICT stated that it published its first guidelines for independent tower operators, allowing qualified entities to apply
for five-year permits to construct, manage and operate towers. The DICT, by October 2019 had signed 24 memorandums of
understanding with various tower companies, including edotco and LCS Holdings.
In February 2019, the DICT estimated that the plan will generate USD4.4bn in new investments, and that the country will need an
additional 50,000 towers to provide mobile services on par with neighbouring countries. In June 2019, the DICT stated that the
policy was 'beginning to take shape'.
Mobile Number Portability
In June 2019, the NTC issued new rules for the Mobile Number Portability Act, which came in force in July 2019. The laws initially
gave telcos a six-month grace period to implement the NMP. The three telcos have established a joint company to handle number
porting requests, and have selected US-based Syniverse as the MNP service provider. MNP services are expected to go live no later
than 18 months from January 2020, meaning that MNP will likely be introduced in H121. Porting services will be provided to
subscribers free of charge.
In April 2021, Globe announced the launch of its MNP service, available for both its pre- and post-paid customers.
Competitive Landscape
KEY PLAYERS - PHILIPPINES TELECOMS SECTOR
Company Name Ownership Market
Philippine Long Distance Telephone PCD Nominee Corp (30.8%), JP Morgan Fixed-line telephony (local, domestic long-
Company (PLDT) (Hong Kong) (16.9%), Philippine distance, international), data, internet
Telecommunications Investment (12.0%),
NTT DoCoMo (10.6%), others
Digital Telecommunications Philippines PLDT (99.5%) Fixed-line telephony (local, domestic long-
(Digitel) distance, international), data, internet, mobile
Smart Communications PLDT (100%) Mobile
Globe Telecom Asiacom (50.9%), SingTel (20.1%), Ayala Fixed-line telephony (domestic long-distance,
(13.2%), public (15.8%) international), data, internet, mobile
Converge ICT Solutions Comclark Network and Technology Corp. Broadband and cable internet, Cable Television
(63.74%) Public (20.43%) Coherent Cloud
Investments B.V. (15.83%)
Source: Operators, Fitch Solutions
PHILIPPINES TELECOMS MARKET OVERVIEW

Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121
Mobile Subscribers ('000)
Total 147,439 160,489 168,810 167,322 162,396 150,358 150,539 149,579 151,570
Prepaid 142,432 155,462 163,707 162,235 157,190 145,240 145,631 144,911 146,965
Post-paid 5,006 5,028 5,103 5,087 5,206 5,118 4,908 4,668 4,605
Mobile Usage
Monthly Blended ARPU (PHP) 110 105 102 102 101 103 110 113 109
Monthly Prepaid ARPU (PHP) 87 83 81 81 79 80 88 92 88
Monthly Post-paid ARPU (PHP) 772 771 793 787 744 731 741 755 786
Wireline Subscribers ('000)
Total Wireline Voice Accesses na na na 4,256 na na na 3,179 na
Total Wireline Broadband Accesses na na na 7,237 na na na 7,730 na
Note: ARPU data from Q118 onward is on PFRS16 standards; na = not available/applicable. Source: Operators, Fitch Solutions
PLDT
Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121
Total 63,949 67,548 71,451 73,118 73,076 70,185 72,372 72,934 71,804
Prepaid 61,585 65,151 69,012 70,722 70,591 67,738 70,028 70,779 69,707
Post-paid 2,364 2,396 2,439 2,396 2,485 2,447 2,344 2,155 2,098
Mobile Usage
Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121
Total Wireline Voice Accesses 2,707 2,711 2,727 2,765 2,801 2,918 2,999 3,043 3,109
Total Fixed Broadband Accesses 2,017 2,042 2,091 2,161 2,283 2,609 2,842 3,090 3,276
o/w Fixed Wireless 198 201 212 230 296 504 647 817 891
Financials (PHPmn)
Consolidated Operating Revenue 41,433 42,605 40,398 44,751 43,646 43,089 46,487 47,782 47,924
EBITDA 19,847 19,819 18,269 21,880 21,612 21,553 22,699 20,294 23,072
Net Profit 6,167 6,068 3,801 9,075 5,975 6,448 7,477 7,229 5,874
Capex 12,200 20,500 20,700 29,600 19,600 11,900 11,600 28,800 20,700
Note: ARPU and financials from Q118 onward are on PFRS 16 standards. Source: PLDT, Fitch Solutions
GLOBE TELECOM
Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121
Total 83,490 92,942 97,358 94,204 89,320 80,172 78,167 76,646 79,766
Prepaid 80,847 90,310 94,695 91,514 86,599 77,501 75,603 74,132 77,258
Post-paid 2,643 2,631 2,663 2,691 2,721 2,671 2,564 2,514 2,508
Mobile Usage
Total Fixed Broadband Accesses 1,708 1,814 1,911 2,017 2,259 2,867 3,471 3,797 4,088
o/w Fixed Wireless 1,071 1,177 1,270 1,375 1,613 2,189 2,785 3,058 3,303
Financials (PHPmn)
Consolidated Operating Revenue 40,636 40,885 41,897 43,242 41,191 37,623 40,779 40,926 42,847
Total Service Revenues 36,003 36,876 37,736 38,395 36,882 35,541 36,682 37,284 37,813
EBITDA 19,919 18,662 19,275 18,175 20,476 17,912 17,867 17,258 18,288
Net Profit 6,730 5,317 5,637 4,600 6,595 4,900 4,393 2,735 7,337
Capex 8,756 10,244 13,000 19,024 10,658 10,227 12,515 26,902 19,121
Note: ARPU and financials from Q118 onward are on PFRS 16 standards. na = not available/applicable. Source: Globe Telecom, Fitch Solutions
CONVERGE ICT SOLUTIONS

Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420 Q121
Subscribers
Total Fixed Broadband Subscribers ('000) 325.0 381.3 454.4 529.6 615.5 731.6 900.5 1,038.3 1,181.7
HFC Cable Broadband Subscribers ('000) 158.3 172.5 185.6 199.0 209.7 219.0 227.5 215.5 217.1
FTTX Broadband Subscribers ('000) 166.7 208.9 268.9 330.6 405.8 512.6 673.0 822.8 964.6
Total Broadband Homes Passed ('000) 1,705.8 2,094.2 2,606.6 3,221.7 3,599.5 4,111.7 5,112.6 6,177.8 7,172.0
HFC Homes Passed ('000) 713.3 741.7 771.2 797.8 810.4 810.4 830.8 835.8 841.5
FTTx Homes Passed ('000) 992.5 1,352.4 1,835.4 2,423.9 2,789.1 3,301.2 4,281.8 5,342.0 6,330.5
Usage
Blended Monthly Broadband ARPU (PHP) 1,362.0 1,320.0 1,330.0 1,283.0 1,284.0 1,287.0 1,352.0 1,408.0 1,390.0
Broadband Churn Rate (%) 1.1 0.5 0.5 0.4 0.4 1.1 1.6 1.4 1.2
Financials (PHPmn)
Total Revenues (PHPmn) 1,921.0 1,922.0 1,923.0 2,746.0 3,020.7 3,469.0 4,187.2 4,976.0 5,547.0
Total Operator EBITDA (PHPmn) na na na 1,405.0 1,514.0 na na 2,643.0 3,052.0
EBITDA Margin (%) na na na 0.5 0.5 na na 0.5 0.6
Operating Income (PHPmn) na na na na 965.0 na na na 2,096.0
Net Income (PHPmn) na na na na 574.0 na na na 1,549.0
Total Operator Capex (PHPmn) na na na na na na na na 3,929.0
Converge ICT Solutions, Fitch Solutions
Company Profile
Globe Telecom
SWOT Analysis
Strengths • One of two major telecoms operators in the Philippines, offering mobile and wireline voice, data and
broadband services.
• Controlling stake is held by major regional telecoms operator, Singtel.
Weaknesses • Aggressive competition has caused margin erosion, negatively impacting ARPUs.
• Historically low investment in infrastructure has seen the company trying to catch up recently to improve
service delivery.
• Subscriber base heavily skewed toward low-cost prepaid services.
Opportunities • Expertise and know-how supplemented by Singtel, ensuring smooth 3G and 4G network developments and
improved service quality.
• Investment in international and domestic cable infrastructure will support its expansion into higher capacity
data services.
• Idle network capacity can be utilised with more investment in last-mile connectivity.
Threats • Impending entrance of third telecoms player backed by China Telecom will end duopoly.
• The weak regulatory regime does little to incentivise Globe, or PLDT, to invest in advanced infrastructure and
services or to stabilise price competition.
• Little room in the already highly-penetrated mobile market to grow organically. While prepaid connections
continue to edge upward, a significant amount of these connections do not generate revenue.
Company Overview
Globe Telecom has been active in the Philippines's telecoms industry since 1934 and is a leading fixed-line (domestic long-distance
and international) and wireless operator, as well as a key operator of data communications and internet services. The company is
listed on the Philippine Stock Exchange, and by the end of December 2019, it had a market share of PHP269bn (USD) major
shareholders were SingTel (47%) and Ayala Corporation (30%).
Strategy
Globe's immediate focus is to ramp up capex in order to support the expansion and enhancement of its data network as it prepares
for the arrival of new entrant Dito Telecommunity. The operator spent PHP61bn in capex in 2019, of which roughly PHP40bn went
into infrastructure such as its fibre backhaul as it sought to improve its data capabilities; this is considerably more than the PHP43bn
it spent in 2018. Globe has stated that is key priority is on improving its customers' experience, and it is doing so through deploying
new cell sites and improving its base stations. Although it has defeated San Miguel Corporation's plans to create a third national
player, any market manoeuvre by Globe and PLDT is unlikely to keep the third telecoms player, Mislatel, out of the market.
In 2015, Globe acquired Bayan Telecommunications (BayanTel), the telecoms division of Lopez Holdings Corporation, which had
been under court-supervised rehabilitation proceedings since 2003. Acquiring BayanTel has strengthened Globe's wireline
presence, giving it access to cables, rights-of-way, spectrum and authorisations to provide a broader range of services in the
Philippines. Acquiring San Miguel Corporation (SMC)'s telecoms assets in 2016 gave Globe even more spectrum and mobile
broadband-related assets, such as towers and backhauling facilities.
Developments
2021
In July, Globe confirmed that its efforts to accelerate the rollout of 5G across the country have been successful, noting that the
number of 5G devices active on its network surpassed 700,000 at end of May 2021, up from 620,000 in April and 560,000 in March
2021.
In June, Globe reported that its 5G coverage had reached 88% of the National Capital Region.
In April, Globe Telecom has done the first step and launched its MNP service, which is available for both pre-paid and post-paid
customers. Globe also announced plans to construct 1mn FTTH lines in 2021 as part of its PHP70bn (USD1.45bn) capital
expenditure budget for the year.
2020
In October, Globe announced that it will cease the sale of 3G-enabled SIMs in a bid to stimulate adoption of its LTE services.
In September, Globe announced plans to carry out its 'largest network upgrade', with the operator aiming to upgrade all its existing
cell sites to 4G LTE, while doubling down on fibre-to-the-home rollouts.
In February, Globe stated that it will launch its mobile 5G service in the coming weeks. The operator's next generation network will
be focused on key areas in the Greater Manila area and is expected to be made available to its higher value postpaid customers. In
August, it announced that it will expand its 5G network to prepaid customers.
In January, PLDT, together with Globe Telecom and DITO Telecommunity, established a joint company to handle number porting
requests. Full Mobile Number Portability services is expected to be launched by mid-2021.
2019
In June, Globe launched its ‘Home Air Fiber 5G’ service in selected provinces surrounding the capital of Manila. Globe has stated that
it sees 5G fixed-wireless services as vital to filling the gap in the household broadband market.
Globe had earmarked PHP63bn (USD1.2bn) for capex spending in 2019, higher than the PHP43bn (USD820mn) it spent in 2018. It
expected most of the spending to go into expanding the capacity of its network to cope with increasing data traffic.
Globe announced that it would launch a 5G network in Q219, using equipment supplied by Huawei.
Financial Data
Annual Revenues
• 2016: PHP126.8bn
• 2017: PHP135.3bn
• 2018: PHP150.3bn
• 2019: PHP166.7bn
• 2020: PHP160.5bn
Net Profit/(Loss)
• 2016: PHP15.9bn
• 2017: PHP15.1bn
• 2018: PHP18.4bn
• 2019: PHP22.3bn
• 2020: PHP16.6bn
PLDT
SWOT Analysis
Strengths • Offers fully integrated telecommunications service: fixed line, mobile and internet/broadband.
• Quad-play bundling strategy helps PLDT to differentiate itself from rival Globe.
• Backed by Japanese telecoms player, NTT Docomo.
Weaknesses • Fixed-line business over-dependent on mobile and data divisions in terms of revenue.
• Barely 50% of installed fixed lines are in use in the Philippines: many lines are in low-income areas where
services are seen as prohibitively expensive.
• Lack of competition in fixed-line sector leads to less investment in fixed-line network than the operator's
mobile networks.
Opportunities • NGN upgrade and wireless broadband rollout will enable growth in broadband/data revenues.
• The ePLDT unit has reported strong increases in revenues due to rising call centre revenues.
• Strategic investments and acquisitions, such as that of San Miguel's telecoms assets, will enhance PLDT's
reach and increase growth opportunities.
Threats • Migration away from fixed-line to prepaid mobile services is likely to cut into PLDT's planned fixed-line
growth if penetration drops back.
• Impending entrance of third telecoms player will end duopoly.
• Little room in the already highly penetrated mobile market to grow organically.
Company Overview
PLDT was established in 1928 and is the country's leading fixed‐line provider, serving approximately 70% of the country's access
lines. The company offers a diversified range of telecommunications services across the Philippines's fibre-optic backbone and
wireless, fixed‐line and satellite networks. The company is also the country's leading mobile provider via three sub‐brands; Sun,
Smart and Talk 'n Text (TNT).
PLDT offers mobile services through Smart under the brands, Smart and TNT, as well as through Digitel, acquired in 2011 under the
brand Sun Cellular. Together, these brands accounted for half of the mobile market at the end of 2016.
Listed on the Philippine Stock Exchange, with its US depository shares also listed on the New York Stock Exchange, the company
has Japan's, NTT DoCoMo and NTT Communications, as major shareholders.
Strategy
PLDT is continuing with its strategy of 'digital transformation', aimed at giving customers a superior data experience. Backed by
network upgrades that build on the spectrum acquired through the purchase of half of San Miguel Corporation (SMC), the company
will complete the deployment of its digital platforms. Utilising its competitive advantage around the offering of bundled packages,
PLDT will broaden its content portfolio for private customers, such as through its Voyager service.
For enterprises, PLDT will increase its range of special services in analytics, cloud, security, machine-to-machine and social media
tools. We expect the data segment to give impetus to PLDT's revenue growth throughout the next five-to-seven years. Corporate
data income will grow further, given PLDT's investment in data centres across key cities in Clark Special Economic Freeport Zone,
Paranaque, Taguig City, Pasig and Cebu.
Apart from that, we expect to see PLDT continue to invest heavily in its mobile and fixed broadband infrastructure to improve service
delivery and availability to prepare itself for the arrival of the Philippines's third telco. In September 2020, PLDT announced that it
will upgrade all last-mile copper broadband connections to fibre over the course of 18 months. In December 2020, PLDT
announced that it will commit close to USD2.0bn in capital expenditure (capex) for 2021, primarily for continued network
moedernisation.
PLDT’s renewed push to upgrade existing DSL customers with faster broadband will allow it to upsell over-the-top (OTT) services,
such as higher-quality video streaming, which will improve revenues per user. Focusing on deploying new infrastructure will also
reduce the expenditure associated with maintaining legacy services, which yield lower margins given that older networks are usually
costlier to maintain. Since 2017, PLDT began ramping up investments into building out new FTTH infrastructure to reach new areas,
but it, together with Globe, has previously focused largely on vectoring and G.fast technology to prolong the commercial lifespans of
their copper networks.
Developments
2021
In July, PLDT signed a MoU with AST SpaceMobile, ‘the first space-based cellular broadband network for mobile phones’ as self-
described by the company. The aim of the MoU is to deliver improved broadband connectivity to the operator’s subscriber base. The
vendor will supply cellular broadband connectivity to the Philippines’ mainland, islands, and surrounding waters.
In June, the operator announced it had expanded its 5G network to over 5,000 sites across over 3,000 locations the country, after it
had introduced its 'Unli 5G' offering, and improved its 5G outdoor coverage in the National Capital Region to more than 90% in April
2021.
In May, PLDT stated that its smartphone users accounted for 85% of its Smart customers in Q121, up from the 78% recorded in
December 2020. This translates into almost 40mn active data users for the operator.
In February, PLDT stated that it had installed 429,000km of fibre by the end of December 2020, with its FTTH network covering 48%
of homes across the country, in 1,634 cities.
2020
In September, PLDT announced plans to upgrade all customers using copper-based services over fibre over an 18-month period at
no additional costs. Little details have emerged regarding capex allocated to the programme. Separately, it announced plans to
deploy 5G fixed wireless services in the 'high-frequency' spectrum band.
In May, PLDT stated that its delaying its launch of 5G fixed-wireless services, after previously targeting a launch in the first half of
2020.
In January, PLDT, together with Globe Telecom and DITO Telecommunity established a joint company to handle number porting
requests. Full Mobile Number Portability services is expected to be launched by mid-2021.
2019
PLDT now plans to deploy a 5G network in early-2020. It has stated that it will be both a wireless and fixed-wireless service, and will
cater to both residential and enterprise users.
PLDT in February 2019 announced that it would invest upward of PHP70bn (USD1.3bn) into its network expansion. The company
reported that 54% of 2018 capex of PHP58bn (USD1.1bn) was spent on its wireless business, while the remaining 46% was invested
into its fixed broadband footprint.
Financial Data
Consolidated Revenues
• 2016: PHP165.3bn
• 2017: PHP159.9bn
• 2018: PHP164.8bn
• 2019: PHP169.2bn
• 2020: PHP181.0bn
Net Profit/(Loss)
• 2016: PHP27.9bn
• 2017: PHP13.4bn
• 2018: PHP26.2bn
• 2019: PHP25.1bn
• 2020: PHP27.1bn
Philippines Demographic Outlook

Demographic analysis is a key pillar of our macroeconomic and industry forecasting model. Not only is the total population of a
country a key variable in consumer demand, but an understanding of the demographic profile is essential to understanding issues
ranging from future population trends to productivity growth and government spending requirements.
The accompanying charts detail the population pyramid for 2019, the change in the structure of the population between 2019 and
2050 and the total population between 1990 and 2050. The tables show indicators from all of these charts, in addition to key
metrics such as population ratios, the urban/rural split and life expectancy.
Population
Philippines – Population, mn (1990-2050)
e/f = Fitch Solutions estimate/forecast. Source: World Bank, UN, Fitch Solutions
Population Pyramid
Philippines – 2019 Male vs Female Population, '000 (LHS) & 2019 vs 2050 Population, '000 (RHS)
Source: World Bank, UN, Fitch Solutions
POPULATION HEADLINE INDICATORS (PHILIPPINES 1990-2025)

Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, % y-o-y 2.18 1.91 1.68 1.59 1.35 1.24
Population, total, male, '000 31,267.9 39,280.8 43,386.7 47,397.7 51,388.8 55,028.8 58,543.1
Population, total, female, '000 30,627.3 38,710.9 42,939.6 46,569.1 50,724.4 54,552.3 58,289.9
Population, total, '000 61,895.2 77,991.8 86,326.3 93,966.8 102,113.2 109,581.1 116,833.1
Population ratio, male/female 1.02 1.01 1.01 1.02 1.01 1.01 1.00
KEY POPULATION RATIOS (PHILIPPINES 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Dependent ratio, % of total working age 78.8 71.6 68.2 61.6 58.4 55.2 52.8
Dependent population, total, '000 27,282.2 32,552.4 35,005.6 35,828.0 37,663.5 38,960.8 40,392.9
Active population, % of total population 55.9 58.3 59.4 61.9 63.1 64.4 65.4
Active population, total, '000 34,613.0 45,439.4 51,320.7 58,138.7 64,449.7 70,620.3 76,440.2
Youth population, % of total working age 73.2 66.0 62.3 54.9 51.1 46.6 42.8
Youth population, total, '000 25,337.2 30,003.3 31,991.3 31,940.6 32,964.1 32,921.1 32,741.0
Pensionable population, % of total working age 5.6 5.6 5.9 6.7 7.3 8.6 10.0
Pensionable population, '000 1,945.0 2,549.1 3,014.3 3,887.4 4,699.4 6,039.7 7,651.8
URBAN/RURAL POPULATION & LIFE EXPECTANCY (PHILIPPINES 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Urban population, % of total 47.0 46.1 45.7 45.3 46.3 47.4 49.0
Rural population, % of total 53.0 53.9 54.3 54.7 53.7 52.6 51.0
Urban population, '000 29,082.1 35,981.5 39,459.7 42,597.0 47,262.1 51,950.2 57,199.1
Rural population, '000 32,813.1 42,010.3 46,866.5 51,369.8 54,851.1 57,630.9 59,633.9
Life expectancy at birth, male, years 63.3 65.5 65.6 66.0 66.6 67.4 68.0
Life expectancy at birth, female, years 69.6 72.3 72.9 74.0 75.0 75.6 76.2
Life expectancy at birth, average, years 66.4 68.8 69.1 69.8 70.6 71.4 72.0
POPULATION BY AGE GROUP (PHILIPPINES 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 0-4 yrs, total, '000 9,442.0 10,748.2 11,430.5 11,019.2 11,477.2 10,616.3 10,831.7
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 60-64 yrs, total, '000 981.9 1,448.2 1,699.8 2,221.8 2,768.2 3,393.2 3,935.7
Population, 65-69 yrs, total, '000 787.9 1,075.5 1,250.5 1,513.9 1,934.4 2,485.7 3,056.1
Population, 70-74 yrs, total, '000 547.9 677.1 867.2 1,143.1 1,237.9 1,661.4 2,142.9
Population, 75-79 yrs, total, '000 362.4 451.9 490.8 713.9 846.4 978.2 1,320.7
Population, 80-84 yrs, total, '000 178.7 226.2 267.3 340.8 435.6 580.5 677.9
Population, 100+ yrs, total, '000 0.1 0.2 0.3 0.5 1.0 1.8 2.9
POPULATION BY AGE GROUP, % (PHILIPPINES 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 0-4 yrs, % total 15.25 13.78 13.24 11.73 11.24 9.69 9.27
Population, 100+ yrs, % total 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Telecommunications Glossary
Definition Definition Definition
3G Third generation ILD International long-distance na not available
4G Fourth generation IoT Internet of Things NFC Near Field Communication
Network Functions
5G Fifth generation IPO Initial public offering NFV
Virtualisation
Next generation access

ADSL Asymmetric Digital Subscriber Line IPTV Internet protocol television NGAN/NGN
network
Integrated Systems Digital Operating income before

AI Artificial intelligence ISDN OIBDA
Network depreciation and amortisation
ARPU Average revenue per user ISP Internet service provider OTT Over-the-top
ASP Average selling price IT Information technology POP Point of presence
International Public switched telephone

bn billion ITU PSTN
Telecommunication Union network
CDMA Code Division Multiple Access JV joint venture R&D Research and development
DMB Digital Multimedia Broadcasting kbps kilobits per second RGU Revenue generating unit
Data Over Cable Service Interface

DOCSIS KHz kilohertz SaaS Software-as-a-Service
Specification
DSL Digital Subscriber Line km kilometre SIM Subscriber Identity Module
DTH Direct to Home (Satellite TV) LAN Local Area Network SMS Short Message Service
DVB-H Digital Video Broadcasting - Handheld LEC Local exchange carrier Tbps Terabits per second
e/f estimate/forecast LPWAN Low Power Wide Area Network trn trillion
Earnings before income tax, depreciation Unbundled local loop/Local

EBITDA LTE Long Term Evolution ULL/LLU
and amortisation loop unbundling
European Bank for Reconstruction and Universal Mobile

EBRD M2M Machine-to-machine UMTS
Development Telecomunications System
Very high-speed Digital

EC European Commission Mbps Megabits per second VDSL
Subscriber Line
EMEA Europe, Middle East and Africa mn million VoD Video-on-Demand
FDI Foreign direct investment MEA Middle East and Africa VoIP Voice-over-Internet Protocol
Fibre-to-the-x (x = home, building or

FTTx MENA Middle East and North Africa W-CDMA Wideband CDMA
cabinet)
Worldwide Interoperability for

Gbps Gigabits per second MHz Megahertz WiMAX
Microwave Access
GPON Gigabit passive optical network MMS Mobile Multimedia Service WLL Wireless local loop
GDP Gross domestic product MNP Mobile number portability WTO World Trade Organization
GSM Global system for mobile communications MoU Minutes of Use
HSDPA High-speed data packet access MoU Memorandum of understanding
Hz Hertz MVNE Mobile virtual nework enabler
IDD International direct dialling MVNO Mobile virtual network operator

Telecommunications Methodology
Connected Thinking
We use a simple and transparent forecasting model as a base for our industry forecasts, but rely heavily on our analysts' expert
judgment to ensure our forecasts capture all of the insights we derive using our unique Connected Thinking approach. We believe
analyst expertise and judgement are the best ways to provide the most accurate, up-to-date and comprehensive insight to our
customers.
Our Connected Thinking approach to forecasting and analysis integrates macroeconomic variables from Fitch Solutions Country
Risk to provide our customers with unique and valuable insight on all relevant macroeconomic, political and industry risk factors
that will impact their operations and revenue-generating potential in the industry/industries they operate in.
Telecommunications Methodology
For the Telecoms industry we have historical data and 10-year forecasts for 90 core industry variables, including Mobile, Wireline,
Broadband, Pay-TV, and Operator Financials.
Our forecasts are a combination of regression modelling and our Telecoms analysts' expert judgement. Our Telecoms analysts
interact with other analytical teams, including Country Risk, Infrastructure, Autos, and Consumer & Retail. By taking into account
external industries, the Telecoms team ensures that factors such as political trends, regulatory outlook, operational risk, and
technology trends are taken into account in forecasts.
There is a constant rolling cycle of data monitoring, with 190 market data sets being updated on a quarterly basis. Analysts will
intervene outside of these cycles to implement changes when necessary.
Mobile Subscriber Numbers
Mobile subscriber numbers is defined as the total number of mobile cellular subscriptions, including all pre-paid SIM cards active
during the past three months. This includes GSM/CDMA (2G), UMTS/HSPA (3G), LTE (4G) and 5G subscriptions, but excludes
broadband connections on dedicated data SIM cards or USB dongles.
Historical figures for mobile subscriber numbers are sourced from operators, regulators, industry associations, and national statistics
offices.
Our mobile subscriber number forecasts are based on a regression model, using a market's own historical time series and key
macroeconomic explanatory variables from Fitch Solutions' Country Risk service, such as real GDP growth. In addition, we also apply
analyst expert judgement to refine and finalise the mobile subscriber number forecasts based on exogenous and endogenous
variables or events, not captured by our regression model.
Fitch Solutions' mobile subscriber number forecasts examine the industry with a bottom-up approach, forecasting subscriptions for
each technology to calculate the total market size. Technologies which compose the total subscriber numbers are:
• Prepaid
• Post-paid
◦ 2G
◦ 3G
◦ 4G
◦ 5G
Wireline Operations
Total fixed voice subscribers is defined as the total number of active fixed voice connections, including analogue PSTN lines, ISDN
channels, fixed wireless (WLL) and VoIP (Voice over IP) technologies.
Historical figures for fixed voice subscriber numbers are sourced from operators, regulators, industry associations, and national
statistics offices.
Our fixed voice subscriber number forecasts are based on a regression model, using a market's own historical time series and key
macroeconomic explanatory variables from Fitch Solutions' Country Risk service. In addition, we also apply analyst expert
judgement to refine and finalise the fixed voice subscriber number forecasts based on exogenous and endogenous variables or
events, not captured by our regression model.
Fitch Solutions' fixed voice subscriber forecasts examine the industry with a bottom-up approach, forecasting subscriptions for each
technology to calculate the total market size. Technologies which compose the total subscriber numbers are:
• Narrowband (PSTN/ISDN/WLL)
• Broadband (VoIP)
Broadband
Total broadband subscriptions is defined as the total number of dedicated internet connections with download speeds higher than
256kbps. Includes both fixed and mobile connections (dedicated mobile data connections on data SIMs, USB dongles and M2M
connections, but excluding smartphone-based voice and data 3G/4G/5G connections).
Historical figures for broadband subscriptions are sourced from operators, regulators, industry associations, and national statistics
offices.
Our broadband subscriptions forecasts are based on a regression model, using a market's own historical time series and key
judgement to refine and finalise the broadband subscriber number forecasts based on exogenous and endogenous variables or
events, not captured by our regression model.
Fitch Solutions' total broadband subscription forecasts examine the industry with a bottom-up approach, forecasting subscriptions
for each technology to calculate the total market size. Technologies which compose the total subscriber numbers are:
• Fixed Broadband
• Cable
• xDSL
• FTTx
• Other (Powerline, Ethernet, Wi-Fi, WiMAX, Fixed 4G/5G)
Pay-TV
Total pay-TV subscriptions is defined as the total number of discrete subscription-based premium TV conditional accesses offering
linear and on-demand programming. The data exclude platform-agnostic over-the-top streaming services, owing to the lack of
verifiable data offered up by service providers.
Historical figures for pay-TV subscriptions are sourced from operators, regulators, industry associations, and national statistics
offices.
Our pay-TV forecasts are based on a regression model, using a market's own historical time series and key macroeconomic
explanatory variables from Fitch Solutions' Country Risk service. In addition, we also apply analyst expert judgement to refine and
finalise the pay-TV subscriber number forecasts based on exogenous and endogenous variables or events, not captured by our
regression model.
Fitch Solutions' total Pay-TV subscription forecasts examine the industry with a bottom-up approach, forecasting subscriptions for
each service type to calculate the total market size. Services which compose the total subscriber numbers are:
• Cable-TV
• DTH TV
• IPTV
• Other (DTT, MMDS etc)
• Multi-play (dual-, triple-, quad-, quin-play)
Operator Financials
Gross operator financials data represent aggregate market-level historical data and forecasts.
Historical figures for operator financials are sourced from regulators, industry associations, and national statistics offices.
Our operator financials forecasts are based on a regression model, using a market's own historical time series and key
judgement to refine and finalise the operator financials forecasts based on exogenous and endogenous variables or events, not
captured by our regression model, such as anticipating the launch of new technologies, mergers, licensing of new players, amongst
others.
Fitch Solutions' operator financial forecasts examine the industry with a top-down approach, forecasting revenues and expenditures
for the industry as a whole rather than on a company level.
Risk/Reward Index Methodology
Fitch Solutions’ Risk/Reward Index (RRI) provide a comparative regional ranking system evaluating the ease of doing business
and the industry-specific opportunities and limitations for potential investors in a given market.
The RRI system divides into two distinct areas:

Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state characteristics that may
inhibit its development. This is further broken down into two sub categories:
• Industry Rewards. This is an industry specific category taking into account current industry size and growth forecasts, the
openness of market to new entrants and foreign investors, to provide an overall score for potential returns for investors.
• Country Rewards. This is a country specific category, and the score factors in favourable political and economic conditions for
the industry.
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic profile that call into
question the likelihood of anticipated returns being realised over the assessed time period. This is further broken down into two sub
categories:
• Industry Risks. This is an industry specific category whose score covers potential operational risks to investors, regulatory issues
inhibiting the industry, and the relative maturity of a market.
• Country Risks. This is a country specific category in which political and economic instability, unfavourable legislation and a poor
overall business environment are evaluated to provide an overall score.
We take a weighted average, combining industry and country risks, or industry and country rewards. These two results in turn
provide an overall Risk/Reward Index, which is used to create our regional ranking system for the risks and rewards of involvement
in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall Risk/Reward Index a
weighted average of the total score. Importantly, as most of the countries and territories evaluated are considered by Fitch
Solutions to be 'emerging markets', our score is revised on a quarterly basis. This ensures that the score draws on the latest
information and data across our broad range of sources, and the expertise of our analysts.
Indicators
The following indicators have been used. Overall, the index uses three subjectively measured indicators, and around 20 separate
indicators/datasets.
RISK/REWARD INDEX INDICATORS

Rationale
Rewards
Industry Rewards
- ARPU Denotes depth of telecoms market. High-value markets score better than low-value ones.
- No. of subscribers Denotes breadth of telecoms market. Large markets score higher than smaller ones.
Denotes sector dynamism. Scores based on annual average growth over our five-year forecast period and
- Subscriber growth, % y-o-y
also take into account the penetration rate.
Subjective evaluation against Fitch Solutions-defined criteria. Evaluates market openness and
- No. of operators
competitiveness.
Country Rewards
A highly urbanised state facilitates network rollout and implies higher wealth. Pre-dominantly rural states
- Urban/rural split
score lower, with overall score also affected by country size.
Proportion of population under 24 years old. States with young populations tend to be more attractive
- Age range
markets.
Rationale
- GDP per capita, USD A proxy for wealth. High-income states receive better scores than low-income states.
Risks
Industry Risks
Subjective evaluation against Fitch Solutions-defined criteria. Evaluates predictability of operating

- Regulatory independence
environment.
Country Risks
Score from Fitch Solutions’ Country Risk Index(CRI). Denotes state's vulnerability to externally induced
- Short-term external risk
economic shock, which tend to be the principal triggers of economic crises.
- Policy continuity From CRI. Evaluates the risk of a sharp change in the broad direction of government policy.
From CRI. Denotes strength of legal institutions in each state - security of investment can be a key risk in
- Legal framework
some emerging markets.
From CRI. Denotes risk of additional illegal costs/possibility of opacity in tendering/business operations
- Corruption
affecting companies' ability to compete.
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal weight. Consequently,
the following weighting has been adopted:
WEIGHTING OF INDICATORS
Component Weighting, %
Rewards 70, of which
- Industry Rewards 65
- Country Rewards 35
Risks 30, of which
- Industry Risks 40
- Country Risks 60
Fit
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olonnade,, Canary W
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ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
Fax: +44 (0)20 7248 0467
Web: www.fitchsolutions.com
IS SN: 1748-4731
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This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
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Philippines Philippines: T Telec Elecommunica Ommunications R Tions Report Eport

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Q4 2021

Industry Risk/Reward Index ....................................................................................................................................................12

Regulatory Development ..........................................................................................................................................................31

Philippines Demographic Outlook .........................................................................................................................................45

Uptake Of Advanced Mobile Services To Be Gradual

f = Fitch Solutions forecast. Source: Fitch Solutions

Latest Updates And Industry Developments

Weaknesses • Topographical difficulties increase cost of network deployment.

f = Fitch Solutions forecast. Source: Operators, national sources, Fitch Solutions

Wireline Voice And Broadband

Wireline Voice And Broadband Forecasts

PHILIPPINES TELECOMS MARKET - HISTORICAL DATA AND FORECASTS (2019-2024)

2G subscriptions ('000) 42,421.7 32,602.5 32,636.5 29,861.2 20,922.9 7,281.3

3G subscriptions ('000) 53,807.3 33,969.0 18,411.2 6,775.3 88.1 0.0

4G subscriptions ('000) 71,081.4 82,880.9 95,478.8 105,790.5 113,830.6 117,587.0

5G subscriptions ('000) 127.0 6,343.6 13,194.8 22,958.9 34,668.0

PHILIPPINES TELECOMS MARKET - FORECASTS (2025-2030)

2G subscriptions ('000) 1,622.2 599.9 173.5 0.1 0.0 0.0

3G subscriptions ('000) 0.0 0.0 0.0 0.0 0.0 0.0

4G subscriptions ('000) 118,880.5 114,600.8 106,693.3 96,557.5 86,322.4 76,740.6

5G subscriptions ('000) 45,415.1 55,860.5 66,418.2 76,380.9 86,386.8 94,766.3

Industry Risk/Reward Index

Covid Containment Success Sees Mature Asian Markets Return To Growth

Mature Markets Gravitating To Higher-Value Services

ASIA TELECOMMUNICATIONS RISK/REWARDS INDEX, Q4 2021

South Korea 85.6 53.9 74.5 88.4 92.0 90.2 79.2 1 6

Australia 75.2 69.2 73.1 92.1 86.8 89.4 78.0 2 7

Singapore 68.5 65.0 67.3 88.4 93.1 90.8 74.3 3 18

Japan 73.7 59.1 68.6 85.8 86.8 86.3 73.9 4 21

Hong Kong 70.2 62.0 67.3 89.4 83.8 86.6 73.1 5 23

Taiwan 69.0 53.4 63.6 91.6 90.6 91.1 71.8 6 25

New Zealand 62.2 68.3 64.4 83.0 95.0 89.0 71.8 7 26

Macau 73.9 66.3 71.3 36.1 75.6 55.8 66.6 8 42

China 60.9 46.7 55.9 82.3 80.3 81.3 63.5 9 47

Malaysia 53.3 61.3 56.1 74.9 79.1 77.0 62.4 10 52

Indonesia 53.0 45.7 50.4 74.9 64.9 69.9 56.3 11 69

Brunei 45.6 66.0 52.7 21.9 71.3 46.6 50.9 12 84

Thailand 58.7 37.5 51.3 25.9 66.1 46.0 49.7 13 88

Vietnam 61.4 31.5 51.0 16.0 72.2 44.1 48.9 14 90

India 43.4 32.2 39.5 44.8 67.8 56.3 44.5 15 107

Maldives 46.3 41.5 44.6 41.6 36.8 39.2 43.0 16 118

Philippines 35.6 45.6 39.1 40.5 61.9 51.2 42.7 17 119

Nepal 56.0 31.0 47.2 37.4 25.7 31.6 42.5 18 122

Bangladesh 39.2 35.5 37.9 46.6 49.8 48.2 41.0 19 133

Mongolia 38.1 55.1 44.1 14.7 49.3 32.0 40.4 20 136

Fiji 42.5 50.9 45.4 23.5 33.0 28.2 40.3 22 139

Pakistan 44.5 37.0 41.9 31.3 32.1 31.7 38.8 23 144

Cambodia 41.4 31.8 38.0 25.9 40.8 33.3 36.6 26 154

Tuvalu 33.1 55.3 40.9 11.6 40.6 26.1 36.4 28 157

Bhutan 32.3 37.0 33.9 41.6 36.5 39.0 35.5 29 162

Laos 43.3 38.5 41.6 7.9 33.9 20.9 35.4 30 163

Tonga 37.2 41.7 38.8 9.4 39.9 24.6 34.6 31 170

Kiribati 34.5 45.1 38.2 11.6 39.5 25.5 34.4 32 171

Vanuatu 32.0 40.9 35.1 11.6 52.8 32.2 34.2 33 172

Myanmar 45.8 27.5 39.4 9.3 14.5 11.9 31.1 34 182

Micronesia 31.7 35.7 33.1 11.6 40.6 26.1 31.0 35 183

Samoa 31.7 38.7 34.2 7.9 38.1 23.0 30.8 36 184

Afghanistan 25.8 34.7 28.9 2.8 6.9 4.8 21.7 37 199

Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~

ASIA TELECOMMUNICATIONS INDUSTRY REWARDS, Q4 2021

South Korea 60.8 93.0 99.5 89.2 85.6 74.5

Australia 32.7 88.9 85.4 93.7 75.2 73.1

Singapore 20.6 81.4 87.9 83.9 68.5 67.3