Telcos prospered even with COVID-19 pandemic

Published January 3, 2021, 6:00 AM

by Emmie V. Abadilla

Year-Ender

The pandemic did not wreak as much devastation in the telecom sector as it did in transportation, property and trade.

In a locked down world, the mantra of businesses became: digitalize or die.

Most of the country’s over 100 million locked down population went online, working and studying from home, making purchases on the web and resorting to telemedicine.

Digital was suddenly equated with safety as face-to-face interaction heightened contagion. 

People developed an aversion to physical cash as well, prematurely forcing transactions to go contactless.

And while lockdown froze ongoing upgrades and expansion, the telecom duopoly resumed building immediately though they pared down their capex.

PLDT Inc. and wireless subsidiary Smart Communication Inc.’s 2020 capex  totalled P70 billion, 15 per ent lower than the original P82 billion, pre-Covid.

PLDT whittled down its capex to P63 billion at the onset of the pandemic but jacked up spending again to cope with increased demand for connectivity, President and CEO Manuel V. Pangilinan  confirmed.

Despite severe disruption, PLDT revenues grew 8 per cent to P82.8 billion in the first half of the year, fuelled by soaring data demand as earnings grew slightly by 1 percent to P12.3  billion.

With the surge in demand for data, PLDT and Smart  are allocating between P88 billion to P92 billion capital expenditure in 2021, PLDT Chief Revenue Officer and Smart Communications President and CEO Alfredo S. Panlilio disclosed this December.

“Providing good  experience for mobile and fixed line customers remains to be our ‘North Star’, as we aim to elevate PLDT and Smart to the level of global operators,” he added.

“We support the call of the President to improve our services, and we have spent around P260 billion in the last five years investing in our infrastructure,” Panlilio explained.

“We invested P73 billion on 2019, and we are ending this year with approximately the same level of capex spend. Our capex commitment next year is at a level that will be 20-25% higher than this year’s capex, focused on expanding our fiber footprint and wireless coverage.”

Overall, “We want to benchmark ourselves, not just with local competition, but with our neighboring countries like Thailand and Vietnam, as we want our network performance to be at par with global companies,” Panlilio reiterated.

Significantly, from July to November 2020, the average number of construction permits per month issued to Smart almost doubled, compared to the previous year’s monthly average, according to data from the National Telecommunications Commission (NTC).

The increase in issued permits, enabled telcos  to build more telecoms towers.

Since the Anti-Red Tape Authority issued its Joint Memorandum Circular in August, Smart has secured more than 1,600 wireless permits. 

To date, Smart has over 10,000 sites across the country, including more than 700 new cell sites fired up by the end of 2020 despite mobility restrictions and supply chain challenges due to COVID-19. 

These additional permits help Smart increase its LTE population coverage, cover more municipalities and provide more capacity for dense areas.

PLDT’s fiber infrastructure, the most extensive in the country, is now at more than 422,000 kilometers. 

This fiber infrastructure supports Smart’s 5G, 4G, 3G and 2G networks, which cover 96% of the population and are present in 95% of cities and municipalities. 

As of November, this year, Smart has also increased the number of its base stations to over 58,000, increasing the number of base stations by 20% compared to end-2019.

Smart has rolled out additional 5G sites as it accelerates its 5G commercial services nationwide. 

On the other hand, Globe Telecom Inc. allocated P50.3 Billion for its 2020 capex, slightly lower than the P63 Billion original earmarked.

Globe reduced its capex, given the delays in its rollout during lockdown, but remained aggressive on network upgrades and  capacity expansion for 4G, LTE and 5G, as well as fiber optic cables.

“We expect revenues to decline by a low single digit given the impact of community quarantine restrictions,” President and CEO Ernest L. Cu disclosed.

Globe hauled in P72.4 billion revenues, down one per cent from a year ago and earned P11.5 billion, down 5 percent, due to higher depreciation costs from continued network investments.

Already, Globe Telecom has built 700 new cell sites and upgraded 8,036 as of October 2020, with 600 more cell sites finished by the end of the year, according to president Ernest L. Cu.

Telecom subscribers in the Philippines saw significant improvements from the fourth quarter of 2018 and third quarter of 2020, in the latest Mobile Network Experience Report by independent mobile analytics firm Opensignal.

Globe Telecom’s mobile data average download speeds improved by 80.9% from 4.7 Mbps to 8.5 Mbps.

The third telco, DITO Telecommunity, is not in the game yet.

Despite 80 per cent work stoppage on its cell sites during lockdown, DITO says it’s on track for its March 31, 2021 commercial launch.

The newcomer has already breached its P150 billion investment commitment to the government, as of mid-September.

Overall, prospects remain good for telcos because the only way to recover from the pandemic is to go digital.

“We realized tremendous number of products and services will have to ride on a digital infrastructure,” stressed  Globe Telecom Chairman Jaime Augusto Zobel de Ayala.

“If you’re customer-focused,  people think about keeping themselves safe, accessing services and products in completely different ways. That transformation just moved up to a whole other degree,” he concluded.

 
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