By PHILIPPINE DAILY INQUIRER
ASIA NEWS NETWORK
The massive financial resources and an environment where revenues were slowing because of mature market conditions make it unlikely for a private company to go head to head against the duopoly of PLDT Inc and Globe Telecom, said Sean Gowran, Ericsson president of the Philippines and Pacific Islands operations.
Gowran’s figures, which he called “top of the head” calculations, provided a rare, business viability-based insight on how a third telco player might fare in the country’s two-player market, unusual for a region where three or more players are common.
It also came as the government last week signalled that a serious challenger with a large foreign partner was welcome in the Philippines.
This was an increasingly popular stand among customers who feel the incumbent telcos have done too little to address network issues, especially on Internet quality.
“I think it’s great that we opened the doors,” Gowran said on the sidelines of the Philippine Telecoms Summit last Friday.
“I’m just saying I’m not sure who would want to come.”
Years of consolidation saw the country’s once five-player market get whittled down to the present two.
The last challenger was the Gokongwei family-led operator of Sun Cellular, which was bought by PLDT in 2011.
Then PLDT and Globe joined forces in 2016 to acquire San Miguel Corp’s telco unit, which had yet to start operations, after the conglomerate’s talks with Australia’s Telstra Corp failed.
Gowran said that for a new player to match the nationwide network capacity and coverage of PLDT and Globe, each controlling an almost equal share of the country’s roughly 100 million people, capital spending would amount to $10 billion over five years.
“You have to invest twice as much as they’re investing to catch up,” he said.
PLDT and Globe have had a headstart of decades, building cell sites and laying down fibre lines.
The target is to achieve around 33-per-cent market share by year five, an optimistic goal. Given mature conditions, revenue growth will be minimal and will be split among the three players.
Gowran assumed the three telcos would take in about 100 billion pesos (Bt70 billion) in annual revenues at that point.
PLDT and Globe earned a combined 290 billion pesos in revenues last year.
Expenses and capital spending would come in at 80 billion pesos, leaving annual profits of 20 billion pesos, he added.