RP telecom industry to grow at modest pace this year - Fitch Rating

MANILA, Philippines - The Philippines' telecommunications industry is projected to grow at a modest pace this year as traditional market is approaching maturity, international credit rating firm Fitch Rating said. In its report titled, "Asia Pacific Telecoms Credit Outlook 2008," Fitch Rating said the country's telecommunications industry is going through a phase of moderating growth, with core mobile services rapidly approaching maturity in terms of the addressable market, and new growth engines unlikely to deliver significant contributions to earnings at least over the next two years. Fitch said that major operators are grappling with industry pressures in terms of slowing growth in traditional areas and rising investment needs for new growth areas such as consumer broadband. As of last year, Fitch estimated that the country's mobile phone penetration stood at 57 percent or a total of 50 million subscribers. In 2006, the country has 41.8 million cell phone subscribers' subscribers, a 41.8 percent penetration rate. Fixed line subscribers' penetration rate remains stagnant last year to 18.6 percent. Philippine Long Distance Telephone Co. and Globe Telecom Inc. had announced separately their plan investment for broadband services. For this year, PLDT has set aside $550 million to fund expansion in its wireless and broadband business, while Globe is allotting $400 million to $450 million for core mobile services as well as in wired and wireless broadband technologies. Fitch, on the other hand, said the addressable market for broadband services is expanding rapidly, underpinned by rising personal computer (PC) penetration. The number of households with access to PCs is estimated to have grown by 58 percent in 2006 to 1.4 million, representing penetration of 8 percent. "So far, the major share of broadband growth has been captured by fixed incumbent Philippine Long Distance Telephone Company (PLDT), which has an advantage in that it owns the most extensive wireline network in the Philippines," Fitch said. In 2007, the country's broadband penetration rate went up to 4 percent from 2 percent in 2006 and 0.8 percent in 2005. Fitch said despite that the core mobile services are rapidly approaching maturity in terms of the addressable market, PLDT and Globe Telecom (Globe) are expected to underpin cash flow stability, even as they make the transition to new platforms and advanced technologies. The credit rating firm rated Globe and PLDT's credit outlook at stable. - GMANews.TV