Telcos to ramp up capex due to strong demand

Richmond Mercurio (The Philippine Star) - May 5, 2020 - 12:00am

MANILA, Philippines — The pressure on the country’s telecommunications operators to ramp up further their spending this year and next year is expected to intensify due to higher connectivity demand as work from home arrangements are seen persisting even when quarantine measures are relaxed.

“We suspect that the pressure on capital expenditure budgets of the telcos will be raised this year and maybe next year as well, and so forth, as we expand both the wireless and the home broadband situation,” PLDT chairman and CEO Manuel V. Pangilinan said in a webinar yesterday.

“Clearly, what’s happening is a change of attitude, change of behavior even,
driven mainly by fear, on occasion by this quarantine. And I think it will carry over even after the quarantine is relaxed,” he said.

Pangilinan said companies are actually preparing for a situation wherein it is likely that a portion of their workforce would continue working from home.

“Some will obviously continue to be frontliners and the balance will be reporting to the office, but then you have to rework your office space so that the social distancing, disinfectants, even your air supply system must be revised to conform to whatever health standards the government might impose,” he said.

“Now, given that trend, the impact on the telco infrastructure is going to be quite serious because clearly there will be more broadband usage from the home,” the PLDT executive said.

Fitch Ratings in a report last March said the greater need for data connectivity amid the coronavirus disease 2019 or COVID-19 pandemic would support demand for telecom services among Asia Pacific telcos.

It said the longer-term effects of elevated data traffic should accelerate capex investment to support additional network capacity, more so in markets with under-developed fixed-line infrastructure.

PLDT and Globe are allocating all-time high capex budgets this year, with PLDT earmarking P83 billion and Globe allotting P63 billion.

For PLDT’s capex this year, P64.6 billion will be spent for network and IT projects, mainly to support the explosive growth in data traffic.

The remaining P18.5 billion, inclusive of P5.5 billion carried over from 2019, are to be used for broadband installations, which are projected to grow strongly this year.

Pangilinan earlier said its P83 billion capex budget this year would allow the company to serve better the fast growing data usage of its customers and continue to provide superior data customer experience.

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