MANILA, Philippines — The country’s telco providers have piled up almost P18 billion in foreign exchange losses due to the peso’s weakness, adding pressure to efforts to make connectivity affordable.
PLDT Inc., Globe Telecom Inc. and Dito CME Holdings Corp. sustained a combined P17.6 billion in losses because of forex swings in the first half, based on financial reports.
Philippine Chamber of Telecommunication Operators vice president Roy Ibay said the losses are due to telcos paying dollar-based expenses, especially loans.
The losses are adding pressure on telcos to find ways to keep internet prices affordable. However, if they raise prices, they might lose consumers who have also seen their buying power weaken as the peso declined.
PLDT has recognized forex losses of P1.37 billion as of June, from a gain of P1.41 billion a year ago. Globe also endured forex losses of P2.36 billion during the same period.
Of the three, Dito had it worst, suffering forex losses of P13.88 billion because of its exposure to several foreign currency-denominated loans, including the Chinese yuan.
“In the telco industry, forex volatility and currency devaluations heavily impact our expenditures, particularly in emerging markets relying on imported technologies,” Ibay told The STAR.
“(A) telco operator’s revenue is earned in the local currency, but its infrastructure, software and financing are often priced in global currencies like the dollar,” he added.
Ibay cited, for one, the letters of credit to secure network hardware. When the peso dips, the cost to settle these LCs go up, and is reflected as a forex loss for the telco.
Likewise, Ibay said telcos pay dollar-based subscriptions for bandwidth capacity to activate their roaming services abroad, which usually cater to overseas Filipino workers. They are also charged settlement fees for subsea cables used for data transfers among and between countries.
Telcos also import some of the most critical components to keep connectivity running, including radio access networks, fiber lines, base stations and antennas.
“Since components are purchased from global manufacturing giants, local currency depreciation immediately increases procurement costs,” Ibay said.
PLDT senior vice president and enterprise business head Patricio Pineda III said the telco has put in place spending controls to keep expenses in check as the peso declines.
Pineda said PLDT earns part of its revenue in dollars, but is mitigated by the amount of imports it makes to support network expansion. For enterprise, the telco works with foreign suppliers that are paid in dollars.
As such, Pineda hopes the peso recovers to give business and consumers some breathing room. It will also allow telcos to temper costs so they may keep connectivity affordable.
According to a study by Ookla, data costs in the Philippines have declined by two-thirds to P7.07 per GB, from P21.5 per GB in 2023.
The peso last week pulled back to the 63-per-dollar level, recovering after plunging to a record-low 64.17 on Oct. 27, as global oil prices declined following the US midterm elections.
There are indicators the peso may benefit from the overwhelming win of Democratic lawmakers, who are expected to challenge US President Donald Trump’s war on Iran that has triggered the spike in global oil prices.