Analysts revise projection for Philippine telecom industry

CEBU, Philippines - Market analysts at the investment powerhouse COL Financial Philippines revised its project for the telecom sector in the Philippines in light of recent changes in the industry.

While uncertainties remain on Globe and PLDT's joint acquisition of San Miguel Corporation's telco assets due to Philippine Competition Commission’s review, analysts believe that both firms will fight for this to push through.

Prospects for the industry have also brightened given the commitment of the newly-formed Department of Information and Communications Technology (DICT) to support the improvement of telco services.

COL Financial also upgraded its service revenue by 1.4 percent to P287.5 billion and by four percent next year to P299.4 billion. This is due to the strength of Globe's data-bundled offerings as well as expected faster rate of which PLDT's data revenues will be able to offset the decline from its legacy businesses.

In its earlier pronouncements, DICT committed to help the telcos improve their services. The newly installed department also promised to improve the cumbersome process of deploying cell sites, which currently takes an average of permits at the local government level and eight months to process according to Globe.

DICT is also looking at building infrastructure in far-flung areas that are not viable as a business to telcos.

According to COL Financial, factoring in the changes in its assumptions, analysts estimate that core earnings will mostly be higher moving forward given the faster growth in service revenues brought about by improved prospects in the industry and the telco's initiatives to shift to data.

"We expect that competition would relatively be more subdued as the two players are left to compete with each other only," COL Financial forecasted. (FREEMAN)