PH not viable for a 3rd telco player

UP study

Athird player can enter the Philippine market only if it is “cost-insensitive for the next ten to fifteen years” according to the most recent study about the sector. However, ”No private firm can afford that.”

This was the finding of University of the Philippines (UP) Professor Emeritus Dr. Epictetus Patalinghug, who authored “Assessment of the Structure, Conduct and Performance of the Philippine Telecommunications Industry.”

With the massive capital that the existing telco duopoly of PLDT and Globe Telecom Inc. have already put in over the last few decades, the market is not really viable for the entry of a new player,” he noted.

A third telco player needs a huge capital expenditure (capex) to build up infrastructure and maintain operations to compete against existing players.

In addition, a late entrant has to spend more to acquire new subscribers.

In the short run, a third player will find it difficult to be financially viable due to its late-mover disadvantage and the need to penetrate undeveloped areas where deployment cost is higher than the almost saturated urban markets, Patalinghug explained.

This is on top of other barriers to entry, such as the need for a congressional franchise, lack of spectrum, plus licenses and permits red tape.

With so many barriers to entry, it is no wonder why no new major telecoms companies has invested in the country in the last 15 years while others have tried but did not stay long, observed Philippine Chamber of Telecommunication Operators (PCTO) Chairperson Eric Delos Reyes.

“Putting up a huge amount of money late in the game may not be viable when there’s no immediate profitability,” he concluded.