LOCAL ISPS TO CONTINUE RAMPING UP 5G, FIBER CONNECTIVITY

Local internet service providers (ISP) are expected to spend P190.7 billion over the next two years to improve and expand their connectivity services, according to a report by First Metro Securities Brokerage Corp.

The Metrobank Group unit said in a recent study that the capital investment projection represents 47.1 percent of the aggregate service revenues of Globe Telecom Inc., PLDT Inc. and Converge ICT Solutions Inc.

“We acknowledge that sector capex (capital expenditure) is expected to peak this year; however, for 2023, we forecast capital investments to stay elevated historically as a percentage of service revenues,” First Metro explained.

In particular, capex is estimated to amount to P80.1 billion for PLDT; P90 billion for Globe; and P17.5 billion for Converge next year.

First Metro said that the spending would likely be earmarked for 5G service upgrades and expansion of fiber broadband coverage.

“It is paramount for incumbent players to maintain/improve existing service and network quality to foster brand loyalty and lower churn. This is especially true in the current competitive landscape, where customers have high bargaining power and with new entrants operating with newer network builds,” the report noted.

First Metro noted that proceeds from Globe and PLDT’s tower sale and leaseback agreements would support capex requirements and settlement of debts.

In April, the Pangilinan-led player clinched a P77-billion deal to sell and leaseback its 5,907 towers. The Ayala-owned company also recently inked all the agreements involved in its P91-billion deal for its 7,059 towers.