The Philippines: Mobile market still trying to find its voice

Marc Einstein, Frost & Sullivan
17 Jul 2009

The Philippines has always been an interesting market to follow in the region and has historically been one of the most innovative emerging wireless markets in the world. It was one of the first countries to publicize SMS remittance and SMS credit transfer services, which operators across the world have since tried to emulate.

The Philippines also remains the SMS capital of the world with revenues derived from text messaging on par with revenues coming from voice services.

It is this last trend that is of extreme interest to vendors, investors and increasingly, regulatory authorities in the Philippines, as all are wondering if the extremely low voice volumes in the market will be able to stand the test of time, or will the market follow suit with its regional neighbours such as Thailand, Indonesia and Vietnam, which have seen a surge in voice traffic over the last three years?

The Philippines has a blended MOU (minutes of use) that is markedly below all other emerging markets in Asia. Standing at roughly 18 minutes per user per month, the average mobile user in Thailand uses more voice minutes in one month than a Filipino user in a year, while the corresponding figure from India is an astounding 26 times the Filipino metric.

MOU levels are of course correlated to tariffs, so it's not surprising that high-MOU markets like India have some of the lowest voice tariffs in the world while the Philippines has some of the highest. It is surprising that the Philippines has been able to sustain this market structure for so long since it's a competitive market with SIM card penetration of 73.5%.

But what is most germane is whether these current market dynamics are sustainable and what the implications are for the industry should the Philippines become a more voice-centric market.

There are signs that the market is already starting to transition to a more voice-centric one. Last year mobile challenger Sun Cellular added four percentage points to take its market share to 12% by offering unlimited in-network calling plans, the first of its kind in the market,. The cellco is now No. 2 in the post-paid market.

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