Philippines: Plenty of room for growth

Philippines: Plenty of room for growth

Ajay Sunder/Frost & Sullivan   |   September 12, 2012
The Philippines is still a growing mobile communications market with revenues hitting $3.8 billion last year. The emergence of over-the-top players and numerous content providers has intensified competition in the mobile landscape with a variety of low-cost services. Despite the challenges, the overall market continued to grow, albeit at a slower rate of 7% in 2011.
 
A unique aspect of the Philippines mobile market compared to other APAC markets is that more than 50% of ARPU comes from data - primarily SMS - enabling the country to retain the title of the world's text messaging capital. The major operators offer attractive bundled packages with unlimited text. But operators are launching more innovative data applications and starting to feel the impact of social media, like Facebook Zero.
 
Despite declining prices in fixed and mobile broadband in the Philippines, the service is still not affordable for the majority. The broadband penetration rate of 7.4% in 2011 offers enormous upside growth potential for the industry players. Operators like Globe are pushing hard with competitive entry-level packages priced as low as 15 pesos (35 US cents) for one hour of HSPA service with a 20 MB data cap.
 
The Philippines is still very much a youth market with more than 60% of the population aged 15 to 64 and a median age of 23 years. Most operators are targeting the youth market in their campaigns.
 
Smartphone penetration is still less than 20% but is expected to increase significantly, driven in large part by the youth segment. There also is an increased focus from operators on creating local content and targeting the youth market through innovative applications.
 
It is interesting to observe the different strategies adopted by various operators. For example, Smart focuses on data allowance while Globe sells on speed and unlimited usage. Its unlimited plans are highly popular among subscribers. But as seen in other emerging economies, unlimited usage packages can pose a problem to quality of service as the data usage increases among subscribers.
 
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It's not just about growth in data, it's a signaling issue as well

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