Philippine Telecommunications Industry

Introduction Because of the broad scope of

Telecommunications, the group has decided to tackle only the mobile or wireless communications as the main topic.

Currently, the market is dominated by the Big Three in the Wireless Telecom industry namely, Smart Telecommunications, Inc., Globe Telecom, Inc., and Digitel Mobile Philippines, Inc. or otherwise known as Sun Cellular.

IntroductionThe group’s definition of

telecommunication: Telecommunication is a form of

communication aided by electronic mediums such as telephones, radios, cell phones, and computers.

Historical Background During the 1900’s to 1950’s the only

available form of telecommunication in the Philippines are radios and telegraphs.

Only after 1950’s did the technology for telephone communications were developed.

Historical Background In the 80s, the market became more accommodating and new telephone companies made their industry debut. New lines began operating and franchises were allowed nationwide.

Historical Background

In the early 90s, about 2 of every 10 Filipino families have landline phones, with most of the lines located in Metro Manila.

Historical Background Less than 1 out of

10 owns a mobile phone.

Provinces still lag behind in the race during that time.

And then a few years more, (2000) the cellphone age reached its peak.

In 2010, Market penetration reached up to 94% of the population or equal to 86M Pinoys.

Telecommunications Companies in the Philippines

Incorporated in 1991, Smart Communications, Inc. (SMART) is currently leading the Philippines' wireless services catering to 45.6 million subscribers on its GSM network as of end of year 2010.

Telecommunications Companies in the Philippines

Globe Telecom, or commonly known as Globe, is the second-largest telecommunications company in the Philippines. Globe's ownership are divided by several shares. This including Singapore Telecommunications (45%), Ayala Corporation (34%), and public stock (21%). 

Telecommunications Companies in the Philippines

Sun Cellular. Although placed as third in the wireless communication industry, Cellular Mobile Philippine Phone Sun was once known to top even Smart in the past. This was because of their "24/7" unlimited call and text service they first offered in 2004. This led competing networks Smart Communications and Globe Telecom to offer similar but higher-cost plans.

REVIEW OF RELATED LITERATURE

Related Literature

Digital review of Asia Pacific ICT infrastructure

Performance of the Industry

Production The Philippines mobile market took off back in

1999/00. In the decade since 2000 the number of

mobile telephone subscribers or the market penetration has grown by almost 80 million and was approaching 85 million by June 2010.

Around 1.8 billion SMS messages were being sent every day in the Philippines by 2009.

Production But as an indication of the constant

change in the mobile market the SMS market had started to decline in 2010 as the impact of Internet-based social networks started to have an impact on SMS usage.

Production

Voice Services Call Types Voice Mail Service Call Management

Messaging Services Local Text Messaging International Text

Messaging Multimedia Messaging SIM and Handsets Sales

GPRS, EDGE, HSDPA, 3G Data

Mobile Browsing USB Data Modem (Smart

Bro, Globe Tattoo, Sun Broadband)

Financial Services Smart Money GCash

Loading Services

The wireless telecom companies basically offer the same services to their customers. They are shown as follows:

Elasticity the industry is elastic because services or goods

that have many substitutes which consumers may switch to are elastic.

Advances in mode of transportation and communication accompanied by decreases in their cost have increased the size of markets over time.

Just like the two leading mobile telecommunications firms, Smart Communications, Inc. and Globe Telecom, Inc. they always beefed up their network and marketing promotions.

Pricing

Pricing - PromosBucket services

As of December 2010, Philippines has 86.15 million subscribers in total, or a 94% penetration rate.

Market Share

23.25 M

45.6 M

17.3 M

Total Subscribers

Globe 27%

Smart 53%

Sun Cellular 20%

Financial Performance

*Smart has the highest revenues

*Sun shows the lowest revenues – this is probably because it is the youngest company among the three.

SmartGlobe

Sun

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2009

2008

2009

2008

Cellular Service Revenues(in millions)

Competitive Behavior The Philippine mobile market has been

marked by rapid growth, particularly during the early to middle part of the decade, and intense competition.

Since 2000, the mobile communications industry experienced a number of consolidations while new players continued to enter the market.

Competitive Behavior In 2009, the mobile industry only grew

10% in subscriber/SIM terms as nominal penetration rates reached over 80%, ending with a cumulative industry base of 74.7 million.

high penetration level and increasing incidences of multi-SIM usage,

Sun’s Unlimited Call and Text service.

Government Policies, Laws and Regulations

August 10, 1963: 3846, An act providing for the regulation of radio stations and radio communications in the Philippine Islands, and for other purposes.

December 21, 1989: 6849, An act providing for the installation, operation and maintenance of public telephones in each and every municipality in the Philippines, appropriating funds therefor and for other purposes.

March 1, 1995: 7925, An act to promote and govern the development of Philippine telecommunications and the delivery of public telecommunications services.

Government Policies, Laws and Regulations

In order to protect and promote the interest of subscribers/end-users of prepaid telecommunications services, the National Telecommunications Commission promulgated the regulatory guidelines regarding the lifespan or expiration of loads the MEMORANDUM CIRCULAR No. 03-07-2009

MEMORANDUM CIRCULAR No. 03-07-2009 Amount of Load Purchased Minimum Expiration | Validity Period

PhP10.00 or lower | Three (3) daysMore than PhP10.00 to PhP50.00 | Fifteen (15) daysMore than 50.00 to PhP100 | Thirty (30) daysMore than 100.00 to PhP150.00 | Forty Five (45) daysMore than PhP150.00 to PhP250.00 | Sixty (60) daysMore than PhP250.00 to PhP300 | Seventy Five (75) daysMore than PhP300 | One Hundred Twenty (120) days

Analysis of the Industry

Analysis The market structure of telecommunications in

the Philippines is oligopoly. Decision of one firm is greatly influenced by

the other firms. All of their products are considered

homogeneous or standardized. This market structure comes with innumerable

external hindrances that do not allow entrants easily.

Conclusion and other Recommendations

Conclusion and other Recommendations

the most profitable company in term of service revenue for the year 2009 and 2008 is Smart Communications, Inc. with total of Php77,781M and Php69,749M respectively.

For the non-service revenue, Globe topped the companies with total of Php1,361M for 2009 and Php1,572M for 2008.

Globe Telecom, Inc. holds the largest assets worth Php118,186M in 2009 and in contrast, Smart Communications, Inc. holds the largest amount of liabilities worth Php113,530M in 2009.

to make big improvements on their broadband technology

data services Bandwidth

speeds

Conclusion Recommendations

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