Telcos’ capex to rise by up to 25% in 2021 — Fitch

telcos capex to rise by up to 25 in 2021 fitch - Telcos’ capex to rise by up to 25% in 2021 — Fitch

By Arjay L. Balinbin, Senior Reporter

THE capital expenditure (capex) of the “incumbent” telecommunications companies is expected to increase by up to 25% next year, driven by regulatory pressure and the planned commercial launch of telco startup DITO Telecommunity Corp. in March, Fitch Ratings said.

In its latest non-rating action commentary, Fitch Ratings said: “We forecast the incumbents’ capex will increase by 20%-25% in 2021.The Philippines has among the highest capex/revenue ratios in Asia-Pacific, at around 40%.”

The credit rating agency noted both PLDT Inc. and Globe Telecom, Inc. will be “accelerating their network rollout in mobile and fiber broadband in the coming quarters,” ahead of the commercial launch of DITO Telecommunity, which targets to cover “37% of the national population over the next six months.”

Ernest L. Cu, president and chief executive officer of Globe, said at a briefing last week that the Ayala-led telco would build fiber-to-the-homes “more aggressively” in 2021 to address the increasing demand.

Also last week, PLDT said in a statement that it was aiming to extend its current 395,000-kilometer footprint “by another 81,000 kilometers.”

Smart Communications, Inc. also intends to add “about 2,000 cell sites next year,” PLDT added.

Fitch Ratings also expects the telco sector’s revenues to grow “by mid-to-high single digits” next year, “driven by fast-expanding home broadband services and localized competition in mobile.”

PLDT saw its attributable net income for the third quarter grow 95% to P7.41 billion. Its revenues increased 10% to P46.49 billion, driven by the spike in customer demand for digital services amid a pandemic crisis.

Meanwhile, Globe saw a 22% decline in its attributable net income for the third quarter to P4.39 billion.

Globe’s service revenues declined 3% to P36.68 billion, driven by the sustained drop in traditional voice and mobile SMS revenues.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

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