Philippine telcos ‘face capex pressure despite temporary cut

Philippine telcos ‘face capex pressure despite temporary cuts’, says ratings agency

07 August 2020 | Alan Burkitt-Gray

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Pressure from competition and the regulator will push telcos in the Philippines to raise their capex in 2021 after cuts this year.

Fitch Ratings says that PLDT and Globe Telecom cut capex this year to ease the burden on cash flow. They have both lowered their capex guidance for 2020 by 15%-20% from their original targets in light of pandemic-related supply disruption, said the agency.

Last month President Rodrigo Duterte called the two existing operators “lousy” and gave them until December 2020 to turn around their performance record to prevent the government taking what he called “drastic steps”.

Duterte has already licensed a third operator, Dito, to compete against Globe and PLDT.

Fitch said in a report today: “The government’s push for significant network improvements – recently reiterated by President Duterte at the annual state of nation address – is likely to accelerate network expansion over the next few quarters.”

It added: “The new common-tower policy is also likely to hasten tower builds and access to cellsites, which are being held up by the lengthy regulatory approval process for permits.”

It notes that the new policy requires telcos to lease new towers from independent tower companies, a move to level the playing field for Dito as a new entrant.

However, the mandatory tower sharing does not apply to existing towers, said Fitch.