Philippine telcos strategize to leverage AI, Internet of Things

By Justine Irish D. Tabile, Reporter

TELECOMMUNICATIONS companies in the Philippines are getting ready to take advantage of the increasing adoption of advanced technologies, according to industry executives.

Artificial intelligence (AI) and the internet of things (IoT) continue to gain traction in the country, and telecom companies are capitalizing on their strength to cater to the rising demand for better connectivity, Converge ICT Solutions, Inc. Co-Founder and Chief Executive Officer Dennis Anthony H. Uy said.

“AI will be a game changer in the industry for sure,” he said in an e-mail interview.

“We’re also seeing a more ‘hyper-connected’ or IoT approach in the country; this is not new of course, but being a broadband provider, this is where we want to leverage our strength.”

Telcos may use AI to be more predictive and, eventually, prescriptive in how they operate, according to Roderick S. Santiago, network head at PLDT, Inc. and Smart Communications, Inc.

“We can double the capacity and speed of thinking of this AI by using a five-nanometer and later on three-nanometer (chips),” he said in an interview.

“Those are key innovations that we could see in the next few years to be able to help us to better serve our customers.”

The Philippines’ Trade department has introduced an AI roadmap to steer technology use for local industries’ regional and global competitiveness.

AI adoption could potentially elevate the Philippines’ gross domestic product by 12% by 2030, amounting to around $92 billion, the department said in a statement.

Meanwhile, DITO Telecommunity Corp. is looking at the potential use cases of the fifth-generation (5G) technology in the Philippines, according to Adel A. Tamano, the company’s chief administrative officer.

“We are looking at what is happening in our partners in China because they were the first ones who adopted 5G technology and are extensively using it in manufacturing, seaport and airport operations, and in fact even in agriculture. We wanted to see how it can be adopted in the Philippines,” he said in an interview.

In a report by S&P Global Ratings, 5G population coverage in the Philippines is still between 60% to 80%, on par with Malaysia and falling behind Australia, China, New Zealand, South Korea, Hong Kong, Japan, Singapore, Taiwan, and Thailand.

The ICT industry landscape has been disrupted by the pandemic, policy changes, and the adoption of new technology, prompting companies to realign priorities.

The public health crisis shut down businesses and transportation, impacting traditional brick-and-mortar establishments and goods transportation. However, telcos experienced increased demand, particularly for connectivity and data due to remote work and study.

As for Globe Telecom, Inc., the pandemic caused a 2% decline in service revenues in 2020 compared to the previous year.

“This was due to the impact of quarantine restrictions on the overall economy,” said Maria Yolanda C. Crisanto, chief sustainability and corporate communications officer at Globe, in an email interview.

More Filipinos integrated their work, school, shopping, and other activities from home, leading to increased data consumption. This shift contributed to the rise in data revenue’s share of Globe’s total revenues, increasing from 71% in 2019 to 76% in 2020.

“The greater need for connectivity and digital solutions during the pandemic served as an impetus for the Globe group to more aggressively pursue innovations that will solve Filipinos’ daily pain points,” said Ms. Crisanto.

Converge’s Mr. Uy said that instead of downsizing during the pandemic, the company opted to hire more individuals and expand its workforce to support the ambitious growth of its fiber broadband network.

“What I can see in the industry is that it is in a very disruptive situation. Our first disruption was the pandemic … and then the next disruption was the SIM (subscriber identity module) registration law,” he said.

The SIM registration law pushes people to be now more attached to their numbers and phones and discourages single-use SIM cards, DITO’s Mr. Tamano said.

“I think what’s good for us, and for the industry as a whole, is that we now know who our revenue-generating base is, and then we will just need to build on that,” he said.

OUTLOOK
While there was moderated growth in home broadband, the expansion of fixed-line subscribers outpaced the contraction of fixed wireless subscribers, Unicapital Securities, Inc.’s Senior Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message, referring to the telcos’ first-quarter performance.

“This trend is likely to continue as mobility improves, offset by an increase in spending power due to easing inflation.”

There is sustained demand for data, playing a pivotal role in driving the mobile segment, despite a reduction in subscriber count due to inflation and SIM registration, Mr. Temporal also noted.

“Elevated inflation in the initial months affected prepaid subscriber count. With inflation easing, the mobile segment is expected to benefit.”

“Nevertheless, we remain concerned about the potential impact of terminated SIM cards, accounting for 35% of total subscribers, following the expiry of the SIM registration period.”

Apart from the surging demand for data and the adoption of mobile internet, the government’s initiatives to drive digital transformation will also contribute to industry growth, Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said in a Viber message.

“The Philippine government and businesses are increasingly embracing digital transformation to enhance efficiency and improve customer experiences,” he said. “ICT companies can play a significant role in providing the necessary technology solutions and services.”

Mr. Temporal also highlighted potential opportunities for the sector, including the emergence of new use cases for 5G, hyperscale data centers, and the sustained value creation of fintech companies, particularly Globe and Smart.

Exploring partnerships and collaborations will uncover new growth avenues, expand service offerings, and broaden market reach, according to Mr. Arce.

The industry also faces significant risks, such as intense competition, regulatory changes, and cyber threats, he added.

“Overall, while the Philippine telco and ICT industry offer considerable opportunities for growth, companies must navigate the challenges posed by competition, regulation, and technology disruptions to stay ahead in the market.”

“As technology evolves rapidly, staying updated on emerging trends and consumer demands will be vital for sustained success,” he also said.