The Philippine telecom operators are expected to generate potential annual revenues of $650 million for the rollout of fifth generation (5G) services by 2025, a global technological study showed.
The potential revenue will be shared by the three local telcos: PLDT Inc., Globe Telecom Inc. and new telecom player DITO Telecommunity Inc. which is on track to start its commercial rollout this year.
Karrie Ilagan, Cisco managing director for the Philippines who presented the Kearney study, said 5G penetration and subscriptions will surge rapidly starting 2023 and reach as much as 15 percent penetration by 2025.
“Potentially the 5G penetration rate by 2025 is 15 percent. Currently, it’s hard to say. What we know is the rollout is starting. Singapore will be launching this year. The Philippines will follow,” Ilagan said.
The study expects 5G penetration to be around 25-40 percent in major countries in the region by 2025, with the Philippines seeing nearly 15 percent penetration. The total number of 5G subscriptions in Asean is forecast to exceed 200 million in 2025.
Potential revenues in Singapore amount to $510 million, $900 million in Malaysia, $1.17 billion in Thailand, $1.83 billion in Indonesia and $300 million in Vietnam.
Of the total revenues in the Philippines, bulk will come from enterprise clients at around 18-22 percent while consumer segments will contribute 6-9 percent, according to the study.
Ilagan said the potential revenues per country depend on the population.
Potential investment on 5G services rollout in Asean in the next five years is about $11-$18 billion. Of the total, $1.5-$2.5 billion will be invested by Philippine telecom operators from 2020 to 2025 to gain market share.
“The rollout of 5G services will require substantial investments in technology to modernize underlying networks. In Asean, telecom operators are likely to continue to invest in upgrading their 4G networks and build the 5G capabilities in a phased manner. This will allow 4G and 5G to operate simultaneously and help the operators manage their capex and ROI in a sustainable manner. Cisco is partnering with network operators in their journey to 5G rollout and is already engaged with customers in Asean on 5G transformation,” Dharmesh Malhotra, Cisco managing director for Asean, said.
The study, conducted by management consulting firm Kearney, said 5G promises speeds up to 50 times faster, 10 times more responsiveness and much lower power connectivity than 4G. This will be driven by a combination of three distinctive features: high throughput, ultra-low latency and low power connectivity.
Speed, low latency and enhanced connectivity will help telecom operators provide super-fast internet connections that enable streaming of high-definition videos, cloud gaming and delivery of interactive augmented and virtual reality-powered content to consumers.
It will also help to fast-track the commercialization of several advanced use cases of 5G, including smart cities, Industry 4.0, large-scale Internet of Things (IoT) deployments and more. This will enable telecom operators to increase revenues both from consumers and enterprise clients.
“Digital transformation has been a big theme in the Philippines. Businesses across the country are looking to leverage advancements in Fourth Industrial Revolution (4IR) technologies to enter a new phase of expansion. The rollout of 5G services will play a key role in accelerating the adoption and bring substantial benefits to the enterprises. At the same time, consumers are also eagerly waiting for 5G rollout for enhanced experience with content consumption on their personal devices,” Ilagan said.
“The Philippines is already a global leader in social media usage and Filipino consumers are spending billions of dollars on online shopping. The rollout of 5G services will not only give them better experience but also increase the reach of digital connectivity across the country. Together, these trends will play a key role in boosting Philippines’s economic growth in the coming years,” Ilagan added.
To unlock this potential, the region needs to address some key challenges, such as the slow availability of spectrum for 5G services and the resulting suboptimal network rollout, the study said.
5G will be deployed across multiple bands, with three bands likely to be important globally in the near-term: low band (700 MHz), mid-band (3.5 to 4.2 GHz) and high-band on mmWave spectrum (24 to 28 GHz).
In Asean, many of these bands are already being used to provide other services. Low band is being used for FTA TV and mid-band for satellite services. Although mmWave bands are available, deployment will need to be combined with low band spectrum to enable an economically viable coverage of suburban and rural areas as well as in-building access.
Operators will also need to carefully construct their 5G product and pricing portfolios and migrate consumers to the high-speed network. Consumers are excited about 5G and are willing to pay for better quality, unlike 3G and 4G technology. It would be fatal for operators to engage in a price war just to attract a higher number of subscribers in the hope they can charge them more at a later stage, the study said.
On the enterprise side, operators will need to build new capabilities and bundle enhanced connectivity with solutions and applications to help customers understand, implement and scale up value-enhancing use cases. They will also have to contend with a new set of competitors that provide private networks to enterprises.
“The expected rollout of 5G services comes at a perfect time for telecom operators. The usage of cellular data is growing rapidly as users consume increasing amount of services and content on their personal devices. At the same time, enterprises are looking to leverage the 4IR, which is underpinned by Artificial Intelligence, IoT, 3D Printing, Advanced Robotics and Wearables, to boost growth. The successful adoption of these technologies is largely dependent on the underlying connectivity. This provides a huge opportunity for telecom operators to increase their presence in the enterprise market and sustain their long-term growth,” Naveen Menon, Cisco president for Asean, said.
