Online stockbroker Colfinancial.com expects telecom companies’ topline to grow by 6.1 percent to P426 billion, slower than last year’s projected 6.3 percent growth.
Colfinancial said growth will decelerate as the telecoms sector’s fiber market starts to mature. Still, it sees the revenue uptick to be driven by the telcos’ expansion of their fiber service to areas that are less penetrated and the potential launch of a prepaid variant of the service.
“Last year, fiber take-ups saw a significant slowdown, showing early signs of maturity. This was aggravated by the fallout due to increased churn brought about by high inflation and weather-related service disruptions,” Colfinancial.com said.
Net service additions hit 952,000 as of the first nine months of 2022, compared to 1.5 million the prior year, Colfinancial noted.
“While there are still first-time customers to be acquired, such as those in the Vis-Min region, we expect growth to slow down this year, as competition intensifies increasing the possibility of telcos taking steps to grab market share from each other,” it said.
“On the positive side, the launch of prepaid fiber services could increase the addressable market for the fiber business. Should take-ups be favorable, we expect improved network utilization as telcos could leverage on existing infrastructure,” it added.
Colfinancial said while inflation could remain elevated for the first half of the year, its expected easing towards the latter part of the year could boost consumer spending, allowing mobile revenues to increase faster.
The online stockbroker expects mobile revenues to grow by 3.5 percent to P229 billion this year.
Meanwhile, Colfinancial said telcos are expected to begin cutting their capital expenditure (capex) as early as this year after ramping up the pace of network rollouts during the height of the pandemic.
It noted other factors that would lead to the cutback in capex spending: slowdown in demand growth for fiber broadband, and the increasing reliance on tower companies to improve the quality of mobile phone services.
“We expect the trend of capex spending to go down in the coming years. This should ease pressure on free cash flows following heightened rollouts during the pandemic. Moreover, should current levels of the dollar to the peso be sustained, the impact of foreign exchange translation on capex inflation should considerably subside,” it added.
