1/5/2019 Philippines - Information and Communications Technology | export.

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Philippines Country Commercial Guide

Philippines - Information and Communications Technology

This is a best prospect industry sector for this country. Includes a market overview and trade data

Last Published: 11/27/2018

Overview
Philippines IT (hardware, software, and services) spending is expected to reach $4.8 billion in 2018, and increase to over $7
billion by 2022[1]  There are robust opportunities for growth given increased enterprise spending on ICT infrastructure,
cloud, and cyber solutions.  PC Sales might slow down because Filipinos are investing more in smartphones to access the
internet.

Top markets for IT sales in the Philippines are business process outsourcing (call centers), telecommunications, nancial
services, and the government.  There are signi cant opportunities with the Philippine Government, including the Department
of Information and Communications Technology (DICT), and other government agencies. The IT software and services sub-
sector is dominated by U.S. and European suppliers.  Asian suppliers are very active in the hardware and PC segments. 

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Filipinos are proli c users of social media.  Estimates this year show that there are 83 million active social media users in the
Philippines.  Of this number, 67 million are on Facebook; 12 million on Twitter, and 4 million are LinkedIn users. 

Telecom
The Philippine Long-Distance Telephone Company (PLDT) and Globe Telecom are the two major telecommunication carriers
in the country. PLDT has three mobile brands, Smart Communications, Sun Cellular, and TalkNText (TNT). The current
Philippine cellular infrastructure is Global System for Mobile Communications (GSM).  3G service was launched in 2006 while
4G was made available in 2010.  SMART and Globe launched long-term evolution (LTE) networks in 2012.  PLDT has an
existing digital ber optic, and a digital microwave radio system connecting the entire country. Globe Telecom has ber optic
cables and was the rst to offer Worldwide Interoperability for Microwave Access (WiMax). 

The growth of mobile broadband is expected to surge in 2018 and 2019 as Globe and PLDT continue with their LTE expansion
and movement towards new technology.  Globe has announced a US$850 million capex for 2018 [2], to expand its data
network and address the surge in customer demand for on-demand video content. Globe will invest mainly in multiple-input
multiple-output (MIMO) wireless technology to provide faster internet service to 2 million homes by 2020.

PLDT’s 2018 capex is at US$5 billion to aggressively roll out additional LTE and 3G base stations to provide high-speed mobile
broadband to over 90 percent of the country by 2018. PLDT will double it ber and hybrid ber broadband capacity to over
2.2 million ports. By 2019, virtually all PLDT 1.2 million copper-based DSL subscribers will enjoy ber-fast internet. [3] PLDT
will increase its special services such as analytics, cloud, security, machine-to-machine and social media. [4]

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There is eager anticipation for all such data investments. According to Akamai’s “State of the Internet Report” for the fourth
quarter of 2017, the average internet speed in the Philippines is 5.5 megabytes per second (MBPS), the slowest in Asia Paci c,
and among the most expensive in the world. Globe Telecom’s 2017 annual report shows 63.2 million customers while PLDT’s
2016 Full Year Financial and Operating Results shows a customer base of 62.78 million.  Below is a table showing the
breakdown of subscribers:

  GLOBE TELECOMPLDT
Mobile Subscribers 60.7 million 58.17 million
Home Broadband (Wireless)1.3 million[5] 16,747
Fixed Line Broadband N/A 1.9 million
Fixed Line 1.24 million[6] 2.7 million[7]
Total Number of Customers 63.2 million 62.78 million
 
Chinese companies dominate the telecom equipment industry.  More recently, building on previous experience with 4G
expansion, PLDT is partnering with Huawei to begin research and development on 5G roll-out in the Philippines.  Korea, the
U.S., and China compete heavily in smartphones but Philippine company, MyPhone, is the leading smartphone supplier in the
country because of its affordable products.

Leading Sub-Sectors

Fiber Optic Network – given the new investments in ber connectivity

Cyber Security – signi cant cyber investments for both the public and private sectors
Cloud Services – there is a policy shift towards cloud services but further market education is needed
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Networking equipment – continuous upgrades for enterprise customers

Database storage and management – to support the upgrades of Philippine Government agencies
Smartphones and tablets – the preferred connectivity device of Filipino consumers

Opportunities
The Philippine Statistics Authority (PSA) is preparing to implement the rst phase of the National ID project for the rst one
million registrants.  They are expected to purchase automatic ngerprint identi cation system with a budget of US$40 million
within 2018. The DICT launched the “National Broadband Plan” in 2017 with the goal to connect government of ces
nationwide, provide internet access to far- ung areas that are either un-served or underserved by the private sector, and
stimulate economic growth through the digital empowerment of the people.  The plan is divided into ve components:

International Gateway

Facebook, DICT, and the Bases Conversion Development Authority (BCDA) entered into a partnership to build the
“Luzon Bypass Infrastructure”, a high-speed broadband infrastructure that includes two cable landing stations connected
by a 250-km long cable network corridor.  Facebook, DICT and BCDA signed the Strategic Engagement and
Collaboration to Undertake a Reliable and Ef cient Government Internet (SECURE GovNet) project agreement on
November 2017. 

Facebook will build and operate a submarine cable system that will land on Baler, Aurora on the east coast of the
Philippines. BCDA and DICT will construct the 250-km bypass cable network from Baler to Poro Point, La Union on the
west coast.  Facebook will continue the cable system as it exits from Poro Point.  According to DICT Secretary Rio, this

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cable system will provide direct connections from Luzon to internet hubs in the U.S. and Asia.  Facebook has agreed to
provide the Philippine Government with broadband capacity of at least two million MPBS in exchange for using the
bypass cable network.[8] 

Domestic Backbone

Domestic Backbone – DICT entered into a tri-partite agreement with the National Grid Corporation of the Philippines
(NGCP), and Transnational Corporation (Transco) to use NGCP’s ber optic network to provide broadband to areas that
are underserved or unserved by the two telecom providers.

 Accelerated Tower Build – This focuses on new telecom tower build-up efforts and facilitating tower-sharing between
networks.  The Philippines only has 20,000 telecom towers, the goal is to increase this to 60,000 by 2022.

 Accelerated Fiber Build for the Last Mile – The DICT wants to increase Fiber-to-the-Home (FTTH) connectivity.  The
plan is to offer subsidies to telcos to lay ber in strategic areas that are not commercially viable.  

Satellite Overlay – The Philippines is an archipelago and there are numerous isolated areas that are best served by
satellite services.

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In May 2017, the DICT released the “National Cybersecurity Plan 2022” (NCSP) with the goal of increasing the security and
resilience of critical infrastructure in the Philippines. The rst component of the NCSP is the “National Cyber Intelligence
Platform Project” (NCIP).  The NCIP Phase I is valued at US$10 million and it will establish a National Computer Emergency
Team (NCERT) and a Security Operations Center (SOC) for threat intelligence and analysis. The NCERT and the SOC will
identify, monitor and respond to cybersecurity threats and provide the basis for further implementation of the NCSP through
subsequent project phases. Phase I will include provision to connect 10 other government agencies.  DICT issued a tender for
procurement of technology and services required for the implementation of Phase I on May 30, 2018, with a bid deadline of
July 20, 2018. 

NCIP Phase II will include a rollout of cybersecurity infrastructure and capacity building for up to 50 government agencies.
The budget for Phase II implementation is approximately US$40 million. The DICT is also undertaking the selection of the new
major player in the Philippine telecommunications industry.  There are two versions of the terms of reference (TOR) for the
selection[9].  The DICT has submitted a proposed TOR using the “highest committed level of service” (HCLOS) as criteria,
designed in consultation with the International Telecommunications Union.  Under the HCLOS model, the minimum annual
standards were 30 percent for population coverage, 5 Megabits per second for internet speed, and an US$800 million
investment for over ve years, with no upfront fee for spectrum rights.  It requires the bidding consortia to have experience in
the operations of telecommunications services for the last ve years, a paid capital of at least $200 million, and not be related
to the current dominant players.  The Department of Finance (DOF) developed a counter proposal that requires a minimum
bid of around USD 730 million for frequency rights.  Finance Secretary Sonny Dominguez has taken the position that Filipinos
deserve income from the country’s spectrum assets and believes an investment of at least USD 4 billion will be required of the
new provider to compete effectively.  The high cost of entry requires local bidders to partner with foreign investors.  According
to news reports, probable foreign partners include China Telecom, South Korea’s LG Uplus, Japan’s KDDI, Vietman’s Viettel,

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and possibly a company from the U.S.

Web Resources
Department of Information and Communications Technology (http://www.dict.gov.ph/)
Globe Telecom (http://www.globe.com.ph/about-globe)
PLDT (http://pldthome.com/about-us)
SMART Communications (http://smart.com.ph/About/)
 

[1] BMI Research: Feb 2018 IT Industry Forecast

[2] https://www.rappler.com/business/195384-globe-telecom-net-income-2017-capex
(https://www.rappler.com/business/195384-globe-telecom-net-income-2017-capex)
[3] http://www.pldt.com/docs/default-source/ nancials-press/2018/pldt's-5-year-p260-b-capex-program-enters-3rd-
year.pdf?sfvrsn=0 (http://www.pldt.com/docs/default-source/ nancials-press/2018/pldt's-5-year-p260-b-capex-program-
enters-3rd-year.pdf?sfvrsn=0)
[4] https://bmo.bmiresearch.com/article/view?
article=1365232&advanced_search=1&matches=1404&page=1&position=2&keyword=PLDT
(https://bmo.bmiresearch.com/article/view?
article=1365232&advanced_search=1&matches=1404&page=1&position=2&keyword=PLDT)
[5] https://investor-relations.globe.com.ph/content/dam/multi-microsites/docs/investor-relations/2018/GLO_4Q17-
Quarterly-Results-Press-Release.pdf (https://investor-relations.globe.com.ph/content/dam/multi-microsites/docs/investor-
relations/2018/GLO_4Q17-Quarterly-Results-Press-Release.pdf)
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[6] https://investor-relations.globe.com.ph/content/dam/multi-microsites/docs/investor-relations/2016/GLO_17A-2016.pdf
(https://investor-relations.globe.com.ph/content/dam/multi-microsites/docs/investor-relations/2016/GLO_17A-2016.pdf)
[7] http://www. rstpaci c.com/wp-content/uploads/2015/08/PLDT-1Q2018-presentation.pdf
(http://www. rstpaci c.com/wp-content/uploads/2015/08/PLDT-1Q2018-presentation.pdf)
[8] “Philippine Government Teams Up with Facebook for High Speed Broadband Infrastructure”, January 7, 2018, BCDA:
http://www.bcda.gov.ph/philippine-government-teams-facebook-high-speed-broadband-infrastructure
(http://www.bcda.gov.ph/philippine-government-teams-facebook-high-speed-broadband-infrastructure) 
[9] “DICT Chief threatens to resign over 3rd telco roadblocks”, Philippine Daily Inquirer, July 16, 2018,
http://business.inquirer.net/254031/dict-chief-threatens-resign-3rd-telco-roadblocks
(http://business.inquirer.net/254031/dict-chief-threatens-resign-3rd-telco-roadblocks)
 

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