SINCE its deregulation in 1995, the country’s telecommunications industry has experienced noteworthy developments. It has expanded dramatically spurred by burgeoning number of subscribers and their diversified needs, interconnectivity among leading players as well as the influence of the unbridled growth of the Internet.

For some years now, the mobile market has since become increasingly vibrant with a revolution spurred by the massive usage of short messaging system or SMS as an effective communications tool a few years back.

Equally important is the recent expansion in the broadband Internet sector, which is building a robust subscriber base boosted by the presence of wireless services in the mix of broadband platforms delivering service.

BMI’s analysis and forecasts for this sector is based on data published by the Philippine Long Distance Telephone Co. (PLDT), Globe Telecom and Digital Telecommunications Philippines (Digitel). This provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies comprehensive independent forecasts and competitive intelligence on the country’s telecom sector.

By the end of June 2011, the report revealed that there were almost 91.3 million mobile subscribers in the Philippines, up from just over 86 million at the end of 2010 and 84.17 million in June last year.

Also, the telecom sector added over 3.23 million mobile subscribers in the three months leading to June 2011, thus, making the second quarter of last year the strongest period for growth thus far since the first half of 2010.

Despite robust performance in the first semester of 2011, the independent information provider still believes that the market is reaching its saturation point; hence, operators will be forced to focus more on the post-paid segment.

The continued advancement of the local telecom industry is seen to extend through to the end of 2016. BMI forecasts a 4.4-percent average annual growth of the mobile subscriber in the Philippines in the five years to the end of 2016.

Even better, it expects the market to grow to over 117 million mobile subscribers at the end of 2016—equivalent to a mobile penetration rate of almost 114 percent.

In the said report however, the Philippines dropped a notch from 11th to 12th position in BMI’s telecoms business environment ratings for the Asia-Pacific region. Currently, the country scores 49.7 overall, down from 51.1 in BMI’s previous update.

While the country is at the bottom half of BMI’s ratings table, the market is still relatively attractive when benchmarked with alternative emerging markets in the region.

Key developments

In the “Philippines—Key Statistics, Telecommunications Market and Fixed Network Operators” report released by independent global telecommunications research and consultancy firm Paul Budde Communication Pty. Ltd. (BuddeComm) in October 2011, some key developments in the telecom regulatory area were cited that somehow helped ease the effect of the global fiscal crisis on the domestic telecom industry.

For one, the National Telecommunications Commission (NTC) substantially increased the administration fees for telecoms operators.

Likewise, it released more spectrum for wireless broadband services and published draft recommendations on the minimum speed of broadband connections.

The local telecom regulator also worked with the mobile operators to reduce interconnection fees for both voice calls and text messages.

Last year also saw PLDT shaking up the telecom sector through the “biggest merger ever,” with rival operator Digitel. On October 26, 2011, the NTC finally approved PLDT’s purchase of a 51.55 percent stake in Digitel from JG Summit in a “landmark” share-swap transaction valued at about P69.2 billion.

The deal was approved under three conditions: PLDT’s divestment of its stake in subsidiary Connectivity Unlimited Resources Enterprise Inc., which owns 10MHz of 3G frequency in the 2100 band; Digitel’s permanent implementation of Sun Cellular’s unlimited call and text services; and PLDT-Digitel’s continued provision of “high quality service to subscribers and users.”

With the merger, PLDT now corners 70 percent of the market both in terms of revenue and subscribers, leaving Ayala-owned Globe Telecom Inc. to about 30 percent of the market.

Unfazed by the PLDT-Digitel consolidation, conglomerate San Miguel Corp. (SMC) also aimed to be another major telecom player after forging a joint venture with Qatar Telecom. The resultant entity from the joint venture between the two aforementioned companies is Liberty Telecom, a new entrant in the wireless-broadband sector offering WiMax (Worldwide Interoperability for Microwave Access) service.

Other noteworthy developments in the country’s telecoms sector include the announcement in September that broadband operator Bayan Telecommunications Inc. (Bayan) had acquired a permit to operate a cellular-mobile telephone system (CMTS) network until November 7, 2013 by the NTC.

The extension would allow the Lopez-owned company to continue installing cell sites to meet permit obligations and prepare for the launch of next-generation 3GPP Long Term Evolution or LTE services, a standard for wireless communication of high-speed data for mobile phones and data terminals, following the lead of Smart Communications and Globe Telecom.

Likewise, NTC recently approved the sale, assignment and transfer of all Bayan’s rights and interest used in its wireless local loop (WLL) service to Multi-Media Telephony Inc., which will also assume all of the former’s liabilities as well as its more than 200,000 WLL subscribers.

Emergence of social media

IN today’s digital age, social media has taken the world by storm with the popularity of networking sites such as Facebook and Twitter. Being staples in a substantial number of mobile devices, telecom companies are likewise quick to take advantage of their revenue potential.

Apart from being the country with the largest number of text users globally, the Philippines was reported to be the world’s leader in terms of Facebook penetration with an estimated 93.9 percent of its Internet-linked population regularly accessing the site.

According to the latest figures from social-media statistics portal socialbakers.com, there are 26.5 million Filipino “FB” users at present.

Meanwhile, based on the recent study by research firm Nielsen, the place of Internet access has shifted from Internet cafés (down 66 percent in 2011 from 71 percent in 2009) to homes (up 35 percent from 27 percent). Web access through mobile phones remained flat at 4 percent to 5 percent.

Fitch Ratings, on the other hand, cited that going mobile is another way of leveraging on the popularity of social networks. It said, however, that local telcos are still at risk as more and more subscribers turn to mobile Internet messaging and social-networking services, thus, cutting down their traditional call and text messaging revenues.

To further help the growth of mobile Internet and social media usage locally, the country’s biggest wireless service provider Smart introduced new products and services for the tech-savvy Filipino consumers. The company has been pushing sales of Web-enabled smartphones, particularly mid- and low-cost handsets. (In fact, it launched the Netphone in Barcelona, Spain, in January which runs on the SmartNet mobile platform that allows subscribers to post and read status updates on their Facebook and Twitter accounts at no cost.)

Smart’s parent company, the PLDT group, on the other hand is undertaking a two-year, P67-billion network transformation program. Globe, meanwhile, will spend $790 million or about P17.6 billion in the next five years to upgrade its network.

Given these developments in local telecom last year, they send a clear signal and establish ever-expanded connections to usher in an even robust industry for 2012.

In Photo: Caller is king A man uses his mobile phone near a Philippine Long Distance Telephone Co. communication tower. (Bloomberg News)