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Telcos’ revenue growth seen stable next year

By Arjay L. Balinbin, Senior Reporter

MOODY’S INVESTORS Service on Thursday said it expects the revenue growth of Philippine telecommunications companies to remain stable in 2021.

“Revenue growth of operators in emerging markets will remain stable,” Moody’s Investors Service said in its 2021 outlook report for the telecommunications sector in Asia Pacific.

Emerging markets refer to Bangladesh, China, India, Indonesia, Malaysia, Pakistan (up to 2017), and the Philippines.

Moody’s noted that “rising” data consumption and broadband usage in the Philippines “continue to drive revenue growth, although partially offset by declines in legacy voice and messaging services.”

“Heightened competition will weigh on growth when a new player, DITO, enters the market in 2021-22,” it added.

As for the entire Asia-Pacific region, Moody’s said telco revenue will grow 3.5%-4% next year, as the sector “bounces back” from the decline in the first half of 2020, which was caused by the coronavirus pandemic.

“Capital spending will be high at about 22% of revenue, but we expect companies to fund spending largely with internal cash,” Moody’s said.

It also expects the free cash flow to remain “negative.”

“But some reduction in shareholder returns will lead to gradual improvement,” it added.

Moody’s identified six themes that will shape global credit next year, namely: policy challenges, digital transformation, social trends, uneven recovery, rising debt burdens, and environmental impact.

PLDT, Inc. Chairman and Chief Executive Officer Manuel V. Pangilinan has said he expects “better numbers for 2021.”

PLDT recently reported a 95% growth in its attributable net income for the third quarter.

It said the period was an “all-time high” across its different business segments because of the spike in customer demand for digital services.

The company posted an attributable net income of P7.41 billion, up from the P3.79 billion it generated in the same period last year.

Meanwhile, Globe Telecom, Inc. saw a 22% drop in its third-quarter attributable net income to P4.39 billion.

Globe said its service revenues declined 3% to P36.68 billion, driven by the sustained drop in traditional voice and mobile SMS, but partly mitigated by the increase in the mobile data segment.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

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