Philippines Economy

The Cell Phone Industry in the Philippines

The cell phone and Smartphone industry in the Philippines is a thriving and growing business. The number of people owning a cell phone has jumped from 14.8 million in 2013 to 27.5 million in 2016. That’s a lot of people. It puts the Philippines as the third largest cell phone user in Southeast Asia. The trend is forecast to increase to 38.4 million users by the year 2020.

Current Trends

Smartphones sales are trending up while less capable feature based cell phones are trending down in terms of total sales. This can be attributed to the entry of larger companies in the market focusing on smartphone sales at a lower price because of the existence of low-cost smartphones sales from local providers such as Cherry Mobile. Global players like Acer and Lenovo are competing with the local providers and that serves to drive prices down while jacking up the volume. Feature phone providers like the Philippine local company Cosmic Technologies has seen a consistent drop in sales volume and remains one of the few companies still in the feature phone business.

The compound annual growth rate (CAGR) for smartphones is +20% while CAGR for features phones is on the decline at a -28% percent rate.
The State of the Market

The mobile services and broadband market is dominated by two providers, Smart Communications and Globe Telecom. Globe is the up and coming competitor while Smart, as a subsidiary of the Philippine Long Distance Telephone (PLDT) Company has had a majority of the market share for some time. Between these two competitors, mobile coverage is available to over 99% of the population. The intense competition of Smart and Globe has provided for a higher quality of service to the average user as each company fights for a higher market share.

3G and 4G/LTE value-added services continues to spread as the demand for it increases but SMS text messaging continues to be the backbone of growth in cell phone usage overall.

One unique feature of the Philippine cell phone market is the services provided to Philippine ex-pats working overseas. It drives a thriving prepaid market because of the amount of money that is sent home to family in country. It comprises a significant percentage of money that drives the Philippine economy.

Philippine Governmental Policy over the Mobile Broadband Market

The issues of economic development for any country have a direct tie to mobile broadband services. The World Bank conducted a study that showed a 10% increase in broadband penetration would add 1.38% to the gross domestic product (GDP). In lesser-developed countries, the impact is even higher.  

The Philippines faces a significant challenge is achieving the economic growth indicated by increased mobile penetration. They are behind other the power curve with their neighbors and competitors in the APAC market. It is due to antiquated policy, lack of vision and a restrictive competitive country market.  

The changes that need to be made include adopting an open access policyFeature Articles, an update of the laws and regulatory framework that will encourage investment and innovation and updating the overall Philippine Digital Strategy Plan that serves as the blueprint for continued expansion of services. 

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