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Telco revenue growth seen to stay stable in 2022

By Arjay L. Balinbin, Senior Reporter

CREDIT ratings agency Moody’s Investors Service forecasts that revenue growth for telecommunications companies in the Philippines will “remain stable” in 2022, owing primarily to the increasing data consumption and broadband usage amid the pandemic crisis.

Moody’s expects that telcos’ revenue in the Asia-Pacific region’s emerging markets, including the Philippines, will continue to grow around 5% next year.

“Rising data consumption and broadband usage continue to drive revenue growth and a higher proportion of revenues,” Moody’s Investors Service said in its “Telecommunications — Asia-Pacific 2022 Outlook” released on Tuesday.

“Although partially offset by declines in legacy voice and messaging services, these are becoming a smaller proportion of revenues,” it added.

The credit ratings agency considers the exposure of the telco sector to the coronavirus disruption to be “low,” as it is “an essential service for internet use and telecommuting.”

Sought for comment, Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said that “in the longer scheme of things, investors are still more bullish on telco stocks since their operations are considered pandemic-proof.”

“On top of this, Globe Telecom, Inc. and PLDT, Inc. offer stable dividends at attractive yields.”

“However, this doesn’t mean that the telco stocks are immune to short-term fundamental shocks related to the market as a whole. That’s why when the index plunged last Monday due to the Omicron variant, the telcos were also affected,” she noted.

On Monday, PLDT shares closed 1.12% lower at P1,680 apiece, while Globe Telecom shares declined 3.47%, closing at P3,282 apiece.

Moody’s also expects that emerging market telcos’ spectrum liabilities will increase to more than 16% this year and 2022, from 11.6% in 2020.

PLDT and Globe have been calling for lower spectrum fees.

PLDT has said that “most likely” it would end 2021 with around P2.4-billion expenditure on spectrum user fees.

Moody’s also pointed out that technological disruption and cybersecurity remain major threats to telcos.

“Telcos have to maintain a high level of cyber risk awareness and take mitigating actions to curtail cyber risk,” it said.

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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