The Philippines is one of the fastest-growing and tech-savvy nations in Southeast Asia. The country’s mobile connection penetration has reached 140% and most of the leading operators have launched 5G services. According to the Digital 2022 report, there were more than 92 million social media users at the start of 2022 and internet users aged 16 to 64 spent an average of 5 hours and 47 minutes on mobile internet every day. Thanks to this extraordinary social media usage, the country is also known as the “Social media capital of the world”. Not only this, online gaming too has strong traction among Filipinos with the mobile phone being the preferred device here.
With the launch of 5G services and their expanding coverage, consumers are increasingly opting for 5G smartphones. Smartphone players are offering discounts and launching affordable 5G smartphones to increase their shipments, whereas telcos are partnering with smartphone players to offer devices with various 5G plans. According to Counterpoint Research’s Monthly Philippines Channel Share Tracker, 5G smartphone shipments accounted for 27.3% of the overall smartphone shipments in Q1 2022.
Q1 2022 witnessed a growth of 20% points YoY in 5G smartphone share in total smartphone shipments and we expect this share to continue to increase in the coming quarters. Key factors contributing to this growth include:
Increasing availability: Globe became the first player to launch 5G in Southeast Asia and the Philippines by introducing its ‘Globe At Home Air Fiber 5G’ plan. Smart followed suit and launched the ‘Smart Bro Home Wi-Fi 5G’ plan. Telcos started deploying 5G at a rapid pace and, according to VIAVI Solutions, the Philippines had 98 cities offering 5G services in 2021, ranking the country third in terms of the highest number of cities having 5G services.
Telcos’ initiatives and increase in investments: The Philippines’ top two telco players, Globe and Smart, are investing heavily in upgrading and expanding their networks. They are increasing 5G coverage and launching the services in remotest parts that were not connected by the internet earlier. Globe’s 5G coverage has reached 96% of the NCR region and 85% of key cities in the Visayas and Mindanao regions. The operator is planning to invest PHP 89 billion to accelerate the 5G rollout, increase cell sites and upgrade the infrastructure. Smart is planning to spend PHP 85 billion to upgrade its 4G and 5G infrastructure. The third telco, Dito, has recently launched its 5G home Wi-Fi services in selected cities of the NCR region.
Favorable consumer behavior: Filipinos are technophiles. They actively use e-commerce, digital finance, digital and social marketing, social media and other platforms. With the increased speed, 5G can evolve online education, telemedicine, entertainment industry and more.
Although there are favorable dynamics in the market to support 5G smartphone and services uptake, there are also some challenges that can adversely impact the momentum:
Macroeconomic factors: The Philippines is one of the fastest-growing nations in the region. It saw a growth rate of 8.3% YoY in Q1 2022 as the opening of the market and increased consumer spending helped in increasing demand. But in recent times, it is facing the problem of rising inflation along with the weakening of the Peso and increasing interest rates. This might affect consumer spending and cause a slowdown in demand.
Speed issues: The Philippines is an archipelago with more than 7,000 islands. Therefore, providing fiber optic connectivity to every corner of the country becomes difficult. According to Ookla’s Speedtest Global Index, the Philippines ranked 88th (out of 139 countries) as of June 2022 with a median mobile download speed of 21.41 Mbps. It is behind many of its peers such as Singapore, Thailand, Malaysia, and Vietnam. Low mobile network speeds hamper the internet experience. With most Filipinos spending a big amount of time on social media and mobile gaming, it is important to provide high-speed and reliable internet to encourage customers to adopt 5G.
Outlook
The Philippines faces the issue of slow internet speed due to its geography, and telcos are trying to solve it with the help of the 5G network. They are increasing their investments in upgrading and expanding their 5G coverage. With increasing 5G availability, people are switching to 5G smartphones to experience it. Smartphone players are also launching affordable 5G devices, whose shipments continue to increase. 5G will help Filipinos have smooth social media and other digital experiences.
Another important area that will benefit from 5G is mobile gaming. 5G can help make the mobile gaming industry bigger, as it provides a lag-free experience with low latency and cloud-based multiplayer games can be played with ease. Smartphone makers can capitalize on this growing segment by launching dedicated gaming devices. Some OEMs are already sponsoring mobile gaming leagues and tournaments. Telcos can market 5G services that offer a smooth gaming experience on a smartphone and by hosting e-sports events.
