DIGITAL infrastructure efforts in the Philippines are catching up with regional peers and could boost foreign investment in the country’s information and technology sector, a Fitch Group unit said, but significant challenges remain.
“We continue to highlight the upsides provided by strategic government initiatives to boost last-mile rollouts of fiber-optic infrastructure, and we consequently expect the Philippines Digital Infrastructure Project (PDIP) to catalyze further foreign investment in the Philippines’ wider ICT (information and communication technology) ecosystem,” BMI Country Risk & Industry Research said in a report on Wednesday.
It noted, however, that achieving widespread adoption of fiber broadband in Filipino households remained highly difficult and that the PDIP would offer limited benefits to its outlook.
BMI forecast that there would be slightly more than 1.83 million fiber to the x (FTTx) subscriptions — referring to all types of fiber infrastructure — by 2033, equating to a penetration rate of 1.4 subscriptions per 100 people.
This would be higher than the 2024 forecast of 1.58 million subscribers, the Fitch unit said, but added that penetration would remain relatively stable at 1.3 subscriptions per 100.
“We believe that obstacles to consistent and widespread fiber uptake remain the prices of packages in last-mile areas, particularly stemming from the elevated costs of rollout that are further increased by the Philippines’ archipelagic configuration,” it said.
BMI stressed that the success of the PDIP in increasing fiber adoption among Filipino households would depend significantly on effective execution and project management.
By significantly investing in last-mile infrastructure, wholesale network providers could be motivated to lower prices for fiber bundles, potentially impacting average revenue per user (ARPU) figures.
With a P16.1 billion budget funded by World Bank assistance, the National Economic and Development Authority Board has said that the PDIP would improve the country’s broadband connectivity.
This initiative aims to bring high-speed internet to underserved areas, boost digital infrastructure, bridge the digital divide, encourage private sector investments, and enhance cybersecurity and critical information infrastructure protection.
BMI noted that while these strategies might attract new, mostly temporary fiber customers due to the flexibility of low-cost contracts, high customer turnover could significantly impact ARPU levels and overall revenues.
“Renewed government efforts to fiberize the Philippines’ last-mile areas will be beneficial for the players with a large risk-seeking stance,” it added.
“Regardless, wider digital transformation ambitions and the attractiveness of the Philippines’ ICT market are set to benefit from a stronger nationwide backbone and last-mile network density.”