Market Trends of Philippines Telecom Towers Industry
5G Deployment to Address the Increasing Market Demand
- With the growing mobile internet users and IoT connections, the demand for improved and advanced telecom infrastructure is also increasing in the country. The evolution of cellular network technology has allowed users to experience faster data speeds and lower latency and has prompted rapidly increasing use of services and data-heavy applications.
- Moreover, the significant rise in the volume of data being carried by cellular networks has been primarily driven by consumer demand for video and business and consumer moves to cloud services. This factor is expected to drive the need for a more resilient and stable network, such as the 5G connection that offers fast and high-capacity networks.
- Compared to 4G LTE, 5G may bring lower latency, higher bandwidths, and increased connectivity to mobile broadband. 5G connections may make more data travel faster over broader coverage areas. 5G bandwidths are projected to be ten times higher than 4G LTE, contributing to faster data transmission, images, and videos. Hence, the growth in the deployment of 5G globally is further expected to accelerate the demand for telecom towers during the forecast period.
- For instance, the International Finance Corporation (IFC) invested USD 70 million in Communication and Renewable Energy Infrastructure (CREI) Phils Inc. This funding was estimated to facilitate the construction of over 600 towers by 2023. Analysts suggest this move could revive the local mobile communication sector. With costs and infrastructure being jointly utilized by other telecom providers, the World Bank Group's private sector arm emphasized that this investment package is designed to bridge the digital divide via a shared mobile infrastructure.
- Moreover, the Department of the Interior and Local Government (DILG) stated that in September 2023, a total of 8,311 permits and clearances to build cellular towers of telecommunications companies were permitted by 668 local government units (LGUs) across the country. In the statement, the secretary of DILG stated that as of September 2023, another 2,404 permits were still being processed in 229 cities and towns. Such expansions are expected to drive the demand for the market studied over the forecast period.
- Furthermore, in November 2023, PhilTower and Huawei solidified their strategic partnership during the 10th Annual TowerXchange Meetup Asia in Malaysia, signing a memorandum of understanding (MoU) to improve Digital, Smart, and Green Tower initiatives. The partnership aims to uplift innovative tower and intelligent energy solutions, strengthening both companies’ industry-leading capabilities.
- Such developments, increased data traffic, growing connected devices, and rollout of 5G services across the world are anticipated to significantly boost the demand for telecom towers to cater to the growing data needs in the future.
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The Rooftop Segment to Witness Growth
- Mobile network operators (MNOs) will need to make significant infrastructure investments for 5G to expand, and rooftop infrastructure will be essential to these investments. Building facades and rooftops are ideal real estate for MNOs wishing to densify their networks and expand their capacity or coverage. Antennas on the 5G network can deliver 5G signals straight to customers through a more significant line of sight on rooftops in an urban setting. In this approach, 5G reception can be reliably obtained by people and devices on the ground and close to the boundaries of surrounding buildings.
- As mobile network operators upsurge 5G capabilities, rooftops will play a key role. The growth of 5G will require massive infrastructural investment by mobile network operators (MNOs), and rooftop infrastructure is expected to play a pivotal role in this investment. For instance, in August 2023, a Telenor Group survey on mobile device usage in the Philippines revealed that 38% of respondents relied on a 5G connection. Conversely, 10% reported not using a 5G network at all.
- Moreover, according to Viavi Solutions, as of April 2023, 105 cities in the Philippines boasted 5G network coverage, marking an increase from the previous year. To enhance network services for their clients and harness the full potential of this technology, all three major telecommunication providers have been rolling out 5G networks across the nation.
- However, with space constraints and rising land costs, rooftop towers have found higher attractiveness amongst telecom tower players and mobile network operators. The initial implementation of telecom towers is the backbone component that enables the rolling out of these technologies but also incurs high costs. Therefore, the market players are adopting different strategies for cost-effective deployments of telecom towers.
