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(Updated: Sept. 18, 2024, 6:18 p.m.)
While Globe Telecom Inc. has been on the expansion mode, its additional network infrastructure might not be fully utilized by consumers given the expected decline in tech-savvy Korean tourists, according to a study by Fitch Solutions unit BMI.
Article continues after this advertisementThe research arm, in its latest report, noted that Korean travelers might think twice before booking their trips to the Philippines amid the “cooling economic outlook” that could discourage discretionary spending.
FEATURED STORIES BUSINESS National ID gives more Filipinos ‘face value BUSINESS BIZ BUZZ: Unwinding Gogoro … quietly BUSINESS Polvoron maker seeks P500 million capital for expansionThe Korea Development Institute downgraded its economic growth forecast for South Korea to 2.5 percent—from 2.6 percent—this year due to a slow recovery in private consumption.
As such, BMI said that “South Korean consumers may reduce spending on non-essentials, including travel and hospitality, in favor of essential expenses such as housing, utilities and food.”
Article continues after this advertisement“This shift in spending could lead to decreased travel and an increased preference for local resorts within South Korea, impacting the number of tourists visiting the Philippines,” it added.
Article continues after this advertisementWith fewer travelers, BMI said Globe might see a slowdown in its network usage. When tourists visit the Philippines, they usually buy prepaid travel SIM (subscriber identity module) cards and tap the local telco infrastructure for connectivity.
Article continues after this advertisement“There is an expectation that tourists will demand higher-speed connectivity during their visits, with a significant proportion attributed to tech-native South Korean travelers,” the report noted.
In the first half, the Ayala-led company built 352 new cell sites and upgraded 1,942 existing mobile sites. Globe also deployed additional 256 new 5G sites in the same period. Its 5G coverage spans 98.45 percent in National Capital Region and 94.19 percent in key cities in Visayas and Mindanao.
Article continues after this advertisementAlong with this, the telco giant is expanding its data center capacity as well to support the increasing digitalization.
Its joint venture company with Singapore-based ST Telemedia Global Data Centers, STT GDC Philippines, held a groundbreaking ceremony for its 124-megawatt (MW) data center in Fairview Quezon City. It is set to spend about $1 billion to construct the facility sprawling over 83,000 square-meters (sqm) of gross floor area across four buildings.
Construction for the first phase of the project, comprising 28 MW, has started. It is set to go live by early 2025.
STT GDC Philippines also broke ground for its $78-million data center in Cavite last year, with the target opening by mid-2025. The 6-MW hub is a two-story building with a gross floor area of over 4,500 sqm.
READ: DOT: 1 in every 4 foreign tourists in PH from South Korea
The telco giant, meanwhile, emphasized that the customer segment cited in the BMI report “accounted for a tiny fraction of Globe’s total Mobile revenues in FY 2023.”
“Their size is understandably small in comparison to our stable domestic base. Thus, a decline in South Korean tourists into the country will not have a significant impact on the Globe network,” said Yoly Crisanto, Globe Chief Sustainability and Corporate Communications Officer.
Data also shows consistently growing data utilization in the Globe network, attributed largely to Philippine residents who actively use the Globe network. As of the first half of the year, mobile data traffic reached 3,256 petabytes, 16% higher compared to 2,814 petabytes reported in 2023. This also represents a leap of 92% in mobile data use from before the pandemic, with mobile data traffic at 1,699 petabytes in FY 2019.
This contributed to an all-time high in Mobile data revenues at Php48.0 billion, a significant 9% growth compared to the previous peak of ₱44.0 billion achieved a year ago. Globe said even if South Korean tourist arrivals decline, as BMI had forecast, the impact could be cushioned by inbound tourists from other countries, which has seen an uptrend, based on Department of Tourism figures.
For instance, Japanese tourist arrivals in the Philippines reached 260,773 from January to August this year, an increase of 33.64% YoY. Chinese tourist arrivals also rose by 38.27%, reaching 241,041 in the first eight months of the year.
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“Globe values the tourism industry which is why we continue to innovate on our products and services, such as traveler SIMs and eSIMs to better serve our customers. Globe also supports the tourism industry as a whole through consistently improving our connectivity services across the regions. This means serving tourists of all nationalities, tourism facilities, operatorstwo-up casino, workers and all other stakeholders big and small,” said Crisanto.
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