While PLDT's strong Q1 2024 performance, fueled by a 7% surge in mobile revenues, grabbed headlines, the earnings call transcript reveals a less prominent but potentially game-changing story. The key to PLDT's future lies not in its 5G expansion or its upcoming hyperscale data center, but within a seemingly stagnant business unit: **Fixed Wireless Broadband**.

Many analysts, fixated on the slowing growth of PLDT's Home Broadband segment, attribute it to intensified competition and market saturation. They cite the 7% growth in Fiber-Only revenues, a significant slowdown from previous years, as evidence. However, this overlooks a critical detail.

The Home Broadband segment encompasses three distinct businesses: Fiber, Fixed Wireless, and Legacy copper-based services. While Fiber steadily progresses, it's the Fixed Wireless business that demonstrates surprising resilience in a fiercely competitive market. This seemingly "lesser" technology is gaining traction, transforming into a strategic asset for PLDT.

The transcript reveals a 4% growth in Fixed Wireless subscribers during Q1 2024, adding a net 14,000 customers. This growth stands out as the overall fixed wireless market contracts, with competitors losing customers. Quietly, PLDT's market share in this area is expanding.

Why is this significant?

Fixed Wireless, once considered a temporary solution, is evolving into a potent tool for PLDT. It allows the company to penetrate underserved markets, particularly lower-income segments, where fiber deployment is not economically viable. Moreover, the transcript highlights PLDT's strategic implementation of Fixed Wireless in a prepaid format, further solidifying its presence in the price-sensitive market segment.

"PLDT's "dual-pronged" approach, utilizing Fixed Wireless alongside Fiber, is proving effective. Fiber caters to the high-end market, offering ultra-high speeds and premium Average Revenue Per User (ARPU), while Fixed Wireless captures the mass market with affordability and accessibility. This strategy enables PLDT to optimize its reach and revenue generation across diverse customer segments."

The Numbers Tell the Story

The average ARPU for Fixed Wireless Prepaid is less than ₱500, substantially lower than the ₱1500 ARPU for Fiber. However, considering the vast untapped market in the lower-income bracket, the potential for Fixed Wireless to generate considerable revenues is undeniable.

Hypothetical Revenue Growth from Fixed Wireless

The following chart illustrates a conservative hypothetical scenario of PLDT's potential quarterly revenue increase from Fixed Wireless Prepaid subscribers.

This hypothetical scenario assumes PLDT adds 500,000 Fixed Wireless Prepaid subscribers by the end of 2024, with an average ARPU of ₱400. This translates to an additional ₱200 million in quarterly revenue – a significant contribution to the Home Broadband segment. This is a conservative estimate, and the actual revenue potential could be even greater.

PLDT's Ace in the Hole

The strategic deployment of Fixed Wireless extends beyond incremental revenue growth. It enables PLDT to achieve network dominance in a way that solely focusing on Fiber cannot. It empowers PLDT to saturate the market, limiting competitors' ability to establish a foothold.

"This "stealthy" expansion of Fixed Wireless is PLDT's hidden weapon – a weapon that could catapult them to a dominant position in the Philippine broadband market. While other companies strive to match PLDT's Fiber infrastructure, they may be overlooking the larger picture. PLDT isn't just competing in the Fiber arena; they are strategizing for comprehensive network dominance across all customer segments. Fixed Wireless is their ace in the hole."

Fun Fact:

The Philippines has the highest social media usage globally, with Filipinos spending an average of 4 hours and 15 minutes on social media daily. This highlights the Philippines' substantial reliance on internet connectivity, emphasizing the significance of PLDT's strategic approach to broadband network dominance.