Philippine Telcos Suffer ₱17.6 Billion in Forex Losses as Peso Weakness Drives Up Costs

 

Philippine telecommunications companies are facing mounting financial pressure after unfavorable currency movements wiped out a combined ₱17.6 billion in foreign exchange losses during the first half of the year. The peso's depreciation has increased the cost of maintaining and expanding networks, creating another obstacle for operators seeking to keep internet services affordable.

Financial disclosures from PLDT Inc., Globe Telecom Inc. and DITO CME Holdings Corp. show the scale of the impact. DITO recorded the largest losses at ₱13.88 billion, largely reflecting its substantial exposure to foreign currency-denominated borrowings, including loans in Chinese yuan. Globe reported ₱2.36 billion in forex losses, while PLDT posted ₱1.37 billion. PLDT had recorded a ₱1.41-billion foreign exchange gain during the same period last year.

The financial strain stems from a fundamental imbalance in the telecommunications business: operators collect most of their revenue in pesos but depend heavily on equipment, technology and financing priced in foreign currencies.

Roy Ibay, vice president of the Philippine Chamber of Telecommunication Operators, explained that currency depreciation affects nearly every stage of network development and operation, particularly in emerging markets that rely on imported infrastructure.

One significant exposure involves letters of credit used to purchase telecommunications equipment. When the peso weakens against the dollar, settling these financial obligations becomes more expensive, resulting in additional foreign exchange losses.

International connectivity also carries substantial foreign currency costs. Telecommunications providers purchase bandwidth capacity from overseas suppliers to support roaming services, including those used by overseas Filipino workers. They also pay settlement charges for submarine cable systems that facilitate data transmission between countries.

Meanwhile, critical network infrastructure remains heavily dependent on international manufacturers. Radio access network equipment, fiber-optic lines, base stations and antennas are among the essential components that Philippine operators must procure from abroad. A weaker peso increases their acquisition costs, potentially making network expansion and maintenance more expensive.

PLDT senior vice president and enterprise business head Patricio Pineda III said the company has implemented spending controls to manage expenses amid currency volatility. Although PLDT generates some dollar-denominated revenue, its foreign currency exposure remains significant because of imported equipment and payments to international suppliers, particularly in its enterprise operations.

Pineda expressed hope that the peso would regain strength, noting that a stronger currency could ease financial pressure on telecommunications providers and give businesses and consumers greater room to manage their expenses.

The challenge is particularly significant because increasing service rates could make internet access less affordable for households already dealing with reduced purchasing power. Operators must therefore balance higher operating expenses against the risk of losing customers who may become more cautious about spending.

Despite these pressures, internet pricing in the Philippines has continued to improve. Research by Ookla indicates that the average cost of mobile data declined to ₱7.07 per gigabyte, approximately two-thirds lower than the ₱21.50 recorded in 2023.

Currency movements could determine whether this downward pricing trend remains sustainable. The peso recently recovered to the ₱63-per-dollar range after reaching a historic low of ₱64.17 on October 27. The rebound followed a decline in international oil prices after the US midterm elections.

Political developments in the United States may also influence the currency's trajectory. Democratic lawmakers' strong electoral performance could strengthen opposition to President Donald Trump's war on Iran, a conflict that has contributed to elevated global oil prices.

For Philippine telecommunications providers, a sustained peso recovery would offer more than accounting relief. It could reduce the cost of imported infrastructure, ease foreign debt obligations and help protect the affordability of internet services. Until then, currency volatility remains a significant financial risk for an industry expected to deliver increasingly reliable and accessible connectivity.