Globe: The Telecom Whose Best Business Was a Wallet

The most valuable thing a Philippine telecom operator built in the past decade was a payments business. This story covers the challenger entry, prepaid economics, the data transition, the wallet, the tower sale, enterprise services and the capital allocation question — part of the Philippines Company Stories hub.

How did the challenger get established?

By deploying digital mobile technology when the incumbent’s network was analogue and its fixed-line service was inadequate, offering a product that was simply better.

Prepaid was the commercial breakthrough. Removing credit checks, contracts and monthly commitments made mobile accessible to customers who could never have obtained a landline.

Distribution followed the same logic: airtime sold through sari-sari stores, kiosks and street vendors reached customers wherever they already shopped, with revenue collected immediately.

What are prepaid economics like?

Excellent for cash flow, since customers pay before consuming, there is no bad debt and no billing infrastructure required.

They also produce lower revenue per user and higher churn, because a customer with no contract can switch networks by buying a different SIM for the price of a snack.

Operators respond with loyalty mechanics, on-network pricing that makes calling friends on the same network cheaper, and bundles that lock in usage for a period.

How did the data transition work?

Through small, affordable data bundles sold in the same way as airtime — a day’s access, a specific application, a fixed volume — matched to what a customer could pay that day.

Bundling with popular applications drove adoption, since customers understood buying access to a specific service better than buying an abstract quantity of data.

The transition was also a margin problem, since data revenue per unit of network capacity is far below what voice and messaging generated, requiring volume growth to compensate.

Why did the mobile wallet succeed?

Because it solved the cash conversion problem using a network that already existed. Sari-sari stores, pawnshops and retail outlets became agents where customers could deposit and withdraw.

The operator brought a subscriber relationship, a phone number as an identifier, and a brand customers already trusted with money through airtime purchases.

Regulatory support mattered too, with the central bank actively promoting digital payments and building instant transfer rails that made the wallet interoperable with the banking system.

What does the wallet actually do now?

Payments to merchants, transfers between users, bill payment, mobile top-up, remittance receipt, savings products, insurance, investments and credit — a full financial services stack.

The economics come from transaction fees, float on balances, and increasingly from lending and financial product distribution rather than from payments alone.

That last point is the strategic one: payments acquire the customer, and financial products monetize them, which is why every large wallet in the region is becoming a lender.

How valuable is the wallet relative to the network?

External funding rounds have valued the financial technology business at levels comparable to or exceeding the operator’s own market value, which is a remarkable statement about where investors see the growth.

The network is a mature, capital-hungry utility; the wallet is a growth business with network effects and a very large addressable market in an underbanked population.

The question this raises is whether the two belong together, and the market’s answer has generally been that separate ownership would value both more accurately.

Why sell the tower portfolio?

To release capital tied up in passive infrastructure that specialist tower companies value more highly and can operate more efficiently by hosting several operators per site.

Proceeds funded network investment, debt reduction and the growth businesses, which is a reasonable use of capital if the assets sold were genuinely non-strategic.

The cost is a long-term lease obligation, which converts an owned asset into a fixed operating expense for decades and reduces flexibility if network requirements change.

What is the fixed broadband position?

A significant fibre-to-the-home business, built rapidly as home internet demand surged, competing against the incumbent and against a fast-growing pure-play fibre challenger.

Fixed broadband has better revenue per household than mobile and requires enormous civil works, permits and right-of-way negotiation to deploy.

It is also stickier than mobile, since switching a home connection is disruptive in a way that changing a SIM is not.

What are the enterprise and platform businesses?

Connectivity and managed services for corporations and government, plus data centre capacity and cloud services aimed at a market with limited local infrastructure.

Outsourcing clients are a major segment, requiring redundant connectivity, guaranteed uptime and international bandwidth at scale.

These businesses generate better margins than consumer mobile and require capability rather than only capacity, which suits an operator seeking growth beyond subscriber numbers.

What are the risks?

Capital intensity in the network business with limited revenue growth, competition from a well-funded third entrant, and regulatory pressure on pricing and service quality.

In financial services, the risks are credit quality in a rapidly growing loan book, competition from banks and other wallets, and regulation that will inevitably tighten as the sector matures.

Concentration is the third: everything the group does depends on Philippine consumer income and Philippine regulation, with no geographic diversification at all.

What is the lesson?

That distribution assets can be repurposed. A subscriber base, a retail agent network and a trusted billing relationship built for telecommunications turned out to be the ideal foundation for financial services.

The second lesson is that the best business inside a company is not always the one it was founded to run, and recognizing that requires unusual honesty from management.

The third is about capital allocation. A mature utility and a high-growth platform inside one balance sheet compete for the same money, and the market prices that conflict rather than the assets.

How does a wallet make money from lending?

By offering small short-term loans underwritten against observed transaction behaviour — how much flows through the wallet, how regularly, and whether previous advances were repaid.

The data advantage is genuine, since a wallet sees a customer’s actual cash flow rather than a self-reported income figure, and it updates continuously.

The risk is that credit models trained during an expansion have never been tested through a downturn, which is the standard warning about every fast-growing consumer lender.

What is the agent network worth?

It is the physical layer of the digital business: tens of thousands of small shops where customers convert cash to digital value and back.

Building it required recruiting, training and managing small businesses on commission, ensuring they hold enough float to serve customers and controlling fraud.

That operational achievement is the actual barrier to entry. A competitor can build a better application in months and cannot build the agent network in years.

How does the operator compete on network quality?

Through site density, spectrum holdings, backhaul capacity and the reliability of power and transmission at each site, which together determine speed and consistency.

Quality has become a genuine differentiator as data replaced voice, because customers experience buffering and dropouts directly in a way they never experienced call quality.

Independent measurement of network performance is now published regularly, which makes quality claims verifiable and has raised the competitive stakes considerably.

What is the relationship with the parent conglomerate?

The operator sits within a group with property, banking, power and water interests, which provides a stable controlling shareholder and access to group financing.

It also creates commercial opportunity: estates that need connectivity, a bank that can partner with the wallet, and corporate customers within the group.

The constraint is that the conglomerate’s capital is finite, and a network business demanding continuous investment competes with property and power projects for it.

What is the regulatory position of mobile wallets?

They operate under electronic money issuer licences, holding customer funds in trust accounts at licensed banks and subject to anti-money-laundering, consumer protection and capital requirements.

Regulation has tightened as the sector scaled, covering transaction limits, identity verification, fraud reporting and the treatment of customer funds.

The direction is convergence with banking supervision, which raises compliance cost and also legitimizes the sector for customers holding larger balances.

How large is the digital payments shift?

The share of retail payments made digitally has risen sharply from a very low base, driven by wallet adoption, instant transfer rails and merchant QR acceptance.

Cash remains dominant in absolute transaction count, particularly in provincial and low-income settings, so the shift has years left to run.

For operators the strategic value is that every additional digital transaction deepens the customer relationship and generates data that supports lending.

What are the group’s adjacent digital ventures?

Investments in health, entertainment, advertising technology and business software, on the reasoning that a subscriber base and a payment rail can distribute many kinds of digital service.

Some have scaled and many have not, which is the ordinary outcome of corporate venture portfolios and is why disciplined exit matters as much as investment.

The strategic logic is sound where the venture genuinely uses the distribution advantage, and weak where the operator is simply buying into a category it finds interesting.

How does the operator handle rural coverage?

Through lower-cost site designs, solar power at remote locations, satellite backhaul where fibre is uneconomic, and shared infrastructure with other operators.

Coverage obligations attached to spectrum assignments also require build-out in areas that would not be served commercially.

The economics remain marginal in the most remote areas, which is why universal service funding and infrastructure sharing matter more there than competition does.

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