Telcos: Fiber runway still long, but affordability delays conversion

From AB Capital's The Opening Bell: Three Moves

Event

Philippine FTTH penetration reached just 29% in 2025, while broadband costs exceeded 4% of GNI per capita, more than double the ITU affordability benchmark. High costs push households toward mobile data and cheaper connectivity options.

View

Fiber has a long growth runway, but affordability delays conversion. CNVRG is most vulnerable in a high-inflation environment given its pure-play fiber exposure and price-sensitive customer base, reflected in zero net adds in 2Q26. Mobile data may benefit from consumers trading down, but we believe fiber adoption can accelerate over the longer term as affordability improves (ARPUs across telcos are already on a downtrend).

Catalyst

Subscriber growth and pricing trends will be key. A recovery in fiber net additions would support CNVRG's growth outlook, while aggressive discounting could lift volumes but weigh on industry ARPUs.

Action

Prefer GLO for near-term resilience given its mobile-heavy mix. CNVRG remains our preferred play on long-term fiber penetration, with upside hinging on a recovery in subscriber growth without significant ARPU erosion.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.