Frenemies

Road access is the only thing standing in the way of Batangas taking off. That is about to be solved.

For too long, the only way to make it to Batangas was to go through Tagaytay. Today, Tagaytay is an extreme bottleneck.

A few years ago, the problem of road access was partly addressed by the construction of the STAR expressway running from Calamba to Lipa. Another route was opened to reach Nasugbu from Cavite, but it is narrow and often congested. The full economic potential of the deep Batangas City port has yet to be realized.

For years, the two main tollways giants – Metro Pacific Tollways Corporation (MPTC) and San Miguel Infrastructure (SMI) – were rivals and competitors. They tried to outbid each other for projects and raced to build ahead of the other.

MPTC holds the concessions for the NLEX, the CALAX, the C5 Link Segment, the SCTEX and the Cebu-Cordoba Link Expressway. SMI, for its part, holds the concessions for the SLEX, Skyway, NAIA Expressway, STAR Tollway, the TPLEX and the MCX. All these tollways improved road access to metropolitan centers.

In 2018, MPTC proposed to build a 50.4-kilometer Cavite-Tagaytay-Batangas Expressway (CTBEX) to the DPWH and was granted original proponent status. SMI, for its part, submitted an unsolicited proposal to build the Cavite-Batangas Expressway (CBECX) and the Nasugbu-Bauan Expressway (NBEX). SMI’s proposal won the support of the provincial governments of Cavite and Batangas.

The situation might have resulted in the construction of redundant expressways, each eating into the other’s market.

A few months ago, the two tollways giants got together and agreed to partner instead of compete. Last Monday, the partnership was formalized in a memorandum of agreement to jointly design, build and operate a combined 87.96-kilometer expressway. The new tollway will begin from the Silang interchange of the CALAX and extend to Bauan in Batangas province.

All told, the new tollway will have a combined cost of P72 billion. The proponents committed to have the new expressway operational by 2027. This is a quick schedule, going by the experience of earlier roadway projects. This is testament to the combined financial and engineering power of the two tollway conglomerates.

The projected tollway will open up the entire CALABARZON region, where numerous industrial and leisure zones are being built. It will relieve congestion in the Sta. Rosa-Tagaytay route where numerous factories and subdivisions are located. Expect land valuations in Batangas to rapidly spike as a result of this, enabling investors who have been land banking for years to better capitalize their projects.

In addition, the new tollway will make travel from the Tagalog regions to Bicol much easier – even ahead of the programmed railway link to Southern Luzon.

The economies of the Southern Tagalog provinces will boom because of this. All motorists will celebrate the deal that made friends of former enemies.

Connectivity

Infrastructure is not just roads and connectivity is not just moving people and goods. In the new digital economy, moving data is just as important.

Our telecoms providers are not about to be left behind in the race to improve the connectivity required to grow our economy. They are building capacity and improving on internet speed so that we can eventually match the efficiency of our neighbors.

Based on first-half income reports, telco giant PLDT registered the highest growth among all connectivity providers. The company grew its net income after tax by 10 percent to P18.5 billion. In the same period last year, PLDT earned P16.8 billion.

By comparison, Converge ICT Solutions Inc. saw its net income grow by 10 percent to P4.29 billion. Globe’s income contracted by 27 percent during the first half, dropping to P14.38 billion.

Higher revenue growth means the telcos could invest more in upgrading their technologies. That will be good for helping our transmission speeds catch up with our neighboring economies.

For the first half, PLDT spent P40.8 billion of its capex. Converge, which operates solely in the broadband segment, invested P3.2 billion or only 19 percent of its capex budget. Globe spent P37.7 billion or nearly half of its planned capex for the year.

Of the three competitors, however, Converge posted the highest growth in its service revenue. Its growing subscriber base enabled Converge to grow its service revenue by 8 percent. By comparison, PLDT posted service revenue growth of 3 percent to P99.3 billion while Globe posted 2 percent growth to P80.4 billion.

CreditSights, a unit of Fitch Group, foresees PLDT to stay liquid for the rest of the current year. The nation’s largest telco, according to the credit rating analyst, should be able to raise cash partly through through the monetization of passive assets. PLDT is expected to improve on its credit metrics over the next two quarters.

It will be recalled that PLDT escalated its capital expenditure last year. The company has, since then, strictly managed its funding flow to avert any liquidity problems. It is in this context that the improved revenues in the first quarter is better appreciated.

In the coming period, as the domestic economy expands, demand for more digital services is expected to increase. This will enable our telcos to achieve a more optimal balance in their finances.

The next few years will be exciting ones for the Philippine economy. We are trying to manage a higher growth rate by digitalizing our processes as quickly as possible.

In the modern economic world, connectivity is key. Tollways and data transmission services enhance that.