PLDT sees painful fight to survive shift to digital phone services

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Manuel Pangilinan (right), chairman of the Philippine Long Distance Telephone Co. (PLDT), gestures during the 2015 First Quarter Financial and Operating Results press briefing as Napoleon Nazareno (center), CEO of Smart Communication, and Anabelle Chua (left), senior vice president looks on. AFP PHOTO

Manuel Pangilinan (right), chairman of the Philippine Long Distance Telephone Co. (PLDT), gestures during the 2015 First Quarter Financial and Operating Results press briefing as Napoleon Nazareno (center), CEO of Smart Communication, and Anabelle Chua (left), senior vice president looks on. AFP PHOTO

Philippine Long Distance Telephone, the country’s largest telecommunications firm, said Tuesday it expects to spend nearly $1 billion in a “painful” fight to survive the consumer shift to digital from traditional phone services.

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The listed company said net profit for the first three months of the year was flat at 9.4 billion pesos ($211 million), and the full-year net profit would likely fall below the 34.1 billion pesos it posted last year.

The company said the growth in its mobile Internet business had not been strong enough to offset the decline in its traditional revenue sources — voice calls and text messaging — that account for 60 percent of the total.

“It’s either we pivot or we perish,” PLDT chairman Manuel Pangilinan told reporters.

He said PLDT may exceed the record 39-billion peso ($876 million) expansion budget it set this year to build more 3G and LTE (Long-Term Evolution) infrastructure and entice more of its subscribers to go online.

“In many respects, it’s like changing tires while the car is moving,” he said.

“The whole way into this is to implement the digital pivot… It will be painful.”

While data and broadband revenue grew 11 percent to 11.2 billion pesos in the January-March period, it accounted for only 27 percent of the total.

Revenue from local voice calls and text messages dipped two percent to 24.2 billion pesos.

Revenue from international and domestic long distance calls, which account for 13 percent of the total, fell 19 percent to 5.2 billion pesos.

“There is an ongoing evolution of the telco subscriber into the digital consumer and there is a need by PLDT to identify new ways of serving the customer,” said company president Napoleon Nazareno.

He said PLDT would continue offering free access to selected websites and applications to whet consumers’ appetite and persuade them to subscribe to full data plans.

While Filipinos are among the world’s most active Internet users, the country also has one of the slowest average connection speeds.

The record capital outlay this year would help address that, company spokesman Ramon Isberto told AFP.

Pangilinan said he could not say when revenues from PLDT’s Internet services would overtake those from its so-called “legacy” businesses.

“Every 10 years there is a revolution in this industry. It will be a contest on various fronts — infrastructure, pricing, digital experience,” he said.

AFP

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