PLDT’s new quad-play service seen boosting ARPU

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PHILIPPINE Long Distance Telephone Co.’s (PLDT) move to offer quad-play services not only places it in a better position to target premium customers in the country, it can also boost PLDT’s average revenue per user (ARPU) and build brand loyalty, a market research firm said.

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“The decision to launch multi-play services will place PLDT in a better position to target premium customers in the Philippines,” BMI Research said in a recent study.

The country’s largest telecommunications operator recently launched its quad-play service, bundling a mobile package from its Smart Communications (Smart) mobile unit with its existing triple-play bundle of voice, data, and Cignal fiber services.

The quad-play bundle will be available to PLDT Home subscribers for an additional P500 a month and comes with a free iPhone device.

“This is strategically important because compelling digital content and solutions are the keys to winning customer engagement and loyalty,” Ramon Isberto, PLDT Corporate Communications head, told The Manila Times.

“Let me put it this way: Quad play strengthens both sides of PLDT’s business—it enhances the value of its Home offer and strengthens its mobile service. Moreover, it extends PLDT’s ability to deliver digital content and solutions beyond the Home via mobile devices—wherever the customer is. This applies to PLDT’s growing inventory of entertainment content such as iflix and Fox, and peace of mind solutions like Fam Cam,” he explained.

BMI said that PLDT’s quad-play bundle can serve the purpose of increasing revenue and building brand loyalty. In addition, including a free iPhone in the new bundle could stimulate consumption of data which is still low in the Filipino market, BMI said.

As of the first quarter of 2015, prepaid subscribers made up 98 percent of all Smart users, with ARPU of P80 and a churn rate of 5.7 percent. On the other hand, postpaid ARPU was much higher at P390 in the same period, and with a lower churn rate of 1 percent.

Bundling mobile plans together with other services increases the incentive for users to migrate to postpaid mobile plans, and will have the effect of raising blended ARPU and lowering churn, the market research firm said.

“That said, the P500 price point is significantly higher than postpaid ARPU, and therefore besides the offer of an iPhone, there is little incentive even for existing postpaid users to switch over to the quad-play offer,” BMI added.

“PLDT’s new quad-play offer will therefore enable it to build its experience and brand in this segment, but we believe that in order to truly make it attractive to customers, then the operator will have to give customers a stronger price incentive to subscribe to the bundled contract,” BMI said.

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