Telco subscribers evolving into digital customers — PLDT

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Philippine long Distance Telephone Co. (PLDT) said on Tuesday its data and broadband services to continue to grow, replacing the traditional and legacy sources of revenues.

PLDT and Smart President and Chief Executive Officer Napoleon Nazareno said the changes indicate an “on-going evolution of the telco subscribers into digital customers.”

“There’s a need for PLDT Group to undertake customer centric changes … to identify new ways of serving the customers,” Nazareno said.

PLDT reported on Tuesday its unaudited, financial and operating results for the first three months of 2015 a net income stable at P9.4 billion.


Consolidated core net income, before exceptional items, amounted to P9.3 billion, P0.5 billion lower than the P9.8 billion recorded for the same period in 2014 and in line with core income guidance of P35 billion for 2015.

The decrease was due mainly to lower Ebitda (earnings before interest, taxes, depreciation and amortization) and higher financing costs.

Ebitda margin for the period was at 48 percent, identical to the same period last year and higher than the 47 percent margin for fourth quarter of 2014. Consolidated Ebitda for the first quarter of 2015 was 2 percent lower at P19.3 billion compared with the same period last year, as lower service revenues and higher provisions offset the decrease in cash operating expenses.

Consolidated revenues, which include non-service revenues primarily relating to the sales of PLDT Home solutions, were stable at P42.6 billion.

Consolidated service revenues for the period declined by 2 percent to P40.5 billion, as the declines in SMS revenues and the international and national long distance streams offset increases in revenues from the data and broadband businesses.

Consolidated capital expenditures for the period amounted to P3 billion, P0.7 billion higher than the capex level in the same period last year, in support of expanded 3G and 4G access networks, increased fiber reach and capacity, enhanced indoor and outdoor coverage, augmented network resiliency and redundancy, increased data center capacity and unified Smart-Sun network project to build operational efficiency.

Capital expenditures are expected to remain elevated for 2015 in light of the anticipated exponential growth in data traffic resulting from the continued growth in smartphone ownership and our own initiatives to stimulate data adoption and usage.

“While our core revenue sources undergo this transition phase where the erosion of our high-margin legacy businesses still outpaces the growth of our newer initiatives for now, we are taking significant steps to ensure that we are ready and prepared for the digital future,” Manuel V. Pangilinan, PLDT Chairman said.

“This future will require looking at our customers from a different set of lenses, as both individuals and enterprises embrace a digital life,” Pangilinan said.

“On the enterprise side, we are looking at data center infrastructure, big data and the Cloud as our digital enablers; for the individual, digital commerce, mobile money and entertainment. In both instances–enterprise and individuals–our major task is to deliver and ensure that the digital experience is enriching,” Pangilinan said.

Data and broadband revenues
The company’s total data revenues for first three months of 2015 totaled P11.2 billion, an 11 percent growth year-on-year; data and broadband now account for 27 percent of total Group service revenues.

PLDT Group fixed broadband businesses generated P3.8 billion in revenues for the period, up by 10 percent from P3.5 billion in 2014.

Wireless broadband revenues, exclusive of mobile Internet revenues, increased by 2 percent to P2.5 billion, compared with the P2.4 billion recorded last year. Corporate data, inclusive of data center revenues, rose by 15 percent to P2.6 billion from the same period in 2014.

Moreover, mobile Internet usage continues to grow strongly, with mobile Internet revenues increasing by 19 percent to P2.2 billion in the first quarter of 2015 from P1.9 billion for the same period in 2014.

The Group’s combined broadband subscriber base was over 4.5 million at the end of the first quarter of 2015.

Smart’s wireless broadband service, offered through its wholly-owned subsidiary Smart Broadband, Inc., had a wireless broadband subscriber base of over 2.6 million at the end of the period, about 2.1 million of whom were on Smart Broadband’s prepaid service.

In addition, Sun Cellular’s wireless broadband subscriber base rose to 778,000.

PLDTDs fixed broadband subscribers increased by 3 percent from the end of 2014, bringing the PLDT Group’s total fixed broadband subscriber base to over 1.1 million for the first three months of 2015, and now represent 51 percent of the fixed line subscriber base.

From September 2014 to February 2015, Smart, Sun Cellular, and Talk ‘N Text ran a “Free Internet” campaign to great success. Despite giving subscribers 30MB of data usage per day, free of charge, mobile Internet revenues continued to register quarter-on-quarter growth during the promo period.

The company said that 6 million subscribers signed up for the promotion, of which about 70 percent had not accessed data services previously.

“While we continue to stimulate data usage such as through our partnership with Internet.org, we have also started to monetize data by requiring purchase to avail of the free Internet,” Nazareno said.

“We continue to lead in the broadband space where our subscriber count and revenues are growing at a healthy rate,” he said.

“Moreover, the unqualified success of our Free Internet promotion just underscores our premise that once exposed to the ease and relevance of being “on”, consumers will pay for data,” Nazareno said.

Wireless subsidiaries Smart and Digital Mobile Philippines, Inc. (DMPI) together continue to lead the industry in terms of both revenues and subscribers.

Wireless service revenues of P27.9 billion for the first quarter of 2015 were 4 percent lower than the P29 billion recognized last year, reflecting the pressure on SMS and inbound international revenues.

Postpaid revenues now account for 23 percent of total cellular revenues, having improved 11 percent to P5.7 billion for the first three months of 2015.

The PLDT Group’s total cellular subscriber base at the end of the year stood at 69.6 million, broken down as follows: Smart had 25.9 million subscribers under its mainstream Smart brands; value brand Talk ‘N Text ended with 28.1 million subscribers; and there were 15.7 million Sun Cellular subscribers.

The Group’s combined postpaid cellular subscriber base grew by over 135,000 from the end of 2014, rising to 2.9 million at the end of the period, while the combined prepaid base stood at 66.7 million.

Fixed line services
Fixed line service revenues for the first three months of 2015, net of interconnection costs, increased to P14.3 billion, or 4 percent, from P13.7 billion last year.

PLDT data and fixed broadband revenues, representing 56 percent of total fixed line revenues, continued to grow on the back of a 10 percent increase in fixed broadband revenues, a 7-percent rise in corporate data and other network services, and a 23-percent increase in data center revenues.

Combined ILD and NLD businesses of PLDT, representing 12 percent of fixed line revenues, declined by 17 percent. Fixed domestic voice revenues, which now account for only 28 percent of total fixed line revenues, were higher by 2 percent at P4.2 billion.

The fixed line subscriber base reached over 2.2 million at the end of the period, over 50 percent of which have fixed broadband subscriptions.

The PLDT Group leads in enabling infrastructure for the Enterprise sector with six data centers at the moment and another two on the way. These data centers offer co-location, server hosting/outsourcing, disaster recovery, connectivity and data scrubbing.

These centers are telco-grade, carrier-neutral and vendor-agnostic with an aggregate rack capacity that is the largest in the country.

“PLDT is uniquely positioned to offer a unified customer experience – that of a Connected Individual and a Connected Home. This “boundary-less” environment allows us to fuse our consumer and home businesses into one that is symbiotic and complementary,” Nazareno said.

The fixed line subscriber base reached over 2.2 million at the end of the period, over 50 percent of which have fixed broadband subscriptions.

The PLDT Group leads in enabling infrastructure for the Enterprise sector with six data centers at the moment and another two on the way.

These data centers offer co-location, server hosting/outsourcing, disaster recovery, connectivity and data scrubbing. These centers are telco-grade, carrier-neutral and vendor-agnostic with an aggregate rack capacity that is the largest in the country.

“We’re not the future, we’re just stewards of the future, I guess…” Pangilinan said.

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