PLDT to invest P100-M on fast-growing Internet business

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) is investing more than P100 million in the next few years as it focuses less on its traditional voice business and more on the fast growing Internet business.

Except for Infocom Technologies which is run as a separate entity under information and communications technology subsidiary ePLDT, PLDT for the first time will be making a pitch for the highly competitive consumer narrowband Internet access market (both prepaid and postpaid) currently dominated by Infocom, Sky Internet, and Pacific Internet. There are more than 30 players in this highly fragmented market, which now offers as low as 20 centavos per minute for Internet access.

But in order to benefit from its 1.5-million residential subscriber base and its corporate brand name, PLDT is coming up with its own Internet service provider distinct from subsidiary Infocom, but utilizing its network such that all PDLT postpaid landline subscribers are pre-activated to the new ISP named Vibe.

This new business, expected to contribute around P60 million in net revenues, is among the top three priorities of PLDTretail under its five-year strategic plan. The two others are prepaid landline and landline texting, both of which are expected to contribute a more sizeable portion of PLDT’s revenues in the years ahead.

"Together with Infocom, we expect the PLDT group to account for 70 percent of the Internet market (both broadband and narrowband) in five years’ time from the present 50 to 60 percent," officials noted. As for the consumer broadband market, PLDT said that it currently has a market share of 68 percent for the myDSL brand and expects this to increase to 70 to 80 percent in two years.

PLDT officials said the Internet market is still small, underdeveloped, and therefore offers a lot of opportunities for growth, with the growth driver expected to come from the prepaid Internet card business and the broadband Internet sector.

Currently, only 1.4 million Filipinos – two percent of the 76-million population – have personal computers. Of that number, only 164,000 people have Internet access. Among those with a Internet access, 88 percent have either narrowband or dial-up and 12 percent broadband. More than half of the narrowband or dial-up Internet subscribers choose the prepaid option.

PLDT national retail marketing sector head Joaquin San Agustin said they expect the percentage of the population with PCs to increase from two percent to five percent in five years' time.

With revenues from the traditional voice business going down, more and more telecommunications companies are looking for ways to maximize their existing network and subscriber base and at the same time generate incremental non-voice revenues.

In 2001, around 99 percent of PLDT’s retail revenues came from its traditional voice business (local calls, toll revenues from NDD and IDD, prepaid cards) while only one percent or even less came from data/Internet, in particular from its digital subscriber line (DSL) business that brought in only P36 million in revenues last year.

San Agustin said that by 2006, PLDT expects 22 percent of retail revenues to be generated from the Internet and data business and the rest from the traditional voice business. "PLDT is basically looking for ways to survive in the market given a stagnant landline business," he noted.

PLDT yesterday launched PLDT Vibe, a dial-up Internet service available to all PDLT residential telephone users nationwide. It offers both postpaid and prepaid variants. "This pay-per-surf Internet service is aimed at maintaining competitiveness vis-à-vis other telecom companies, maximize PLDT’s network resources, and generate new significant revenue streams with our strategic participation in the Internet/consumer data service market," he explained.

He also noted that with PLDT DSL initially addressing broadband access requirements and now with Vibe addressing the narrowband access needs of their clients, PLDT is strengthening its strategic move to increase its participation in the growing Internet market segments and eventually be the industry’s major player.

When asked whether Vibe will compete with Infocom Technologies (Infocom), the PLDT Group’s Internet service provider (ISP), San Agustin explained that Infocom will be a separate brand under ePLDT utilizing PLDT’s telephone lines as a client. "In the case of Vibe, it will be a product directly under PLDT and therefore has more control over access. Vibe will also be priced higher than Infocom, the latter going after customers who are after value for money," he added.