Cellphone firms see further growth in subscriber base

The country’s leading mobile phone companies expect their subscriber market to continue growing aggressively next year, after removing those who have not been generating revenues.

Smart Communications Inc. president and CEO Napoleon Nazareno said there is still an addressable market of 25 million which the company can tap into.

For his part, Globe Telecom president Gerardo Ablaza said the market can rise to a 50-percent penetration rate in the next 12 to 18 months.

Nazareno explained that the industry penetration rate will most likely go down by one to two percent as the various operators continue to disconnect subscribers who have not generated revenues. After this correction, the industry will see growth from revenue-generating subscribers, he said.

During the third quarter, the PLDT cellular group’s total subscribers remained at 20.8 million. The effect of the termination of SIM-swapping activities in May manifested itself in the third quarter as the group reported net disconnections of 724,000 subscribers for the period compared to net activations of one million and 537,000 in the first and second quarters of 2005.

Smart recorded net disconnections of 43,500 subscribers while Talk ‘N Text added about 42,700 subscribers as of end-September with 15.8 million and five million subscribers, respectively. This downward trend in the subscriber base is expected to continue for the balance of the year.

Nazareno said the beneficial effects of the termination of SIM-swapping activities will be felt in four to six months time. "This makes it difficult to estimate what the fourth quarter subscriber numbers would be," he pointed out.

Meanwhile, Ablaza noted that the remaining half of the year will see the extraneous elements in the SIM (subscriber identification module) card swap dynamics. "Beginning the first half of next year, we might get rid of this unfortunate period in our marketing history," he said.

During the first half of 2005, Ablaza said there were around 33 million SIMs in the market, of which only 30 million are revenue-generating and about three to five million non-revenue generating and owned by those who have more than one SIM belonging to different operators.

The real subscriber penetration rate, he explained, is now in the vicinity of 35 to 38 percent. "This is good news for us because this means there is still considerable headway, especially in the lower income market and in the provincial areas," he added. Globe’s subscriber base dropped eight percent in the third quarter compared to the second quarter.

Gross subscriber additions for the third quarter of 2005 reached more than two million. The company’s second brand, TM or Touch Mobile, has also made a significant contribution, accounting for 38 percent of total gross additions for the period.

However, as the company churned out SIMs from swaps net disconnections reached 1.2 million during the quarter, resulting in the contraction of the subscriber base to 12.4 million. Officials explained these SIMs from swaps do not generate revenue and approximately one million more are estimated for disconnection from the network in the fourth quarter in accordance with prevailing expiry policies.

"While there were net disconnections of non-revenue generating subscribers, we had healthy gross addition of revenue generating subscribers. It‚s all for the better that SIM swap activities have ceased. Next year, there will be a settled growth," Ablaza noted.