Telco battle heats up

Last Sunday, I ventured to predict that the Philippine Long Distance Telephone Co. (PLDT) will be beating market expectations when they announce their 2007 full year results. True to form, the giant telco did just that announcing a net income of P36 billion for last year.  Congratulations are therefore in order to the two captains of PLDT, Manny Pangilinan and Polly Nazareno.

The 2007 figures showed that it was the cellular and the broadband business that drove revenues up for the PLDT group. Congratulations also to Bong Mojica of Smart’s wireless consumer division and Butch Jimenez the group’s overall broadband head who came out with the acclaimed “Pambansang Broadband” campaign. Cellular subscribers of Smart rose by 5.9 million subscribers to end the year with 31 million subscribers while broadband showed astounding growth and rose by over 100 percent ending the year strong with 579,000  subscribers. All told, it was a spectacular year once again for MVP and his team.

Cellular and broadband will remain to be the focus of growth for 2008 and the market expects broadband subscribers of PLDT to achieve another 100 percent growth in subscriber base and end 2008 with at least 1.2 million subscribers. That shouldn’t be too difficult with PLDT’s Mydsl doing 7,500 connections a week even before the start of 2008.

Broadband is in the same growth mode that cellular experienced when it was showing galloping growth in subscriber base. Knowing MVP, he will not agree to anything less than doubling the subscriber base for 2008. Makes sense since his rival Globe is also set to more than double its broadband subscriber base in 2008.

But while cellular and broadband may be the growth story for 2008, another potential winner is the wireless landline product. This really isn’t anything new. Broadband Philippines launched this service four years ago and Digitel also launched the same product called “Mango” (Man on the Go) three years ago. But it never flew. However, when Bayantel launched Bayan Wireless middle of last year, the product gained steam.

To date, Bayan Wireless has hit over 160,000 subscribers and growing fast. By middle of this year, the Lopez group intends to topple Globe landline and even Digitel to become the second biggest landline provider in the country. This I predict will be another battleground as PLDT launched its own wireless landline dubbed PLDT Landline Plus late last year.

But while PLDT was breathing down Bayantel’s neck in this race last year, Bayantel has pulled away as of February.  According to Bayantel, they plan to hit 200,000 subscribers by the end of the first quarter of 2008, while PLDT is hovering far away at about 40,000 subscribers to date.

Bayantel launched their pre-paid version last week and sources claim take-up has been very strong. I hear the Bayantel HQ is highly energized with the emerging success of this new product. PLDT hinted in its last media briefing that they will be launching their pre-paid version as well. Globe on the other hand has yet to realize a battle is raging on this front and is no where in sight. But I’m certain Gerry Ablaza and Gil Genio have an ace up their sleeve.

So while MVP goes up against the Ayalas for cellular and broadband supremacy, MVP is now going up against the Lopezes in the battle for wireless landline supremacy. This is a war I would love to watch. A war of two former competitors, Sky Cable and Home Cable, who became partners when the two companies merged, and now competitors again in wireless landline.

Right now, Gabby Lopez is clearly ahead and is fast pulling away. But will he give up that lead and let PLDT overtake him? Will MVP be able to sleep at night knowing he is the number two wireless landline provider in the country?

The war has started to get bloody. PLDT came out with full page print ads ridiculing Bayantel’s quality of service. Many thought that was a bit arrogant and misplaced since PLDT can’t even answer the telephone calls of its subscribers who want to report service interruption (Who is running PLDT’s customer service hotlines?).

But there seems to be hope because MVP said they have hired consultants to help fix PLDT’s quality of service problems. That’s a good first step. But let us hope that when the PLDT board sees how much it will cost to improve total quality of service, they will continue to put the customer before shareholder interest and give management the needed financial support to improve quality of service.

If the first few rounds of the battle are any indication, then the MVP vs. Gabby bout may be more exciting than the upcoming battle between Manny Pacquiao and Juan Manuel Marquez. 

ICTV targets TMT

Based on a research on Technology, Media and Telecommunications (TMT) markets conducted in 2006, Morgan Stanley reported five related trends in the global TMT industry.

These are: first, that emerging TMT markets have finally emerged; second, global residential broadband growth is compelling; third, global Internet is increasingly mobile-centric because mobile devices are becoming small, functional computers that offer increasing levels of connectivity and therefore, mobile services with basic internet connectivity are expected to enter their own “sweet spot” of adoption within two years; fourth, the pace of global innovation is accelerating, and the innovation is coming from outside US in areas related to broadband and mobile Internet, with global investors appear willing to support it; and fifth, Internet leaders, for the most part, are well positioned, and increasingly, are vying to become next-generation communicationhubs.

In the Philippines, there is a company that intends to join the sunrise TMT industry. Based on its latest disclosures filed at the Philippine Stock Exchange, the board of directors of listed company Information Capital Technology Ventures (ICTV) has approved an amendment to the primary business purpose of the corporation to allow it to engage in the business of providing telecommunications (VAS), media (except mass media) and information technology products and services.  

It would be interesting to see what this new entrant would offer the TMT market.

New and exciting developments transpired at the meeting of the ICTV board recently. The board elected four new members with differing illustrious backgrounds and areas of expertise, from telecommunications and information technology, to mass media, and to financial services and investment banking. From among the new directors, the board elected a new chairman in the person of respected media personality Babes Romualdez. The board likewise elected Marcelito Ordonez thereby granting representation to ATR-Kim Eng Capital Partners, the largest independent investment house in the country today.

With the above developments, there is reason to be optimistic about what the year 2008 will bring for ICTV.

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