Zed Phils expects revenues to decline by 50% this year

Zed Philippines, the local unit of one of the world’s leading mobile content providers, said it expects its revenues to drop by as much as 50 percent this year due to the continuing delay by the National Telecommunications Commission (NTC) in addressing the issue of ownership regarding value-added service providers.

In an interview, Zed country manager Jay Paolo Adevoso said the NTC’s failure to decide on whether a 100-percent foreign-owned company such as theirs can operate as a content provider, has adversely affected Zed’s financial performance and expansion plans in the Philippines.

Zed provides content such as ringtones and wallpapers through leading mobile phone operator  Smart Communications Co. Inc. and does not have any direct contact with individual phone subscribers.

From P600 million in 2007, Zed’s revenues are forecast to go down to nearly P400 million this year due to higher expenses,  Adevoso said. “We will not do as well as last year. We would have been able to match last year’s revenues but this ownership issue has taken a toll on our financial performance.”

Adevoso said Zed has assumed all marketing expenses for its services after its partner Smart Communications Co. Inc. stopped promoting Zed.  “Smart used to spend P50 to P70 million a year to market Zed in TV and newspapers but these have all stopped when this ownership issue cropped up.  So we assumed all the marketing expenses.”

He said while the business remains healthy, the company’s expansion plans have been deterred by the ownership cap.

Adevoso said the group’s plan to make the Philippines as its regional hub may no longer push through given the unresolved ownership issue which has dragged on for two years.  He said the group is now looking at Malaysia as site for its regional headquarters.

“I don’t understand why this has dragged on for years.  We are willing to comply with all official rules, regulations and laws of the country but the absence of clear-cut rules has prevented us from moving forward,” Adevoso said.

“The NTC is currently holding evidentiary hearings but we don’t know when this is going to end.  So we’re hopeful that the NTC decides soon so we know what to do,” Adevoso added.

Adevoso said Zed has been unfairly singled out since Information Gateway, another company that is also 100-percent foreign-owned and currently the biggest content provider in the Philipines, has never been questioned.

The mobile phone content business reportedly chalks in revenues of around  P8 billion per year and contributes a significant amount of revenues to the national coffers and to local employment.