PLDT says it is ready to face IT competition

MANILA, Philippines - The Philippine Long Distance Telephone Co. (PLDT)  forecasts 2012 core profit at P37 billion, down from P39 billion a year earlier as it finishes a P67 billion two-year capex program even as it builds on its acquisition last year of Digitel, the Philippines third-largest telecommunications services provider.

‘’PLDT regards 2012 as a year of alignment which will lay the  groundwork for a return to growth in 2013 as the teleco-mmunications industry transforms itself into a data-intensive multi-platform business.

’’In preparation for this future, PLDT is building a new media content business via its investment in MediaQuest Holdings Inc. (MediaQuest), which operates the TV5 television broadcaster and Cignal, the Philippines largest direct-to-home satellite broadcaster,” the company said.

In his speech at the 6th Internet and Mobile Marketing Association of the Philippines (IMMAP) summit, Pangilinan acknowledges that digital is the way to go.

 “The digital universe is something to behold – 1.8 trillion gigabytes in 500 quadrillion files were exchanged two years ago – more than doubling every two years, according to Terra Data Magazine, June 12 edition. That’s the video equivalent of you watching your HDTV for 22 million years. John Gatz of the International Data Corp  described these bits of information in the digital universe as numerous as all the starts in our physical universe. That is the power of digital at work today. The exceptional is becoming normal — in fact, the ‘new normal.’ And it’s become much a part of my life — as it has yours. Even my humor has gone digital,” he said.

This is the challenge that telcos have to face. “Our strategic response to this ‘digital tsunami’ is to embrace, rather than resist it. We all know the worlds of telecoms, Internet and media are converging. We want to be at the heart of that convergence, because that it precisely the space where new and exciting opportunities lie. This represents the first point of our convergence – and underlies our investments in media – TV5, Cignal TV, The Philippine STAR, Philippine Daily Inquirer, and Business World,” he pointed out.

The challenges to PLDT, according to Pangilinan, emerge from two fronts: First, the need for continuous upgrade of their networks to supply unlimited bandwidth to their customers; and second, the threat from over-the-top players (OTT) like Facebook, Twitter, and YouTube.

 “As a telco, our first priority is to ensure that our delivery infrastructure is updated digitally, is I/P-enabled, and capable of delivering boundless broadband. We know that the mobile space is the future – that LTE or 4G is the future – as are data centers, cloud computing, and business analytics. Smart has for example just overhauled its entire mobile network to make it easily upgradeable to LTE and HSPA+. Smart has also fired up its 4G network for commercial service, capable of delivering data wirelessly at 42 megabytes per second. Access to high-speed mobile internet will therefore become more widely available all over the country.

PLDT is turbo-charging its 54,000 km domestic fiber optic network, and raising the capacity of its international undersea cable systems up to 100 gigabytes per second. We’re also expanding our cloud infrastructure to lead the hundreds of millions who have become addicted to cloud-based social media and e-mail services,’ he told participants to the conference.

Pangilinan said that at the same time, they must cast a careful eye on the OTT players. “To ignore them is perilous, but to surrender their space is unsafe. We must therefore find a balance where we can partner with OTT suppliers and evolve our business model in an independent yet cooperative way. This is the second point of our convergence – merging telcos as a delivery system with OTT players as content suppliers,’ PLDT’s top executive added.

Pangilinan was quick to warn, however, that while all of these are new and interesting, many Filipinos are still cut off from the digital world, living at the outskirts of thriving web-connected communities.

 “It is thus important for the future of our country that we bridge this divide  as quickly as we can. As a 2009 World Bank study points out, broadband Internet is not just an infrastructure. It is as well a general purpose technology that can fundamentally restructure an economy,” he said.

To this end, the PLDT group has created Ideaspace, a non-profit incubator/accelerator fund designed to stimulate innovation and promote technology-based entrepreneurship in this country. PLDT will select the 10 best technology-based ideas to be incubated in the program, which has a funding commitment of P500 million over five years.

As a player in the highly volatile and uncertain world of technology and telecommunications, PLDT must be very clear as to where it wants to go and how it plans to get there if it wants to remain for generations to come as the leading telco in the country, not only in terms of profitability but more importantly in terms of reliability and relevance to its customers.

With an ambitious technological roadmap for PLDT, Smart, and Digitel being laid out, and clear synergies among its other businesses, Pangilinan’s vision for the PLDT group to be a multi-media company, operating not only here in the Philippines but regionally as well, is not far from becoming a reality.