Rise of social media hits PLDT revenues

CEBU, Philippines - The evolution of social media has continued to hit the revenues of text-messaging and voice-service performance of telecommunication leader, Philippine Long Distance Company (PLDT), as it reported a drop of SMS and voice volume in the first semester of 2011.

 During the PLDT first half financial and operation performance briefing, PLDT president Napoleon Nazareno reported that despite the increase of its subscriber base during the period, cellular voice revenues declined by seven percent to P19.9 billion.

Likewise, cellular data/text revenues fell by two percent to P20.6 billion, with text volumes declining 10 percent.

However, the decrease of revenue and volume of both voice and SMS services, is being offset by its robust growth in the broadband business, he said.

Because of stiff competition, rate of these two services also dropped. Voice calls now is pegged at 77 centavos per minute, while text message is now at 12 centavos, from 18 centavos in the past.

According to Nazareno, in order to temper further decline, the company is preparing to match the competition offers.

PLDT on the other hand, is confident that further plunge of SMS and voice calls in the future will be tempered and expected to stabilize, while attractive offerings will be put in place.

For the first six months of this year, PLDT announced that its unaudited financial and operating results showed Core Net Income declining by one percent to P21.0 billion, from P21.2 billion in 2010, but ahead by one percent compared with the second half of 2010.

“Despite the mature market and aggressive pricing environment, we are pleased to have been able to maintain our strong cash flows and our commitment in terms of our regular dividend policy,” said PLDT chairman Manuel V. Pangilinan, via a video conference.

Approximately 26 percent of consolidated service revenues are directly or indirectly linked to the US Dollar. Had the peso remained stable, the decline in service revenues year-on-year would have been two percent.

Service revenues did improve one percent quarter-on-quarter, from P34.6 billion in the first quarter of 2010 to P35.1 billion in the second quarter of 2011. The Group’s consolidated net debt remained at US$1.3 billion as of June 30. 

Wireless service revenues dipped four percent to P45.7 billion for the period of 2011, compared with the P47.9 billion recognized in the same period last year.

Wireless EBITDA (Earnings before interest, taxes, depreciation, and amortization) , for the first six months fell two percent to P29.0 billion. EBITDA margin improved to 63 percent from 62 percent in the same period in 2010 as a result of a pro-active management expenses.

The PLDT Group’s total cellular subscriber base as of June 30 this year was 47.8 million, five percent or 2.2 million up from the end of 2010.

Smart recorded net additions of 0.8 million subscribers to end with 26.5 million subscribers while Talk N’ Text likewise added approximately 0.8 million subscribers to end with 19.8 million.

Red Mobile, the brand owned by Smart subsidiary, CURE, had about 1.5 million subscribers at the end of the period, having added 0.6 million new subscribers. Red Mobile was re-launched in March 2010 and positioned to meet market demand for unlimted services, particularly for “second SIM” holders.

On the broadband front, SmartBro, Smart’s wireless broadband service offered through its wholly-owned subsidiary Smart Broadband, Inc. (SBI), continued to expand as its wireless broadband subscriber base which grew to approximately 1.5 million at the end of June 2011, over 1.0 million of whom were on SmartBro’s prepaid service.

Wireless broadband revenues, inclusive of mobile Internet revenues, increased by five percent to P4.0 billion, compared with the P3.8 billion recorded in the first half of 2010.

However, mobile Internet usage continues to grow strongly, with revenues increasing by 44 percent, from P345 million in the first six months of 2010 to P498 million in 2011.

Wireless broadband revenues now account for seven percent of wireless service revenues.

 “We expect revenues to remain under pressure for the near term; nonetheless, we are confident that with our cost discipline and focus on innovation, we will continue to produce value for our customers and shareholders,” Nazareno concluded.