Globe sees lower industry margin due to promo wars
MANILA – Globe Telecom said it expects the industry’s margin to further squeeze mostly because of the intensifying price war among telecom firms.
“The industry’s price war is still continuing. I think most telecom CEOs [chief executive officers] will tell you that. We’re in the middle of that particular war,” Ernest Cu, Globe’s president, said.
Given this, Cu sees lower margin for all telecom players.
The Ayala-led telco’s mobile revenues fell nine percent in the first semester and three percent again in the second half of last year.
Globe had said that the increasing preference for unlimited and bucket promotions also drove down yields, resulting in a decline in revenues, despite the higher voice and texts traffic.
Globe’s average revenue per user (ARPU) for prepaid fell 15 percent to P210 in the first half of the year, while postpaid ARPU was down by four percent to P1,739.
ARPU’s for Touch Mobile was three percent higher to P123 from January to June, from P120 in the same period last year.
For Smart Communications Inc., its prepaid subscribers’ ARPU dropped by 17 percent to P190, while postpaid ARPU was down by nine percent to P1,675.
ARPU measures the average monthly revenue generated for each subscriber.
Globe’s mobile business contributed 81 percent of the total service revenues for the first half of the year compared to last year’s 87 percent.
With the shrinking margins of the company’s mobile business, Cu said Globe is optimistic about the prospects of its Internet broadband business, particulary mobile broadband.
“The use of Internet on the handset has the ability to drive ARPU up,” Cu said.
Mobile data revenues accounted for 49 percent of total mobile service revenues for the first half of the year. Owned by the Ayala Corp. and Singapore Telecommunications Ltd., Globe recorded a net income of P5.1 billion in the first six months of the year, down by 29 percent compared with last year’s P7.2 billion.
The company’s consolidated service revenues for the first six months was at P30.7 billion, down three percent from P31.7 billion last year.
Anubhuti Belgaonkar, Ovum lead analyst, said focusing on data services is typically the way to offset revenue decline.
“PLDT and Globe have now shifted focus to mobile broadband to drive revenue growth, a strategy Ovum closely agrees with,” Belgaonkar said.
Ovum, an industry research firm, earlier said the shrinking revenues of Philippine Long Distance Telephone Co. and Globe is the first sign of the impending market maturity caused by an ever increasing mobile penetration rate in the country.
The research firm projected that the mobile penetration rate will increase from 78 percent at the end of 2009 to 98 percent by 2015, reaching a total mobile subscriber base of 107 million.
At present, the country’s mobile phone subscribers stood at about 83 million.*PNA
