PLDT on track to meet P37-B core profit guidance

PLDT’s fourth quarter net profit is “most likely better than the third quarter,” Napoleon L. Nazareno, the listed telecom company’s president and chief executive officer, told reporters on the sidelines of an event in Makati City on Thursday night.

PLDT made P7.94 billion in the three months ending September, down 14.4% from P9.27 billion during the same period a year ago. It has so far booked P27.9 billion in net profit and P28.6 billion in core income for the January to September period, down 3% and 1% respectively from year-ago levels.

PLDT, according to Mr. Nazareno, is “on track” to hit its already recast P37 billion full-year core profit guidance.

That profit goal was a revised number from an earlier announced P39.5 billion. The changes were prompted by lower earnings, which PLDT attributed to “intensification of competition which was felt significantly during the quarter,” Mr. Nazareno had said during PLDT’s quarterly financial briefing in Makati City on Nov. 4.

Last week, the company official said prospects for the fourth quarter should be better.

“Fourth quarter is usually the best quarter for us, because there’s normally an uptake in mobile broadband during the Christmas season,” Mr. Nazareno said.

“However, with the free internet, it might be tempered a little bit,” he added.

PLDT has mobile broadband subscribers of 3.7 million as of end-September, its latest financial report show. That’s 330,483 more than end-2013’s 3.4 million subscribers.

About 2.7 million of that total are wireless broadband subscribers, and the rest, fixed line.

Smart Broadband, Smart Communications, Inc.’s wireless broadband service offered through its wholly-owned subsidiary Smart Broadband, Inc., had a wireless broadband subscriber base of nearly 2.1 million at the end of the period, about 1.6 million of whom were on Smart Broadband’s prepaid service.

In addition, Sun Cellular, a brand owned by Digital Mobile Philippines, Inc. that is a wholly owned subsidiary of Digital Telecommunications Philippines, Inc. (Digitel), had a wireless broadband subscriber base of close to 600,000.

Meanwhile, PLDT’s fixed broadband subscribers increased by 11% from the end of 2013, bringing the total fixed broadband subscriber base to 1.1 million for the first nine months of 2014, and now represent 48% of the fixed line subscriber base.

Hong Kong-based First Pacific Co. Ltd., PLDT’s parent, announced on Nov. 9 that it is allocating about P36 billion in fresh capital outlay next year for its Philippine-based telecom unit.

Mr. Nazareno said on Thursday that his company is “still finalizing it [budget], but definitely higher than last year’s.”

PLDT’s capital expenditure (capex) for this year is projected at P34.5 billion, also revised from an earlier projection of P32 billion.

A “higher capex level for 2015 than this year” would be warranted to outdo the competition, he said.

“We are fast-tracking our data capacity build-out due to the positive response to our free Internet promo as well as our TD-LTE (Time-Division Long-Term Evolution) build-out to meet increasing fixed wireless data demand. In light of the market’s continued appetite for data services, we expect higher capex,” Mr. Nazareno said.

New broadband player offers satellite-based service

The operator of the Global News Network (GNN) is launching next month a satellite-based broadband service.

Philip J. Chien, chief executive of First United Broadcasting Corp (FUBC) last week said the company is spending at least $5 million to roll out the service called “iGSat Satellite Broadband” next month.

FUBC, which runs GNN and a direct-to-the-home (DTH) satellite TV service, has partnered with Newtec, which specializes in designing, developing and manufacturing technologies for satellite communications, for the rollout.

"This latest technology will support the grassroots program of the government and private firms to cover the entire Philippine society for communication, information and education. The technology will be available anywhere, everywhere. It is limitless and beyond boundaries," Chien said.

"This project will not be in competition with the present providers but will be a great support in areas where there is slow or no available bandwidth at all," Chien added.

iGsat offers a range of solutions for the broadband user, comprising of satellite connections for the home, business, private network and maritime communications as well as Internet service providers (ISPs).

The service is based on Newte'c technology, which provides local ISPs with the broadband connection they need to offer reliable, high-speed and always-on Internet access to users through a wired or wireless (Wifi) connection.

"Newtec is proud to partner with First United Broadcasting Corp.'s iGsat Broadband service in the Philippines. Our technologies continue to offer high performance in the most economical way and remain at the forefront of pushing satellite broadband to areas where any connectivity was not previously thought to be possible and we are doing this at a competitive price," Serge Van Herck, Newtec's chief executive, said.

Globe scores NBA partnership

Globe Telecom has become the official wireless and broadband partner of the National Basketball Association (NBA), extending the league’s reach to the telco’s 45 million mobile and broadband customers.

The partners will be launching NBA-related promotions and premiums starting with the introduction of the NBA League Pass. Exclusive to Globe subscribers, it lets users watch games live and on-demand through multiple devices and access to play markers and statistics.

Additional NBA video content will be streamed through Globe’s new PisoMall video platform, another service exclusive for all Globe and TM customers optimized for both feature phonesand smartphones.

The deal is newest “world first” Globe has been focusing to accomplish in the last two years and a half. Among them are key partnerships with Facebook, Google, Viber and Spotify.

“Our partnership now puts the best sports experience in the world in the palm of every Filipino’s hands,” Bithos, chief operating advisor at Globe, said.

“At Globe, we are hands down the digital leader in the Philippines.  We love bringing ‘world’s firsts’ to customers and our partnership with the NBA takes our digital experience to a whole new level,” he adds.

The NBA said that the multi-year partnership with Globe marks another milestone in a landmark year in the Philippines, which saw the introduction of the first Jr. WNBA program in the country, the launch of the world’s first NBA Cafe, the announcement of the first NBA Store in the Philippines and, most recently, the NBA’s multiyear partnership extension with local broadcasters ABS-CBN and Solar Entertainment.

“We are excited to welcome Globe into the NBA family,” said Scott Levy, NBA Asia Managing Director.  “The NBA shares Globe’s commitment of enriching the lives of Filipinos and, through this new partnership, Globe will have a presence across all areas of the NBA experience and bring the game closer to our millions of fans throughout the country.”

Globe taps Apple store designer for Generation 3 stores

Tim Kobe may not exactly ring a bell among Filipinos – unless you mention Apple Inc, which has legions of loyalists in the Philippines.

The Eight Inc founder and CEO, who is behind the original design concept for Apple stores, is in the Philippines to help in the "Apple-like" transformation of Ayala-led Globe Telecom Inc's stores in SM North EDSA in Quezon City and Limketkai Mall in Cagayan de Oro City.

Globe closed down the two flagship stores and is mum about how both branches would look like when they are unveiled in December.

Kobe, one of the brains behind the minimalistic glass cube Apple store in New York City’s 5th Avenue, is necessarily tight-lipped but gives Rappler a very general idea of what the public can expect.

“They won’t look like anyone else’s telco. It’s not going to feel like you’re walking into a telco,” Kobe tells Rappler in an interview on Thursday, November 6.

Eight Inc provides commercial, retail, industrial, and residential design to offices in New York, San Francisco, London, Honolulu, Tokyo, Singapore, Hong Kong, and Beijing.

His firm, founded in 1989, unites the traditional disciplines of strategy, architecture, exhibition, interior design, product, communications, and branding.

Apart from Apple, Kobe and his creative team of 90-plus strategic designers and business creatives have done meaningful design projects for Citibank and Citi Private Bank, Coca-Cola, Coach, Nike, Virgin Atlantic Airways, to cite a few.

Among its clients, Eight Inc has had the closest relationship with Apple since the firm worked with Apple founder Steve Jobs for 12 years, and even designed the homes of some of the the company's top executives.

'A meaningful experience'

Stiff competition in the Philippine telecommunications industry have kept top players Globe and Smart perpetually on their toes, constantly upping their game.

When Smart offered free Internet to its subscribers in September, Globe then revived its free Facebook promo. Some of their “fights” end up in courts. (READ: Globe to PLDT: No need to auction Bayantel frequencies)

For the first half of 2014, Globe’s net income almost quadrupled at P6.84 billion ($151.91 million*) from P1.4 billion ($31.09 million) from the same period last year. Revenues from all its business segments – cellular, broadband, and landline – breached P47.5 billion ($1.05 billion) in the same period for this year. It also has growing mobile phone subscriber base of 42.7 million, up 18% from 36.1 million a year ago.

The Manuel V. Pangilinan-led PLDT group still has the largest subscriber base at 68.9 million. However, its first half of 2014 earnings are lower compared to Globe: P20 billion ($444.16 million), only 2% higher than its P19.7 billion ($437.51 million) income in 2013.

Such telecommunications wars are beyond Kobe’s scope of responsibility, as far as his Globe project is concerned. His mission is to create a meaningful experience for both Globe and its customers, which is evident in Kobe’s collaboration with Apple.

In 2001, Jobs recruited Kobe to remodel its stores. Apple was then being dismissed as the company selling unusual computers with built-in monitors and single-button pointing devices, with a dismal 2% share in the market dominated by Windows-run computers like IBM and Hewlett-Packard.

Today, Apple is one of the most valuable brands in the world. Its success was due in part to the company’s focus on building high-end retail stores that let customers experience the Apple brand.

“Look at what separates Apple, Amazon, Google, Facebook – why are these companies worth millions of dollars? When they are not the first to market?” Kobe points out.

Another way of competing, he says, is “to solve a part of the customer’s life,” which applies to telecommunication companies like Globe.

“In this case, it would mean offering what the company’s technology could offer, aside from being a utility company,” Kobe says.

Kobe’s arrangement with Globe, as with other clients, is not simply to redesign its retail stores but to reimagine a conventional transactional branch – one that caters to customer service and payments – into an engaging site.

In a statement, Globe Retail transformation and management head Joe Caliro said Globe is taking a giant leap with the new retail concept of the company’s two flagship stores.

“Our Generation 3 stores will bring to life our customers’ digital lifestyle and epitomize the aspirations of our customers. Our stores will be a wonderful place where customers can explore and discover exciting finds in the digital space,” Caliro said.

Prior to opening, the Generation 3 stores features themed surprises – Arts, Community, and Technology. Globe collaborated with Filipino artists led by Ross Capili, who is working with the past to future-themed designs, seen on the mounted mural in the Globe stores. The mural will transform every two weeks as the artist adds more strokes on the canvas.

There’s going to be a fair amount of space for storytelling in the Globe stores, Kobe says.

"We’re doing away from transactional to experiential,” he stresses.

The idea of giving more space to customers has been replicated by several brands. Japanese convenience store chain FamilyMart proved the formula to be successful in the Philippines. In only two years, its well-designed stores grew to 60 in Metro Manila.

But is it too early to say that Kobe’s proven formula will translate into success for the Ayala-led telecommunication company?

Kobe responds with a paraphrased Steve Jobs philosophy: “Nothing that’s worth doing does not contain some risk.”

The two Globe Generation 3 stores will be unveiled in December.

Newtec and First United Broadcasting Go Island Hopping...All 7,100 Philippine Islands to Receive iGSat Broadband

Newtec, designer, developer and manufacturer of equipment and technologies for satellite communications, will partner with satellite service provider First United Broadcasting Corporation (FUBC) together to launch a new broadband service called “iGSat Satellite Broadband” in the Philippines.

iGSat is a service being provided by FUBC which is licensed to operate Direct To Home (DTH) satellite services as well as radio and TV broadcast. FUBC also runs the DTH Satellite TV (GSAT) and Global News Network (GNN) and its satellite footprint reaches the Philippine archipelago and surrounding countries. The new iGSat Broadband service will deliver high-speed satellite broadband across the Philippines, which is comprised of over 7100 islands.


“This latest technology will support the grassroots program of the government and private firms to cover the entire Philippine society for communication, information and education," said First United Broadcasting Corporation CEO Phillip J. Chien. "The technology will be available anywhere, everywhere. It is limitless and beyond boundaries."

Serving the corporate market, iGSat Broadband will deliver reliable, high-speed, always-on Internet access without depending on availability of terrestrial networks. The network connects entirely via satellite. Whether in the city or the depths of the countryside, users will be able to enjoy a broadband connection wherever they are.

“This project will not be in competition with the present providers, but will be a great support in areas where there is slow or no available bandwidth at all,” said Chien.

iGSat offers a range of solutions for the broadband user, comprising of satellite connections for the home, business, private network and maritime communications as well as for Internet Service Providers (ISPs).

The broadband service is based on Newtec’s broadband hub utilizing thousands of Newtec’s terminals including the MDM2200 IP Satellite Modems and interactive LNBs. This technology provides local ISPs with the broadband connection they need in order to offer reliable, high-speed and always-on Internet access to users through a wired or wireless (WiFi) connection.

“Newtec is proud to partner with First United Broadcasting Corporation’s iGSat Broadband service in the Philippines," said Newtec CEO Serge Van Herck. "Our technologies continue to offer high performance in the most economical way and remain at the forefront of pushing satellite broadband to areas where any connectivity was not previously thought to be possible and we are doing this at a competitive price."

A contract was signed on November 6, 2014 at the Sofitel Philippine Plaza and witnessed by Ambassador Roland Van Remoortele of the Kingdom of Belgium and Ambassador Garry Lin of Taiwan ROC. The iGSat Broadband service will launch at the beginning of December in 2014 and ultimately connect thousands of businesses and homes to satellite broadband technology.

Globe takeover of Bayantel requires Congress approval, says PLDT

The sale of Bayantel's frequencies to Globe will require legislative clearance, according to PLDT.

"Bayantel's franchise specifically prohibits the transfer, sale or assignment of any right or privilege granted it without approval of Congress," Philippine Long Distance Telephone Co said in a statement.

"The arrangement circumvents pertinent laws and regulations regarding the assignment, allocation or use of radio frequencies that call for the public auction of the contested radio frequencies which remained idle for over 10 years or since the grant of provisional authority to Bayantel way back in 2000," PLDT said.

Globe Telecom Inc had acquired 98.26 percent of Bayan Telecommunication Inc's loans and 100 percent of Radio Communications of the Philippines Inc's (RCPI) liabilities. RCPI is a unit of Bayantel, both of which are owned by the Lopez Group.

The acquisition cost $130 million, lower than the $400 million face value of Bayantel's aggregate debt.

PLDT recently bagged 60-day temporary restraining order from the Court of Appeals, barring the sale of Bayantel to Globe.

The Appellate Court said the National Telecommunications Commission (NTC) should first act on the objections raised by PLDT before granting Globe's acquisition of Bayantel.

Globe was expecting last July to snag NTC approval of the Bayantel takeover, but the PLDT Group and Next Mobile sought to block the deal.

As Bayantel's largest creditor, Globe intends to convert its debt holdings into at least 54 percent of the former's outstanding shares.

Globe plans to unlock Bayantel's key business assets, particularly in corporate data and broadband. The takeover would allow Globe to address rising demand for mobile data services, and Bayantel to build its mobile network.

NTC eyes changes to broadband speed rules

THE NATIONAL Telecommunications Commission (NTC) will amend its memorandum on the minimum speed of broadband connections after concerned parties on a Senate inquiry on Sept. 16 sought for some changes in the terms, a senior official said.
In a phone interview, NTC Director Edgardo R. Cabarios said that a public consultation and hearing was sought after some telecommunication providers during a Senate hearing proposed “ways to measure speed connections and methods of measurement.”

The Senate inquiry last month, which was called by Senator Paolo Benigno “Bam” A. Aquino IV, was centered on whether consumers are getting their money’s worth from their Internet and telecommunications service providers.

NTC said during the hearing that it will issue a memorandum circular prescribing minimum standards for telecommunication companies and Internet service providers on broadband connectivity.

In a notice of public consultation and hearing published yesterday, the NTC invited all affected and interested parties to a meeting on Nov. 7 about their proposals to amend Memorandum Order No.07-07-2011 on the minimum speed of broadband connections.

Tabled for discussion, among others, are the parameters to be measured; the methods and periods of measurement of broadband speed connectivity; who should conduct the measurement; and methods of mediation and arbitration in case of disputes.

NTC said during the Senate inquiry that it will buy the equipment needed to monitor the level of broadband connectivity provided by telecommunication companies.

“We need to settle all their proposals first before we can buy equipment that will measure the speed of telco’s broadband services’ connectivity,” Mr. Cabarios explained.

The NTC will conduct another public hearing, according to Mr. Cabarios, after it settles all concerns during the first consultation.

“After that, we will be issuing the amended memorandum before the year ends,” he added.

Other than implementing a minimum speed for broadband connections, the NTC memorandum circular could likewise contain amendments on broadband advertisements that will require the telecommunication companies remove or clarify terms like “unlimited” or “up to” with regard to broadband speed and amount of data offered.

In a report by the United Nations Broadband Commission published last month, the Philippines ranked 57th among 132 countries surveyed for household broadband penetration in 2013.

Smart free Internet now offered to postpaid, broadband subscribers, too

As if free 30MB data daily for its prepaid subscribers isn’t enough, Smart Communications is now offering the same special promo to its postpaid and broadband users—we’re talking all 72 million Smart, Sun Cellular, and Talk ‘N Text subscribers—as well. That’s like throwing in the kitchen sink for good measure!
Even better, Smart has extended the offer from November 30, 2014, to January 5, 2015.
Same rules apply: no P2P, no streaming, no messaging, and no VoIP (more details about the limitations here). We guess the telco needs to make sure that its network can handle the traffic that's coming its way.
Unless you're on Facebook. The promo includes unli all-you-can FB access, so even if you send messages or watch videos on the social-networking site, you won't incur additional charges.
To avail yourself of the offer, just text FREE to 9999.
We wonder what Globe Telecom's answer to Smart's updated promo will be this time. We know that it is bringing back Free Facebook, which was first made available from October 2013 to April 2014. We emailed the company, and we're just waiting for its answer.
Anyhow, we are about to board a plane, so we're just going to post Smart's full press release here. Merry (early) Christmas?
“In another unprecedented move, Smart Communications, Inc. (Smart) and Sun Cellular announced that effective October 3, it is expanding their free Internet offer to all of their prepaid subscribers to also cover all their postpaid and broadband subscribers.  Furthermore, they are extending the duration of the free mobile Internet promo across all subscribers—postpaid, prepaid and broadband—from November 30 through the Christmas season until January 5, 2014.
The announcement was made through MVP’s official Twitter account: “TY for the overwhelming response to #SmartFREEInternet. Our early Christmas gift to our loyal and new subs—offer now extended to Jan. 5.”
In another tweet, MVP added “Even better—free Internet now open to ALL prepaid, postpaid & broadband subscribers of Smart, TNT 7 Sun #smartFREEinternet for All.”
Full Facebook experience and more
On top of their free Internet, all subscribers can also enjoy “unli” “all-you-can” Facebook access - including sending messages via Facebook messenger and viewing of videos embedded in the social networking site. Subscribers can also enjoy all-day Wikipedia access as well on top of their daily 30 MB free data allocation.
Through this special offer, all of the 72 million subscribers of Smart, Sun and Talk ‘N Text can enjoy browsing through all their favorite websites as well their social media accounts using their data-enabled handsets. They can also send and receive emails, use their favorite mobile apps, shop online, and more—without incurring additional data charges.
This move comes a week after Smart and Sun Cellular surprised the industry with its groundbreaking offer for free mobile Internet for its Smart prepaid, Talk ‘N Text and Sun Cellular prepaid mobile subscribers.
"This is our way of thanking our subscribers as well as a response to the requests of our postpaid and broadband subscribers to be included in the special offer. It is part of our overall strategy in accelerating mobile Internet adoption and usage in the country," said Charles A. Lim, executive vice president and head for wireless consumer business at Smart.

Text FREE to 9999
To avail of the free mobile Internet offer, subscribers just have to maintain an airtime balance of at least one peso, or be subscribed to any load bucket/promo. They can register each day, by simply sending “FREE” to the number “9999.” Registration is free. They will receive an SMS confirmation upon successful registration.
Once registered, subscribers can enjoy a free data volume package of up to 30MB per day. Data charges will however apply to peer-to-peer uploads and downloads, videos (unless embedded in Facebook), VOIP and messaging (except for Facebook messenger).
Smart’s successive free mobile Internet offers follows the leader’s recent announcement that it has stepped up the deployment of its broadband network, to meet the growing demand for data services.
Resilient and nationwidest network.
"With millions of subscribers going online, our network has been performing very well, enabling them to sign-up for the service to take advantage of the free Internet offer ." said Roland G. Pena, Smart Technology Group Head.
The PLDT Group has thus far rolled out about 90,000 kilometers of fiber optic cables all over the country which provides the transmission facilities needed to support Internet services. It has also the most extensive international cable systems needed to connect the Philippines to the rest of the world.
Last Wednesday, PLDT also announced that it is boosting the capacity of its 90,000-kilometer domestic fiber optic network by 520 gigabits per second under a P544-million expansion project that will be completed by the first quarter of 2015. This will raise the total capacity of PLDT’s DFON by 13 percent to 4.6 terabits per second.”

NTC sets benchmarking for broadband service

The National Telecommunications Commission (NTC) is set to roll out the benchmarking of the broadband services of telecommunication providers led by dominant carrier Philippine Long Distance Telephone Co. and Ayala-led Globe Telecom Inc.

NTC Commissioner Gamaliel Cordoba said the regulator is seeking a P15.5 million appropriation for the 2015 budget to be able to buy a benchmarking equipment as well as vehicle for the broadband service of telecom providers.

The benchmarking would help determine the quality of broadband service being delivered by telecom providers to their subscribers, he said.

The NTC used to conduct benchmarking test for the voice calls as well as short messaging system (SMS) or text messages offered by PLDT’s Smart Communications and Ayala’s Globe.

The NTC has been conducting Quality of Service Benchmarking tests for voice calls and SMS to ensure that telecom companies provide better service to their subscribers.

Parameters include the blocked calls or grade of service, dropped calls, average signal level, and call set up time.

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The agency is pushing for a legislation that would identify broadband service as a basic service so that the government could regulate it.

Cordoba said the broadband service could not be regulated by NTC because it is classified as a value added service (VAS) under RA 7925 or the Public Telecommunications Policy Act of 1995.

Sen. Paolo Benigno Aquino, chair of the Senate committee on trade and commerce, said in a hearing last week that making broadband a basic service would allow the NTC to regulate it by imposing standards on speed as well as pricing.

The regulator is now drafting a circular setting the minimum standards such as speed of broadband offerings.

The circular being prepared by NTC would also require telecom providers to remove or clarify terms such as “unlimited” or “up to” with regard to speed and size of data offered.

Aquino earlier filed Senate Resolution 620 declaring that the slow and expensive Internet connection is adversely affecting the ease of doing business in the Philippines.

Alcatel-Lucent, Globe Telecom Sign LTE deal in the Philippines

Alcatel-Lucent (Euronext Paris and NYSE: ALU) and Globe Telecom (PSE: GLO) have today signed a confirmation of award for the transformation of wireless network infrastructure in the Philippine regions of Visayas and Mindanao, upgrading it from WiMax to LTE-TDD and LTE-FDD ultra-broadband access technologies.

The LTE infrastructure is part of Globe Telecom’s continuing network expansion to enable advanced technologies for better broadband service experience. This will provide higher network capacity, plus faster transmission speeds, addressing ever-increasing demand for broadband service with higher bandwidth in a country of more than 105 million mobile subscribers.

The signing of the confirmation of award was done during the Philippines official state visit to France. President Benigno Simeon Aquino, III of the Philippines and President François Hollande of France witnessed the signing in a ceremonial event at the Élysée Palace, the official residence of the French president.

Moody’s sees PLDT earnings rising after Rocket investment

International credit ratings agency Moody’s Investors Service sees the earnings of Philippine Long Distance Telephone Company (PLDT) improving further in 2015 following its overseas investment of nearly P20 billion (US$445 million) in German firm Rocket Internet AG, known locally for its online commerce sites Lazada and Zalora, as well as for the EasyTaxi taxi booking service.

Yoshio Takahashi, vice president and analyst at Moody’s, said PLDT’s earnings would improve slightly next year amid lower costs, along with higher revenues from its broadband and mobile Internet businesses following its acquisition of a 10% stake in Rocket Internet.

Takahashi noted, "PLDT’s earnings should slightly improve in 2015, given that it will no longer have to deal with the aftermath of Typhoon Yolanda (Haiyan), and considering the company’s plan to reduce costs, as well as the continued growth in revenue from its broadband, corporate data, and mobile Internet businesses."

PLDT’s 10% stake in Rocket Internet follows a global strategic partnership where PLDT’s investment would allow the two to develop online and mobile payments solutions for emerging markets.

First-half performance

PLDT booked a 2% growth in core income to P19.83 billion in the first half of the year compared to P19.39 billion from the same period last year. Revenues climbed 2% to P82.5 billion from P81 billion. The PLDT group is aiming for a core income of P39.5 billion this year, 2% higher than last year.

Takahashi pointed out that PLDT’s consolidated earnings before income tax, depreciation, and amortization (EBITDA) went down 4% in the first half of the year due to an increase in handset subsidies, cash expenses related to the operation of its expanded network, and residual post-Typhoon Yolanda restoration costs.

“Given PLDT's first half results, Moody’s expects the company’s reported consolidated EBITDA to fall moderately in 2014,” he added. The firm also expects PLDT’s adjusted debt/EBITDA to increase to 1.9 to two times by end-2014 from approximately 1.8 times for the 12 months to June 2014.

Moody's believes PLDT will continue seeking new investment opportunities in the Internet and multimedia sectors to strengthen its ability to deliver multimedia content through its broadband and mobile networks, in addition to growing its e-commerce business. The credit ratings service added that PLDT’s investment in Rocket Internet could be accommodated within its Baa2 ratings and stable outlook.

It also estimates that PLDT will be able to finance the majority of the investment from its excess cash as its cash on hand stood at P43 billion as of end-June.

“While the partnership with Rocket should help PLDT strengthen its mobile and online payment services, generating stable returns from investments in the fast-changing and competitive internet industry is challenging,” Moody’s explained.

“However, Moody’s views that a new major investment is unlikely at least for the next 6 to 12 months, given PLDT’s increased leverage.”

PLDT seeks global partners for Internet-based growth as legacy revenues dwindle

Philippine Long Distance Telephone Company is pursuing partners, particularly two global Internet companies, to take advantage of the growth opportunities in cyberspace in enhancing its broadband and data businesses as legacy revenues continue to shrink.

PLDT currently is looking at web-based investment opportunities, chairman Manuel Pangilinan said during a briefing on the telco's first half results in Makati City on Tuesday.

"There are a few internet possibilities we're looking at by way of investments and strategic partnerships," he said.

"In many respects, PLDT is also in the Internet space in Philippines, so it would be a good working relationship," he added.

Pangilinan said the largest Philippine telco is now in the advanced stages of discussions with two companies, with one more imminent than the other. He did not name the companies.

"The first one is a European company with a global footprint," he said, declining to give out further details.

The investment in the internet space is in line with the shift towards two growing business segments – broadband and data services.

"It is clear our future lies in the broadband/data and Internet space, evidenced in our numbers this year, and in recent past years," Pangilinan said.

In the first half, PLDT's broadband and data revenues drove net income growth by 2 percent to P20 billion from P19.7 billion a year earlier.

Meanwhile, core net income increased by 2 percent to P19.8 billion from P19.4 billion.

PLDT looks overseas for content acquisitions

Philippine Long Distance Telephone Co (PLDT) is scouting for overseas opportunities as part of its convergence strategy after its failed acquisition of GMA7.

PLDT chairman Manuel V. Pangilinan last week told reporters that the company is looking beyond the Philippines for content providers, with an eye on global Internet companies.

Pangilinan said GMA7 is no longer on its "radar screen" after the controlling shareholders of GMA Network Inc agreed to sell a minority stake to San Miguel Corp president Ramon S. Ang.

When asked if Ang's deal with the GMA shareholders would put an end to the PLDT Group's attempts at investing in GMA-7, Pangilinan said: "It's not up to us, isn’t it? It takes 2 to tango."

PLDT saw the acquisition of GMA7 as a boon to the group's strategy of evolving from a traditional telecommunications company into a multimedia service company.

The PLDT Group has been aggressively expanding its media portfolio, starting with its acquisition in 2009 of Associated Broadcasting Corp, operator of what is now known as TV5, a distant third in a ratings war lorded over by behemoths ABS-CBN and GMA. InterAksyon.com is the online news portal of TV5.

Besides TV5, the PLDT Group also owns Cignal, a direct-to-home pay-TV service – both folded under MediaQuest Holdings Inc. The group likewise has acquired interests in the country's biggest newspapers --Philippine Daily Inquirer and Philippine Star – as well as in niche broadsheet BusinessWorld.

PLDT expects to meet its core net income target in the first half of the year of P19.75 billion on the strength of its broadband business. For the entire 2014, the company is targeting a P39.5 billion core net income.

PLDT's core profit, which excludes foreign exchange transactions and other non-recurring items, went up by 2 percent to P9.8 billion in the first quarter this year from P9.6 billion in the same 3 months of last year.

Portable mobile broadband, network service upgrades behind PHL telecom growth in 2013 - IDC

Thanks to portable mobile broadband and upgrades in network service, the Philippine telecom market grew steadily in 2013, market intelligence firm IDC said Thursday.

But IDC said mobile services driven by mobile broadband and value-added services are likely to drive growth in the next five years.

"The growth momentum in the next five years will largely come from mobile services, driven by mobile broadband, mobile Value Added Services (VAS), and customized mobile applications. Mobile operators are heavily focus on mobile broadband strategy as they have rolled out full overage of 3G services and starting to roll out 4G network across the archipelago," said Ashadi Cahyadi, senior research manager for IDC Asia Pacific.

IDC said revenues from the telecommunications sector amounted to $5.012 billion in 2013 - two percent higher than the previous year.

Driving the demand in telecom services in the Asia-Pacific market that includes the Philippines is the development or expansion of multinational corporations in the region.

"With fast-growing bandwidth demand and increasing price pressure, usage is expected to increase fast while ARPUs of most services across fixed line and mobile will be on a slow decline. Over-The-Top (OTT) applications are cannibalizing the revenue of some core traditional telecom services such as messaging and voice calls," IDC said.

Cahyadi added that while IDC expects positive revenue growth, the main challenge is how the mobile broadband strategy "can support customer retention and loyalty program in a market of predominantly prepaid mobile users."

IDC noted overall forecasts remain optimistic, although conservative, at a CAGR of 4 percent.

Next 5 years

Sherrie Huang, research manager for IDC Asia/Pacific, said fixed line telecom services may be defined in the next five years by bandwidth upgrade, service improvement, migration from standalone basic communications.

They may also involve connectivity offerings toward managed solutions and bundled packages for fixed line telecom services, she added.

"IDC recomemends that the telecom service provider (SP) community reviews their offerings portfolio and examine the ROI of the services especially those basic, legacy, or standalone services. SPs need to strengthen their managed and professional services capabilities, and come up with innovative solutions and integrated/bundled packages/offerings to remain competitive, rather than continue selling the same portfolio with standalone communications and connectivity services," Huang said.

She added SPs have "to closely monitor market trends and technology evolution to ensure they remain on the right track."

Bigger fines for poor mobile phone, slow Internet services in Philippines

Rep. Arnel Ty said due to widespread consumer complaints of slow Internet access, as well as recurring blocked or dropped mobile phone voice calls,House Deputy Minority Leader now said he is batting for an administrative fine of up to P50 million for telecommunications companies that fail to comply with directives to improve their services.

“We are pushing for new legislation that will revise and update the financial punishment that regulators may impose on telecommunications companies that are unable to live up to mandatory quality of service standards,” Ty said in a statement sent to the regional newspaper Mindanao Examiner.

He said at present, the National Telecommunications Commission may exact a fine of only up to P200 per day on telecommunications companies offering services that do not meet quality benchmarks. The amount is based on a 78-year-old law, the Public Service Act of 1936 and as a result these companies would rather risk paying the paltry fine, than upgrade their services.

“There are bills seeking to raise the maximum fine to any amount, as may be deemed appropriate by the NTC, provided it shall not exceed P50 million,” he said.

Citing the Consumer Act of 1992 - to protect the interest of consumers, including mobile phone and broadband subscribers, promote their general welfare, and to establish standards of conduct for business and industry - Ty said he favors the classification of broadband or high-speed Internet access as a “basic service,” along with voice calls and text messaging.

“We are pushing for universal broadband service. Government’s goal should be to ensure that all citizens have access to high-speed Internet service at a fair price,” he said, stressing the need to renew the telecommunications laws to make them highly responsive to rapidly evolving new technologies.

“In the case of broadband, we have to enable the NTC to push for greater public access to the service via minimum quality standards and reasonable user rates,” he said, adding, at present, high-speed Internet access is being treated as a value-added service, meaning its speed and price are supposed to be dictated by the free market.

Ty also filed House Resolution 186 calling for a congressional inquiry into the deteriorating services of telecommunications companies. He said that a growing number of consumer complaints received by the NTC pertain to blocked calls (denied access by the network), dropped calls (involuntarily disconnected), delayed call set-up, inadequate reception, and deficient broadband services.

Besides the poor signal quality wherein voice transmission in an ongoing call becomes choppy or garbled, Ty also cited complaints that it takes a long time for subscribers to get the first ring after dialing a called party.

“The degraded services may be due to extreme congestion. It would appear that telcos have been taking on an incremental number of subscribers every quarter, without building up their networks fast enough, their huge earnings notwithstanding,” he said.

PLDT rolls out 5,000 new 4G stations

Leading multimedia and telecoms provider Philippine Long Distance Telephone Co. (PLDT) has rolled out 5,000 new 4G (fourth generation) base stations as it continues to rapidly expand its fixed wireless and mobile broadband network all over the country.

PLDT president and chief executive officer Napoleon Nazareno said the deployment of new long term evolution (LTE) base stations would bring ultra-fast wireless connectivity to nearly all cities and municipalities in the country in the coming months.

“This aggressive expansion of our LTE network is part of our thrust to provide broadband connectivity to the whole country,” Nazareno said.

According to Nazareno the PLDT is aggressively rolling out of both LTE and Time Division-LTE (TD-LTE) as it looks at a 50 percent coverage by the end of the year.

“By the end of this year, we should be hitting about 50 percent coverage for LTE.

We are now maybe about 30 percent,” he stressed.

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He said the expansion complements the efforts of the PLDT Group to provide connectivity to all Filipino homes through fixed lined services including the fiber-to-the-home (FTTH) and the Next Generation Network (NGN) services.

PLDT’s wireless subsidiary Smart Communications Inc. launched its mobile LTE service in 2012.

PLDT has so far fired up 2,000 base station for fixed wireless version of LTE since April this year to provide high-speed wireless broadband services to homes via its service PLDT HOME Bro Ultera that provides speed of up to 10 Mbps.

Originally offered in Metro Manila, PLDT executive vice and HOME Business Group head Ariel Fermin said the PLDT HOME Bro Ultera is now available in provincial areas from as far as Cagayan province in northern Luzon and Davao del Sur in Mindanao.

Fermin said the take up of the PLDT HOME Bro Ultera has been phenomenal.

“This new service revolutionizes the country’s internet experience as it enables more Filipino families to gain ready access to multimedia services like social media, movies, games, and music,” Fermin said.

This LTE to the Home service utilizes TD-LTE, one of the two wireless data transmission technologies that fall under the international standard of LTE.

PLDT Technology Group head Rolando Peña said the ultra-fast TD-LTE has maximum speeds per individual user of up to 42 Mbps that is almost six times faster than WiMax and 21 times more than Canopy.

The deployment of more LTE base stations would also enable Smart to expand its high-speed mobile broadband service.

The PLDT Group decided to raise its budget for capital expenditures this year to P32 billion from P29 billion to put up base stations that could withstand strong winds after Super Typhoon Yolanda battered provinces in the Visayas last November.

This year’s budget would also be used to attain a 100 percent 3G (Third Generation) coverage, build more LTE sites, expand its fiber optic network to about 100,000 kilometers, a new international cable system, among others.

In 2013, PLDT spent P28.8 billion for capital expenditures last year, 21 percent lower from P36.4 billion in 2012.

Smart Bro Dashboard lets users manage subscriptions, settings

WITH bulk of its market identified as prepaid users, the wireless broadband service arm of Smart Communications Inc. launched the Smart Bro Dashboard, a web portal where prepaid users can access real-time data about their broadband accounts.

In a press conference on Monday, Smart Mobile Broadband senior marketing manager Richard Mathew N. Dimagiba said the company is the first to offer such a service to consumers. He said the Smart Bro Dashboard was built using feedback from the company’s users.

Dimagiba said their study showed that prepaid users encounter problems on such things as knowing the account details of their device like its phone number, the promo it is subscribed to and the remaining credits of the device. He said many users load credits to their portable Wi-Fi device by taking out its SIM and inserting it into a phone to process loading of credits.

With the Smart Bro Dashboard, Dimagiba said, all prepaid broadband users of Smart can seamlessly view their current load balance, SIM number, promo subscription validity and broadband packages, among other information.

Dimagiba said prepaid users account for 90 percent of the 1.55 million total Smart Bro subscribers.

The dashboard can be accessed by Smart Bro prepaid users through any web browser. Postpaid LTE users can also access it.

Also included in the Dashboard is the “Load Protect” feature, which when turned on, prevents subscribers from incurring unintended data charges once their Unlisurf, Flexisurf or Always On subscriptions expire.

“This way, subscribers are fully aware that they are not being charged beyond the packages that they subscribed to,” the company said in a press statement distributed during the event.

Due to the market’s heavy consumption of social media sites, Smart Mobile Broadband manager Melo Del Gallego added that Dashboard included a free access to Facebook and Twitter feeds through SmartNet, which users can see in the dashboard interface.

Along with the rising popularity of Video on Demand (VOD), music streaming sites, and games, Smart Bro also included in the dashboard an access to music site Spinnr, movie streaming Clickplay, and online games site e-Pins from GameX.

Del Gallego said the potential of the prepaid broadband market is “very big,” citing the present “multi-platform setting” of the Philippines.

He said the dashboard is initially available to all prepaid Plug-IT, Pocket Wifi, SIM-only subscribers and postpaid LTE users.

Mandalay Digital Expands Relationship with Smart Communications

Mandalay Digital Group, Inc. (Nasdaq: MNDL), a leading provider of mobile technology solutions, announced today that it has expanded its relationship with Smart to include direct billing connectivity with its DT Pay product.
"We are excited to further solidify our relationship with Smart, Philippines' largest mobile operator," said Peter Adderton, Chief Executive Officer of Mandalay Digital. "The addition of DT Pay will allow Smart an additional way to earn from mobile applications. The direct billing access will be extended to support Digital Turbine's other products including DT Ignite, DT IQ, and DT Content Management."
About Mandalay Digital Group
Mandalay Digital Group, Inc., through its wholly owned subsidiary, Digital Turbine, provides mobile solutions for wireless carriers globally to enable them to better monetize mobile content.  The company's products include mobile application management through DT Ignite, user experience and discovery through DT IQ, application stores and content through DT Marketplace, and content management and mobile payments through DT Pay.  With global headquarters in Los Angeles, and offices throughout the U.S., Asia Pacific and EMEA, Mandalay Digital's solutions are used by more than 31 million consumers each month across more than 20 global operators.  For additional information, visit www.mandalaydigital.com.
About Smart
Smart Communications, Inc. (Smart) is the Philippines' leading wireless services provider with 55.4 million subscribers on its GSM network as of end-March 2014. Smart has built a reputation for innovation, having introduced world-first wireless offerings such as Smart Money, Smart Load, Smart Padala, and the Netphone. Smart offers 3G, HSPA+, and LTE services, while its satellite service Smart Link provides communications to the global maritime industry. Smart Broadband, Inc., a wholly-owned subsidiary, offers a wireless broadband service, Smart Broadband, with 2 million subscribers as of end-March 2014.
Smart is a wholly owned subsidiary of the Philippines' leading telecommunications carrier, the Philippine Long Distance Telephone Company. For more information, visit http://www.smart.com.ph.
Forward-Looking Statements
Statements in this news release concerning future results from operations, financial position, economic conditions, product releases and any other statement that may be construed as a prediction of future performance or events, including statements concerning the company's strengthening its position in the Asian marketplace are forward-looking statements that involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by such statements.  These factors include the inherent and deal-specific challenges in converting discussions with carriers and other business partners into actual contractual relationships, product acceptance new products such as the DT product suite in a competitive marketplace, the potential for unforeseen or underestimated cash requirements or liabilities, the company's ability as a smaller company to manage international operations, varying and often unpredictable levels of orders, the challenges inherent in technology development necessary to maintain the company's competitive advantage such as adherence to release schedules and the costs and time required for finalization and gaining market acceptance of new products, changes in economic conditions and market demand, rapid and complex changes occurring in the mobile marketplace, pricing and other activities by competitors, and other risks including those described from time to time in Mandalay Digital Group's filings on Forms 10-K and 10-Q with the Securities and Exchange Commission (SEC), press releases and other communications.

PLDT expects better Q2 earnings

Dominant carrier Philippine Long Distance Telephone Co. (PLDT) sees better earnings in the second quarter of the year fuelled by the company’s data and broadband businesses as well as fixed line segment.

PLDT chairman Manuel V. Pangilinan said in an interview with reporters after the company’s 2014 Annual Stockholders’ Meeting that the country’s largest telecom company expects higher profits in the second quarter compared to the same period last year.

“It will be better than last year,” Pangilinan said.

PLDT recorded a P10.54-billion net income in the second quarter of 2013 on the back of revenues amounting to P42.14 billion.

Pangilinan said the growth of company’s profits from April to June is being fuelled by data and broadband as well as the company’s fixed line business.

“Typical thing data and broadband but I think the fixed line business has been doing very well actually during the past year and the first quarter of the year,” he said.

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Furthermore, he said the decline in the company’s international and domestic long distance businesses is “norrower and less steep.”

PLDT’s net income climbed two percent to P9.38 billion in the first quarter of the year from P9.18 billion in the same quarter last year as revenues rose four percent to P42.54 billion from P40.96 billion.

Pangilinan said PLDT is looking at a two percent rise in core net income to P39.5 billion this year from P38.7 billion last year.

PLDT president Napoleon Nazareno told the company’s stockholders that the momentum in profitability last year is expected to be sustained this year.

“For 2014, we expect to sustain this momentum in profitability and anticipate core income to rise further by two percent to P39.5 billion,” Nazareno said.

He said the company’s net income dipped two percent to P35.4 billion last year reflecting the combined impact of foreign exchange and derivative losses, losses from Super Typhoon Yolanda, and higher manpower rightsizing program expenses.

Nazareno explained that PLDT operated in a challenging competitive environment in the last two years while it was undertaking important internal changes involving the integration of Digital Telecommunications of the Philippines Inc. and Sun Cellular into the PLDT Group as well as the massive network transformation program.

Globe partners with Malaysia's IX Telecom

Globe Telecom's enterprise arm has partnered with global service provider IX Telecom Sdn Bhd of Malaysia to expand its enterprise coverage in Southeast Asia.

Through the partnership, Globe will provide connectivity services and information communication technology (ICT) solutions to IX Telecom customers in the Philippines.

Globe has been providing businesses with ICT interconnectivity solutions through mobile, wireline, broadband, data connections, internet and managed services.

“Being at the forefront of ICT not only in the Philippines but also in the ASEAN region, Globe Business is honored to partner with IX Telecom as we both synergize our expertise and leadership in delivering world-class connectivity for our enterprise customers not just in our respective countries but also in Southeast Asia,” said Globe Telecom chief operating officer and executive vice president for international and business markets Gil Genio.

Meanwhile, the chief executive of IX Telecom, Noor Mohd Helmi Nong Hadzmi, said the partnership with Globe will strengthen their presence in Southeast Asia and elevate their positioning in the value-chain as IX Telecom explores other business ventures among telecommunication firms in the region.

The partnership was signed during the Specialized Marketing Mission of the Malaysia External Trade Development Corp from May 21 to 24, 2014.

Globe Telecom exits print and OOH for digital

Globe Telecom is booting print and out-of-home media out of its marketing mix as the country’s 6th largest advertiser finds a better return on investment on digital than from traditional channels.

Speaking to creative and media buying agencies this Wednesday, chief operating advisor Peter Bithos (pictured) said they will keep TV and radio but will now focus its attention on media that is relevant to the brand and to its customers who are increasingly found online.

He declined to detail the breakdown of Globe’s ad budget allocation in response to the changes.

“We at Globe no longer advertise on print. We at Globe made the decision to exit outdoor. So that the ad dollars that we buy do not increase, shifting the least measurable and the most speculative media and the least aligned with our customer segments into digital where we can measure it, grow it and prove it.”

Bithos said that Globe saw the need to make tough top-down decisions to better understand and increase the effectiveness of the money it spends.

Globe devotes upwards of US$ 70 million in advertising annually. A hefty investment that has helped the telco secure 40% of its market, Bithos shared that the company is “very unhappy” in spite of.

“We cannot measure it. We don’t know the returns on it and we don’t know if we are making the right decisions,” he adds.

Bithos vented his frustrations in a fairly emotive talk, saying that after observing the situation for the last three years, Globe has grown tired with lack-luster marketing strategies that have been used year after year.

“No brand marketer, no advertising middle manager, no junior analyst ever got fired for doing what they did last year. So we started realizing this as what kept coming up through the brand campaigns – the same media plan where we do this amount of outdoor, we do this amount of print, we do this amount of TV and that’s what we did last year and even the year before that.”

Digital marketing is undoubtedly an inventible path for Globe to take, taking advantage of its core strengths as a top broadband provider and mobile network for over 30 million users. Together with Globe Mobile Advertising and Entertainment Gateway Group, larger and bolder developments are to be expected.

Their biggest challenge now, Bithos admits, is on how Globe can stand out where virtually every business in the Philippines are all competing for tweets, likes and online attention.

“If you are doing Facebook advertising, guess what, you are doing Facebook advertising just as everybody else. Really? Is that the way we are going to innovate? Is that the way to stand out in the market place?”

He appealed to the agencies in attendance to present campaigns that both make business and creative sense.

“We are not satisfied with the measurements we are getting, the creatives we are getting, with the innovative approaches we are getting. We need your help. Bring innovative ways to advertise to us. Bring new ways to reach our customers,” Bithos said.

Sun expands prepaid broadband

Sun Broadband has unveiled its affordable prepaid broadband kit for more consistent, reliable, and faster service, it was learned.

Because of this, broadband users can now enjoy social networking sites like Facebook and Twitter, video-sharing portals like YouTube, Wikipedia, and Google, Michele Curran, Data and International Services Marketing Head at Sun Cellular, said.

According to her, each Sun Broadband prepaid kit comes with free one hour of Internet surfing so subscribers can enjoy the benefits of having their own broadband connection wherever they go.

PLDT allots P1.3 B to beef up fiber network

Dominant carrier Philippine Long Distance Telephone Co. (PLDT) is pumping in P1.3 billion over the next two years to strengthen its fiber network in northern Luzon.

PLDT network group head Rolando Peña said the strengthening of almost 600 kilometers of domestic fiber optic network (DFON) in northern Luzon would be completed this year.

 “The ongoing fortification program for our northern Luzon DFON will make our network more resilient and less susceptible to fiber breaks that could result in the disruption of our services. These areas are vulnerable to fiber cuts due to typhoon, landslides, and public works diggings,” Peña stressed.

The fortification program would benefit the estimated 11 million subscribers of PLDT mobile subsidiaries Smart Communications and Sun Cellular and around 450,000 customers of PLDT HOME as well as enterprises in northern Luzon.

He reported that PLDT has so far completed work in the network covering Ilocos Norte, Ilocos Sur, La Union, Nueva Vizcaya, Isabela, Nueva Ecija, and Cagayan Province.

Pena noted that below-ground installation is ongoing for the San Fernando, La Union to Candon, Ilocos Sur link. This segment is expected to be completed by March this year.

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Meanwhile, the Cagayan province link from Tuguegarao to Ballesteros covering 124 kilometers is expected to be completed by October.

The PLDT Group has continued to invest in its fiber optic network to reach over 78,000 kilometers, far ahead of competition.

As a result, PLDT’s network remains unrivalled in terms of capacity, coverage and resiliency.

PLDT earlier this year completed the installation of over 150 kilometers of submarine fiber optic cables that would link the island of Bohol with the major network centers in Visayas and Mindanao, boosting the telco’s services in the fast growing tourism and business process outsourcing (BPO) hubs in central Philippines.

It has also completed the rollout of nearly 300 kilometers of state-of-the-art submarine fiber optic cables linking Palawan province in western Philippines to the rest of the PLDT network to meet the rapidly increasing demand for robust and reliable telecoms and data services in one of the country’s top tourist destinations.

PLDT is spending P29 billion for its capital expenditures this year about two-thirds of which would be used for its growing broadband business.

Of the total amount, about 65 percent would be allocated to expand its broadband business while 25 percent would be used to further expand PLDT’s fiber optic fiber network by about 10 percent next year.

PLDT’s cellular subscriber base stood at 72.5 million as of end-September. Wireless subsidiary Smart Communications Inc. had 24.7 million subscribers while value brand Talk ‘N Text ended with 31.9 million.

Digital Telecommunications Philippines Inc. had 15.8 million Sun Cellular subscribers.

On the other hand, PLDT’s combined broadband subscriber base stood at 3.3 million in the first nine months of 2013. For the fixed line businesses of both PLDT and Digitel, the subscriber base remained at 2.1 million.