The Philippine Long Distance Telephone Co. (PLDT) is bent on transforming itself into a 300-billion-peso (US$6.56 billion) technology conglomerate with three principal lines of business: fixed-line, wireless, and e-commerce.
Speaking at the launch of e-Yellowpages (eYP), a PLDT subsidiary, PLDT president and CEO Manuel Pangilinan said the new three-legged structure reflects the scale of changes that have been under way at the phone company in the last 18 months.
Over the last four years, Pangilinan said, PLDT has moved away from its dependence on international services for its revenues. "As recently as 1995, almost two-thirds of our revenues came from international long-distance services," Pangilinan said. "Today, those international revenues account for less than a quarter of the total revenue mix."
Pangilinan said PLDT today has five principal revenue streams: the local network accounts for about 30 percent; international long-distance, 23 percent; cellular, 23 percent; national long-distance, 19 percent; and data services, 5 percent.
In his talk, Pangilinan also pointed to gains in the cellular business, the company's fastest-growing source of revenues. In the first half this year, he said, PLDT's new subsidiary, Smart Telecommunications, acquired one million GSM (Global System for Mobile Communications) customers. "That's something like 5,500 people getting connected every day, and there are no signs of it easing," Pangilinan said. "Our GSM customer base will soar past two million within the next month or so."
By the end of the year, Pangilinan added, Smart and the Pilipino Telephone Co. (Piltel), PLDT's other cellular operation, will have more than three million customers, or 50 percent more than the fixed-line subscriber base that the company took 70 years to build up.
At the same time, he said, PLDT is investing heavily to ensure service quality. "We have 1.7 million customers currently using Smart's GSM platform, comfortably within its capacity of 2.4 million," Pangilinan said. "By the end of the year, when we expect to have 2.5 million subscribers, the capacity will be up to four million."
To achieve this headroom, Smart alone is spending 10 billion pesos in capital expenditures this year, Pangilinan said. On top of this, PLDT is spending an additional 12 billion pesos, mostly on the networks that carry Smart's and Piltel's traffic.
In the short term, Pangilinan acknowledged that these investments have taken a toll on profitability. "But at least the results are clear to see and hear," he said.
At the end of June, Smart had 900 base stations covering 240 cities and municipalities. Today, it has more than 1,050 in 300 cities and municipalities. By the end of the year, it will be more than 1,500 base stations in 400 cities and municipalities, Pangilinan said.
Meanwhile, Pangilinan said, data services grew 60 percent during the first six months of the year, as PLDT brought on new products such as ATM and IP networking services, and the opening of I-Gate, PLDT's gateway to the global Internet.
Pangilinan also said PLDT is introducing ADSL (Asymmetric Digital Subscriber Line) technology to enable high-speed, broadband access over the existing copper wire network, and building its cable Internet business.
"We've opted to use data-capable, Internet-based technologies as the platform for our future operations," Pangilinan said.
Many of the new products, he added, will come under a new subsidiary called ePLDT.
"Initially, ePLDT will serve as the holding company for our interests in a number of existing business, including the cable television operator, Home Cable, and our Internet service provider, Infocom. A number of our other investments and businesses, including our interest in the e-procurement joint venture, BayanTrade.com, will be transferred to ePLDT later," he said.
PLDT's plan to build a new 1.6-billion-peso Internet data center will also fall under ePLDT, Pangilinan said.
Turning his attention to eYP, which is owned by PLDT company Mediaquest, Pangilinan said the online business directory fits into PLDT's game plan by enabling companies to do customer profiling and transaction analysis that will help them target the right service bundles at the right market. These are capabilities that PLDT itself will take advantage of, Pangilinan said.
"Our own culture has moved swiftly from being engineering-led to marketing-led, with the simple message that the customer is king," Pangilinan said. "eYP will, I'm sure, let us know what the king wants."