The extent of how much Filipinos are holding back on making mobile calls and sending text messages due to the uncertainties brought by the ongoing global economic crisis is far greater than the past impact of skyrocketing prices of rice and bread, the quadrupling of fuel costs, and the hikes in tuition fees.
Based on the financial reports of the country’s top 2 telecoms firms in the first 3 months of the year, more Filipinos are subscribing to wireless mobile services but each subscriber has been spending less on voice calls and text messages.
Both Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc., respectively the biggest and second-biggest mobile phone service providers, reported continuous growth rates in the number of prepaid users signing up. What they both noticed, however, is a coordinated and steeper decline in their average revenue per subscriber (ARPU), a key indicator of consumer behavior.
For instance, Globe Prepaid had 14 million SIMs as of end-March from 12.4 million in the same period in 2008. Its gross and net ARPUs, however, declined by 13 percent and 11 percent, respectively.
While Globe attributed the steeper decline to the continuing tendency of Filipinos to hop from one mobile phone company to another, the Ayala-led mobile firm also acknowledged the continued weakness in the consumer environment as caused by the economic downturn. It said this has led subscribers to shop for the lowest text and call cost offerings by changing SIM on the same phone unit or by keeping separate phones for each SIM.
Globe's mass-market brand Touch Mobile (TM) has also reflected this trend. While it expanded its SIM base by 31 percent to close the 3-month period with 11 million from 8.1 million last year, this was accompanied by an annual net ARPU decrease of as much as 21 percent to P91. Globe said TM’s new and additional subscribers, which usually come from lower-income segments, continued to have lower reload activity and shorter tenures.
"[This is] reflective of the evolving mass market dynamic of lower income subscribers going in and out of telco services based on their immediate budget and needs," Globe said, referring to TM.
PLDT's prepaid services from Smart Communications Inc. and mass-market brand Talk 'N Text also shared the same fate, with gross average monthly ARPUs for the first quarter at P272 and P176, respectively. These showed decreases of P20 for Smart and P31 for Talk 'N Text when compared to January to March of last year.
Smart had 20 million subscribers as of end-March, a 3-percent increase from the first quarter of 2008. Talk 'N Text, on the other hand, reported a 42-percent rise in SIMs to 15.5 million from 10 million.
"Because the growth in our subscriber base was mainly in the lower-income segment of the Philippine wireless market, our cellular average monthly revenue per unit was lower compared to the same period in 2008," PLDT said.
Despite the decline in ARPUs, both Smart and Globe's total revenues increased for the three-month period, driven mainly by their bucket-priced promotional offerings which more than offset the decline in their standard rates.
Globe's wireless voice segment, for instance, posted a 2-percent growth to end the quarter with P7.3 billion from P7.2 billion in the same period last year. Data (or text message) revenues, on the other hand, reached P6.7 billion from P6.5 billion, comprising 47 percent of Globe's total wireless service revenues for the period.
"Revenues from bulk and unlimited SMS (short messaging service) packages registered significant growth, compensating for the decline in regular SMS revenues for the period," Globe said.
Telcos usually charge P1 per text message and P6 per minute of voice calls, as applied in standard rates. However, bulk and unlimited call and text promos eventually gave more options for subscribers to make the most out of their prepaid credit.
Earlier this year, Globe and TM offered voice promos (such as unlimited voice calls during off-peak hours at P20 for Globe and P15 for TM subscribers) and SMS packages (such as all-day unlimited text messaging at P20 for Globe and P15 for TM subscribers), driving subscriber acquisitions and sustaining growth momentum.
Smart, meanwhile, reported increases in voice and data revenues at P9.4 billion and P12 billion, respectively. Of this amount, text messaging revenues from Smart's various bucket plans totaled P6.8 billion from P6.3 billion last year. Standard SMS revenues, on the other hand, declined 3 percent to P4.1 billion from the year-ago level.
Postpaid users from both Globe and Smart continue to take up less than 5 percent of each company's subscriber base as of end-March at 3 percent and 1 percent, respectively.
This may be attributed to the lack of bucket-priced promos for postpaid services, making it more expensive for subscribers to make calls and send text messages.
Given this, Globe extended a number of unlimited voice and SMS offerings to postpaid subscribers within a limited period.
They also introduced a range of postpaid plans targeted at different segments of the market such as Load Tipid Plans (in P500, P800, and P1500), which provide subscribers control over their communications spending.
"To drive subscriber acquisitions, Globe introduced Load Tipid Plans - a hybrid prepaid and postpaid plan - which allows subscribers to set a monthly limit on usage while retaining the flexibility to reload value through the usual channels once their limits have been reached," Globe said.