PLDT sees limited near-term impact from satellite entrants

By Ashley Erika O. Jose, Reporter

PLDT INC. said the anticipated arrival of satellite telecommunications providers this year is unlikely to significantly alter market dynamics in the near term, citing coverage limitations and high operating costs tied to direct-to-cell services.

The company said direct-to-cell technology remains in its early stages and continues to face service and affordability constraints despite growing regulatory support for new industry participants.

“We are not scared of the direct-to-cell at this particular point in time. Because if you tested it, or if you tried it, it is really a bad customer experience. At this point in time, we are not used to that kind of service,” PLDT Chief Operating Officer and Head of Network Menardo G. Jimenez, Jr. said during a company briefing last week.

The comments came after Information and Communications Technology Secretary Henry Rhoel R. Aguda said last week that two US-based satellite service providers are expected to begin operations in the Philippines this year.

The Department of Information and Communications Technology (DICT) said the applications of the two companies are already in advanced stages at the National Telecommunications Commission (NTC). One operator may secure regulatory approval within the month after completing testing activities, while another is expected to launch services within the year.

Direct-to-cell technology allows mobile devices to connect directly to low-Earth orbit (LEO) satellites without relying on traditional cellular towers. The technology is seen as a potential solution for geographically isolated and underserved areas that lack conventional telecommunications infrastructure.

PLDT executives, however, said the services remain costly compared with traditional mobile offerings.

“For the telecommunications company, satellite providers at present tend to charge at a very high cost,” PLDT Senior Vice-President and Enterprise Business Head Patricio S. Pineda III said.

“I do not think any of that takes us away from what we have been trying to do over the past three to four decades of really trying to drive very affordable packages for our consumers,” he added.

Mr. Pineda said the company continues to expand network coverage, including in geographically isolated and disadvantaged areas (GIDAs).

Mr. Jimenez said PLDT’s wireless unit Smart Communications, Inc., together with Globe Telecom, Inc., already covers about 96% of the Philippine population.

“That means we do not cover 4% of the Philippines, where are you going to use satellites for? I mean, you’ll need it for backup. But if you’re gonna pay the exorbitant amount they charge for backup. So, it is fancy, and it is exciting, by all means come to the Philippines,” he said.

Despite its reservations about current commercial viability, PLDT is also exploring satellite-based services through its partnership with Lynk Global, Inc. The collaboration involves testing direct-to-device satellite connectivity that would allow ordinary mobile phones to send and receive communications in areas without cellular coverage.

Mr. Jimenez said the technology is expected to improve over time, adding that PLDT is prepared to scale up related services once the market matures further.

The planned entry of additional satellite operators follows the enactment of the Konektadong Pinoy Act, or the Open Access in Data Transmission Act, which liberalized participation in the data transmission sector by removing the congressional franchise requirement for qualified industry participants.

The law aims to streamline permitting and licensing procedures and promote infrastructure sharing to improve competition and connectivity services. Under the measure, data transmission industry participants may construct, establish, maintain, lease, or operate data transmission networks and facilities without securing a legislative franchise.

Separately, PLDT said it is considering listing its data center business as a real estate investment trust (REIT), although the company has yet to set a timeline for the plan.

PLDT Senior Vice-President and Chief Financial Officer Danny Y. Yu said the company is evaluating several fundraising options, including the monetization of non-fiber assets and the sale of idle properties once market conditions improve.

On May 14, PLDT’s board approved the retirement of Mr. Yu effective May 31. The board also approved the appointment of Leo I. Posadas as officer-in-charge of the finance, risk, and sustainability group while concurrently serving as senior vice-president and treasurer effective June 1.

For the first quarter, PLDT reported a 1.77% decline in attributable net income to P8.87 billion from a year earlier as higher expenses offset modest revenue growth.

Hastings Holdings, Inc., a unit of the PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., holds a majority stake in BusinessWorld through the Philippine Star Group.