By Ian Sayson and Cecilia Yap
Globe Telecom Inc. is taking aim at bigger rival Philippine Long Distance Telephone Co. in the prepaid wireless market by teaming up with Cherry Mobile to boost smartphone usage among consumers that can least afford one.
The alliance with Cherry Mobile, the leading smartphone brand in the Philippines, will help the phone company grab more customers in the market’s largest segment, Globe Telecom president Ernest Cu, 55, said in an interview.
“Cherry with Globe produces great proposition for the mass market, a market that can’t afford a smartphone,” Cu said. “Cherry is the strongest phone brand for the mass market and our goal is to help speed the adoption of data. “
Cherry Mobile this month started a prepaid wireless service powered by Globe’s network, targeting the almost 96 percent of 117.11 million mobile phone users in the country that access services on a pay-as-you-go basis. Cu expects the Cherry service to have two million subscribers in as little as two years as it will appeal to those on modest monthly incomes.
“These are those who earn between 8,000 to 10,000 pesos a month: the sales-ladies, security guards who don’t have a smartphone yet,” he said.
Around a third of mobile phone subscribers in the Philippines have smartphones and that ratio could rise to 90 percent in five years as handset costs go down, according to Cu.
Cherry Mobile, which according to International Data Corp. had a 22 percent share of the Philippines smartphone market last year versus Samsung Electronics Co.’s 13 percent, is already selling the cheapest handsets on the market with phones packaged with Globe services priced at P399 ($8.50) to P1,699 each.
Globe will probably spend a record $850 million in capital expenditure next year as “data growth has been tremendous and we need to keep on building,” Cu said.
As at end-September, Globe had 47.75 million prepaid subscribers, trailing dominant Philippine Long Distance’s 64.08 million. But the gap had narrowed from 35.66 million in September 2013 with Cu moving to exploit the rising popularity of social network and communications apps that were cutting into calls and text services.
Globe offered users free access to Facebook in 2013, and in 2015 added messaging service Viber to counter Philippine Long Distance’s move to give free Internet access in the previous year. These moves helped boost the company’s share of mobile data revenue to 65 percent and increase its share of wireless revenue to 47 percent, Cu said.
Though Philippine Long Distance, also known as PLDT, has 1.5 times the sales of Globe, the smaller company has grown at a faster clip. Globe’s revenue grew 62 percent in the five years through 2014 while PLDT posted a 16 percent rise in the same period. Globe’s nine-month profit this year jumped 34 percent while PLDT’s net income slid 9.5 percent. Bloomberg
“It’s not easy climbing to where we are and the easiest way to lose that is to be complacent,” Cu said. “We don’t wanna go back to where we were. We don’t want to be that weaker player.”
