Smart, one of two dominant mobile operators in the Philippines, announced plans to shift its mobile internet strategy from providing merely access to addressing customers’ increasing appetite for video, gaming and other digital content.
The operator said the strategy is designed to generate new sources of revenue from soaring data usage. Smartphone data revenue increased 20 per cent year-on-year to PHP9.7 billion ($188.5 million) in the first half of 2017.
Smart, the mobile unit of PLDT, traded places as the market leader by mobile connections with rival Globe Telecom over the past three quarters, with each holding a near 50 per cent share in Q2 according to GSMA Intelligence.
The announcement follows the operator reporting a sharp drop in wireless service revenue in H1, down 15 per cent year-on-year to PHP41.3 million, while total service revenue decreased 6.5 per cent to PHP75.4 billion. The wireless decline was offset to some extent by an 11 per cent rise in fixed-line service revenue to PHP34.1 billion.
Smart’s “go beyond access” move is aimed at boosting the contribution of mobile data service to its overall wireless service revenue. Mobile data accounted for 40 per cent of wireless revenue in Q2, up from 37 per cent the previous quarter.
“It’s not just about connectivity anymore,” said Ernesto Alberto, PLDT’s chief revenue officer (pictured, right).
Relying on video
Alberto said heavy video consumption helped drive a 78 per cent spike in data traffic on smartphones and dongles on its network to 117,657 terabytes in H1.
The operator expects video consumption to rise as more Filipinos start to use smartphones. As of end-June, 52 per cent of its customer base had smartphones.
Ericsson’s latest Mobility Report estimates video will account for 75 per cent of global mobile data traffic by 2022.
As an example where Smart is moving, its latest video offer comes with subscriptions to top streaming sites iflix and iWant TV: “The 2GB data allocation included in the package gives customers internet access, but the key selling point is the video content that Filipinos can’t seem to get enough of,” Alberto said.
The shift in focus is part of the company’s three-year turnaround plan announced in March 2016, which included its “digital pivot” programme to reduce reliance on its legacy voice and text businesses.
Alberto noted Smart’s business was impacted by customers’ shift from legacy services like voice and SMS to over-the-top (OTT) services like Facebook Messenger and Viber.
“This was a disruption that hit the whole industry. But now we have arrested the quarterly decline in revenues through better monetisation of data services and increased usage of bandwidth-heavy services like video streaming and gaming,” Alberto said.
The operator’s net service revenue rose slightly in Q2 to PHP14.9 billion – its first quarterly increase since Q1 2016 when it peaked at PHP18 billion.