Alejandro Caeg, PLDT: Serving Filipino customers home and abroad
How can an incumbent retain a dominant position in the domestic market while serving its huge population based abroad? Alex Hawkes talks to PLDT’s first vice president and head of carrier business Alejandro Caeg about the company’s multifaceted approach.
While deregulation has helped make the telecoms market the highly competitive, progressive minded industry it is today, it has also led to the decline in fortunes of many incumbents worldwide. In the UK, for instance, the former incumbent BT Group has seen its market share dwindle and has increasingly looked abroad for its future growth. In the Philippines, however, PLDT used the liberalisation of the telecoms market, which occurred in the country during the early 1990s, as an opportunity to restructure and ultimately reinvent itself.
“There was a transformation happening inside PLDT at that time,” says Alejandro Caeg, first vice president and head of carrier business at PLDT.
“This involved a lot of significant change to people and processes as well as considerable investment into improving networks and infrastructure. We looked to offer more innovative products and services to the marketplace in order to keep up with the increased competition, while at the same time the PLDT Group was making strategic investments outside of telecoms.”
Boosted by investment from the Hong Kong-based investment management and holding company First Pacific, which acquired a 17.5% stake in the company for approximately $749 million in 1998, PLDT went on to acquire Smart Communications, the largest mobile operator in the Philippines. It was during this period – which was also the height of the Asian financial crisis – that PLDT laid the foundations for its position today, which has seen the company move away from the traditional voice market to invest heavily in ICT and data. It is a transition that has enabled the company to become one of the largest in the Philippines, as well as receive a ranking on the 2010 Forbes Global List.
Turning to technology
Investment in ICT has played a deeply important role in PLDT’s recent trajectory. In 2000, the company formed ePLDT which has become the group’s principal vehicle for investing in new technology. Under this guise, PLDT has entered the data centre market through its Vitro brand and also set up a thriving call centre business. These, along with further moves into internet and data security services, have proved fruitful investments for the company, but another larger agenda is also at play.
Under its Smart Communications brand, PLDT will introduce to its domestic market in the coming months a new smartphone, which looks to blend its ICT investment and network capabilities.
“The intention is for us to move beyond voice, SMS and data,” says Caeg. “We have several thousand people working on applications that will be very Filipino-centric. These applications will be built into the phone which we believe will offer a combination of mobile money, digital media, mobile TV and mobile commerce all rolled into one.”
Tailoring products and services to the local identity is a recurring theme when talking to Caeg. The CEO, who originally worked for Smart Telecom (Philippines) before the company was acquired by PLDT, has a firm belief that operators “should collaborate with the applications and software developers in the region to customise them for this marketplace”.
Such a smartphone looks to turn that concept into a reality. Embedded with applications and content that range from ordering a burger from a Filipino fast-food chain to paying utility bills or even tuning into the local Filipino radio stations and posting requests to the DJ, the new smartphone aims to amalgamate all walks of Filipino life. PLDT’s smartphone will be a customised Android, which will retail for approximately $100 – also making it an affordable option for the large Filipino population, which last year stood at roughly 94 million.
Connecting the international Filipino community
A device customised to Filipino culture and business is particularly valuable for the large Filipino population based abroad. Approximately 10 million Filipinos live and work overseas and serving this rapidly growing community has become one of the key goals for the company’s international arm PLDT Global, which was established in 2001.
Out of the 10 million Filipino population abroad, approximately two and a half million of the Filipino community work in the US, with roughly that same figure again found in the Middle East, particularly in the Kingdom of Saudi Arabia. “With the Middle Eastern market, for example, we look for opportunities to set up partnerships with existing operators there,” says Caeg. “For markets such as the US, this type of device can be developed not just on GSM but even on CDMA. Volumes and maturity of technology will also contribute to the price curve.”
The remaining proportion of the Filipino community population overseas is largely found in Asia-Pacific where the company is part of the region’s largest roaming alliance, Conexus Mobile Alliance. “Through the alliance, we have 10 operators in 11 countries so these are all possible markets for this type of service,” says Caeg, who also serves as the alliance’s deputy chairman.
Caeg feels the customised smartphone will enable the Filipino population abroad to “feel very connected to back home” as well as play a more practical role through online transactions: “The device can act as a mobile wallet allowing a customer abroad to manage accounts back in the Philippines.”
Networks and networking
To support the launch of the device in its domestic market, PLDT has pledged to invest over $1.5 billion in its network over the next two years. “The device obviously requires the appropriate bandwidth to support the applications,” says Caeg. “As early as a year ago, the company revisited its design and plans for capacity and we are appropriately allocated for the next two to three years.”
LTE trials are also underway in the Philippines. Last March, PLDT launched its first commercial LTE operations in the island of Boracay, a popular tourist destination located several hundred kilometres away from the Philippine capital Manila. “The island attracts close to a million visitors each year, making it a great site to test data,” says Caeg.
PLDT’s strategy of embracing new market trends is also reflected in its plans for this year’s Asian Carriers’ Conference (ACC). The company has hosted the event for the last six years, which aims to bring together carriers in Asia-Pacific with their international partners from the US, Europe and the Middle East. However, in recent years, Caeg has identified that the event has also attracted an increasing number of over-the-top players – a growing trend with carrier conferences that was also evident throughout this year’s ITW (see page 14). “Whether we are discussing smartphone devices, the companies which create the applications or the ones that help bring our products and services to market, we believe that it is important to blend the conventional wholesale market with the upcoming trends on data deployment,” says Caeg.
Leveraging the gap between the carrier community and over-the-top players is an area Caeg strongly believes will continue to be important in the future. “There will be a lot of emphasis and focus on data, that’s for sure,” he says. “Understanding the design and deployment of applications and content is key. At the same time, we have to empower the customer with resilient data networks – whether they are in the domestic market or roaming abroad.”