Tristan Jaspher T Precioso

Khonee Garcesa
Dorothy Maguan
Robert Mendoz

Group 2

Task Performance

PLDT

I. Company Background

ABSTRACT
The article aims to provide an analysis of the PLDT, Inc. by using the Porter’s
Five Competitive Forces that serves as a tool to understand the competitiveness in the
business environment and to identify the strategy’s profitability. With the analyzation of
the Strengths, Weakness, Opportunities, and Threats (SWOT), it is used by
organizations to develop awareness with the factors involved in making business
decisions. Thus, it shows how and why PLDT, Inc. dominates the telecommunications
industry.

II. Industry Analysis

INTRODUCTION
Telecommunications industry in the Philippines has been a great competition over
the years. It has been a demand, since the world is modernizing and engaging with the
technological advancements. Telecommunications is a growth business throughout the

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country. Almost every home has the capability of affording telecommunication services
but it always depends on the service of the network provider and the affordability of it.

Formerly known as Philippine Long Distance Telephone, PLDT Inc. is the

Philippines’ leading provider of telecommunications and digital services. PLDT Inc.
offers a wide range of telecommunications and digital services across the most
intensive fiber optic backbone and fixed line and cellular networks of the Philippines
through its main business groups. The business of the company can be divided into
three main business areas: Fixed line, Wireless and Information and Communication
Technology. PLDT Inc. has redefined the ways to do business technology over the
years. Despite competition from new carriers and mobile operators, PLDT Inc. has
continued to be the Philippines’ dominant fixed-line provider. And as such has been a
large part in the country’s telecommunications market. However, in recent years, Globe
Telecom in particular has been pushing hard to compete in the industry and now is the
leading mobile provider in terms of overall subscribers.

III. Recommendation

STRENGTHS AND WEAKNESSES OF PLDT, INC. INDUSTRY IN THE FIVE

COMPETITIVE FORCES

Threat of New Entrants - Barrier to Entry

The threat of new entrant for the telecommunication industry is currently relatively
low. This is because the telecommunications industry requires huge amount of capital
for the business to be funded and established, government and legal policies, and et
cet. The factors affecting the threat of new entrant are as follows:
Capital Requirement
Due to the high capital requirements in setting up this kind of business, entering
in this industry is fairly difficult. Establishing this type of business requires huge amount
of capital outlay as high expenditures are incurred.
Cost Advantages
Fixed costs are high in the telecommunications industry which makes it difficult
for new businesses to enter. Additionally, existing companies such as PLDT and Globe

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can easily produce and offer its products and/or services at a lower cost/price than that
of new entrants.
Brand / Company name is well-known
Consumers tend to trust products / services that are offered by a well-known and
established company. As such, PLDT has established their name in the
telecommunications industry which led them to have loyal customers in the long run.
Government and Legal Barriers
Prior to setting up the business, paperwork and legal documents need to be
processed in order to operate in the industry. Due to this, companies that are planning
to enter in the industry need to plan ahead of time and set their timeline beforehand to
process their permits and requirements.

Threats of Substitute Products

The threat of substitute products is currently moderate. This is because there are
limited companies that provide the same services as PLDT. Even though there are
companies that provide such services, this is still not enough to compete with the
current well-known companies in the industry.

Relative Prices
Prices of substitutes are relatively similar or even lower than the opposing
company has to offer. PLDT offers different pricing range depending on their plan or
bundle, but there are other companies that provide the same exact services for a lower
price. This results in consumers, switching to another service provider that will give
value to their money.
Performance of Substitutes
The performance of substitutes may influence consumers to switch to a better
service providing company. Typically, when consumers hear from their friends, families
or acquaintances that another company provides better services than the latter,
consumers will not hesitate to switch to a better service provider.

Bargaining Power of Suppliers

Bargaining power of suppliers is one of the forces in Porter’s Five Competitive
Forces that deals with the pressure that suppliers can bring to companies when raising

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their prices, lowering their quality, or reducing the availability of their product. Thus in
PLDT, Inc., the bargaining power of suppliers is relatively low. The reason is in order to
cope up with the ever changing development of telecommunications, the company
would need a large network and the most updated technology.

Bargaining Power of Buyers

Bargaining power of buyers refers to the pressure of consumers can put on a
business such as providing higher quality products, better customer service, and etc..
The bargaining power of buyers is very low. The consumers cannot demand more to the
company because PLDT offers services that cater the populace. The consumers cannot
simply increase or decrease the price of services as they have no power and the
services offered by PLDT are already set.

Current Competitors
The rivalry between the telecommunications industry competitors in the
Philippines is perceived to be weak. One of the factors is that few firms are competing in
the industry and they are decreasing. Smaller companies are being acquired by larger
companies such as Smart, Sun Cellular, and DigiTel are subsidiaries of PLDT.
Furthermore, it is hard for a new company to dominate in the telecommunications
industry without the proper strategies being used.
Currently PLDT and Globe are the top two competing firms in the
telecommunications industry. According to owler.com, “Globe is one of PLDT’s top
competitors. It also operates in the Fixed-line Telecommunications Services industry.
Although, it generates 265M dollars less revenue than PLDT.” Globe can be considered
as one of the current competitors at the moment seeing as it ranks second to PLDT in
the same field.
However on November 7, 2018, CNN Philippines reported that PLDT and Globe
had welcomed their third competitor, breaking their long-standing duopoly in the market.
The government has declared Mislatel Consortium, a joint venture of Dennis Uy's
Udenna Corporation, its logistics arm Chelsea Logistics Holdings and China
Telecommunications—as the country's provisional third telco. This might result in PLDT
lowering the costs in their telco services.

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Profitability in the Industry
Communication plays a central role in a society’s fundamental operations from
business to government to family. Telecommunication has evolved the way we
communicate nowadays. Communication from web browsing to calling cell phones to
instant messaging has become more and more incorporated into how we function, play
and live. It also helped made our everyday situations easier and better.
Profit of PLDT, Inc. comes from its services such as PLDT Home WiFi. It is the
country’s leading broadband and digital services provider that allows seamless,
simultaneous streaming in all your devices at home. PLDT HOME offers Fibr, DSL,
Ultera and Telpad services that let its customers enable moments with their family and
be closer together. Furthermore, PLDT, Inc. recorded stronger profits in the first half as
it saw that the mobile data usage doubled from a year ago. Mobile and broadband
internet led PLDT's revenue streams to hit ₱49.6 billion, which grew by a fifth compared
to a year ago.

MARKET STRUCTURE
Prior to 1995, the landline telephone dominated the telecommunication sector.
PLDT was considered a monopoly back then. In 1995, the Telecommunication Act of
the Philippines (RA 7925) was implemented, setting the policy for competition and
liberalization of the telecommunication sector. In the present time, the market structure
of PLDT is duopoly as it is now competing with Globe Telecommunications Inc. in the
industry. They are the top two competing firms in the country in the telecommunications
industry. Both firms provides services related to wireless communications, home based
internet, and prepaid internet usages.

SWOT ANALYSIS
A SWOT analysis is a compilation of the strengths, weaknesses, opportunities,
and threats of a company that helps a company plans in overcoming challenges. It is
used by organizations to develop awareness with the factors involved in making
business decisions. It helps companies to effectively communicate what part of the plan
need to be recognized. (Schooley, 2019)

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Strengths
PLDT, Inc. is the leading telecommunications in the Philippines as it is one of the
major telecommunication providers. On August 8, 2019, PLDT reported their earned
revenue for the past six months. It showed that it continuously increases as their service
revenue rose to 6% at PHP 76.7 billion which they stated the highest half-year revenue
since 2014. It has an approximately 100 million mobile, broadband and other service
subscriber base. This proves that it has a dominant market position and it owns the top
position in the operating industry in the country. PLDT, Inc. provides diversified business
operations across the telecommunication domain. As innovation kept the company in
top form with the help of 18,000 employees that form the backbone of the workforce,
PLDT now offers the most extensive fiber optic backbone, wireless, fixed-line and data
services, and information and communications technology (ICT) services. It has the
majority of the Philippine market share as the company had acquired Smart
communications, Cignal, Sun Cellular, DigiTel, and TV5 network making it a
telecommunications empire in the country. Now PLDT, Inc. has a national and global
coverage after it has successfully captured the majority of the market in the Philippines,
PLDT decided to go global by expanding their market in Hong Kong.

Weaknesses
As a customer, a person wants to be satisfied with the company’s services. But
when PLDT launched its Vibe and DSL products that allowed users to have a faster
connection to the internet using broadband, numerous customers complained regarding
the service provided. The company was not attentive as the complaints and reports
were not attended at a reasonable time. This resulted to customers deciding in changing
their service providers. In regards to the foreign investments, PLDT is exposed to the
risk of peso weakness because 98% of its $2.5 billion is denominated in foreign
currency because around half of the company’s total debt is covered by the US Dollar.
The risk of depreciation of the peso is reduced by 40% of its revenues. Monthly charges
from postpaid fixed-line customers may increase if the peso depreciates because 18%
of PLDT’s US Dollar linked revenues are from it.

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Opportunities
Venture for new technologies or services is one of the many opportunities PLDT
can consider as there is a growing demand for wireless services in the Philippines. The
ideas of introducing a new technology in the market is a good move, especially if it
attracts the public, because people are interested in newly launched products and how it
can help to the current technology they are using. PLDT, Inc., the first to release a new
technology will give them the chance to capture the market sales which can increase
the number of their customers and their sales revenue. An example is the text
messaging for mobile phones as PLDT only offers landline communication service as of
today. Another opportunity for PLDT, Inc. is strategic partnerships across the world for
expansion growth. As of today, PLDT Global is partnered with international tech
platforms such as DT One and CommuniGate Technologies (CTL) that are based in
Hong Kong.

Threats
Threats are external factors that could damage an organization. PLDT may
experience fixed line market drop as there are predictions that the fixed line market will
drop as the future nears. With the continuous development of new communication
technologies, the public is considering the usage of those technologies. For PLDT that
holds the market for fixed line, may result in dropping their sales. Another threat are the
industry competitors, there is a telecommunications company such as Globe that
provide the same services as them. New company may still arise and enter the market
industry that might introduce new services and technology to the public. Additional
threat is currency fluctuations that impact foreign revenues because PLDT cannot
control the foreign exchange currency in the market.

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IV. Management Lessons Learned

WHAT IS PLDT, INC.’S COMPETITIVE ADVANTAGE AND COMPETITIVE

POSITION?
According to pldt.com, in 2012, PLDT, Inc. became the first Philippine company
with investment grade ratings from global credit watchers. As the country’s major
telecommunications provider, it has earned the distinction of being the first Philippine
company to be given investment grade credit by all three (3) major international credit
watch following a recent upgrade by Standard & Poor’s Ratings Services. S&P raised
PLDT’s long-term foreign currency credit rating at ‘BBB’- from ‘BBB+’ previously,
following the recent Philippine sovereign credit rating upgrade. They said that the
outlook on the PLDT rating is stable. It was also stated that PLDT, Inc. remains the
leading player in the country’s telecoms sector with 68% of the cellular market, 64% of
the broadband market, and 65% of the fixed line business.
As stated in bworldonline.com, it anticipates the telecom giant to “remain largely
unchanged” in the near-future despite the threat of a new major telecommunications
player entering the industry. On July 16, 2019, S&P Global said the positive rating of
PLDT is backed by an expectation that it will keep its dominant position in the country’s
fixed-line telecommunications segment and maintain a substantial market share in the
wireless segment even if PLDT is second to Globe in the wireless segment. The credit
rating margin between Globe Telecom, Inc. and PLDT, Inc. is expected to narrow in the
18 months. Although, PLDT will still benefit from their wider service diversification and a
more established fixed-line position which Fitch regards as advantageous for fixed-
mobile convergence.

WHAT ARE OTHER MAJOR INCOME STREAMS FOR PLDT, INC.?

As PLDT, Inc. have subsidiaries such as Smart Communications, Sun Cellular
and TV5 Network, these gave the company additional income streams. Smart
Communications is the Philippines’ leading mobile network for Call, Text and 4G
Internet services. They serve approximately 95% of the country’s cities and
municipalities with its wireless communications and digital services. Another telecom
provider that provides additional income is Sun Cellular also known as Digitel Mobile
Philippines, Inc.. It offers a wide range of service innovations for mobile telephony from

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voice, messaging and international roaming services, to wireless broadband and value-
added services for customers and businesses alike. When PLDT acquired Digitel, they
vowed to continue to provide Digitel’s customers best value in terms of price, quality,
and range of products and services.

WHAT IS PLDT, INC. BUSINESS STRATEGY?

For PLDT, Inc.’ s product strategy, PLDT is one of the leading telecom and data
companies based in the Philippines. It offers a wide range of products under its portfolio.
They provide special promos of their mixed product range. An example would be their
Best Buy Bundle including the Internet, HD Cable as well as Mobile data. Apart from
this, they have volume based plans like Home Based Internet plans which are popular in
households. The company also offers smart home plans that include mobile
connectivity, entertainment channels, connectivity devices like D-Link router, that cater
to the increasing demands of their customers. PLDT operate in wireless cellular service
through its subsidiary organizations like Smart.

In terms of pricing strategy, PLDT believes in providing premium packages with

the best quality to their customers. Hence, they have always adopted a premium pricing
strategy and has worked for them well over the years. An example would be the PLDT
Home Fibr Plan that starts P1299 per month. There pricing strategy remained the same,
even though there are diversified products being offered. However, they need to keep in
mind the various offerings from competitors be it in telephony services or data services.

For the place strategy of PLDT, Inc., PLDT has branches nationwide to cater the
needs and inquiries of their customers. They try to be the leader in establishing their
presence in every region. In the aspect of global presence, PLDT Global has expanded
to Hongkong to provide communication services for the OFW living there. Their offices
are present across geographies giving good access to its customers and clients.

The promotional strategy of the PLDT is that they promote their products
primarily through TV commercials and advertisement campaigns. They had sponsored
numerous events across the country. As for their employees, PLDT hires the best of the
technical minds to operate the technical and hardware aspects of their product. Being a
service provider, PLDT gives priority to people in terms of high customer satisfaction
through efficient customer services.

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 CONCLUSION
PLDT, Inc., alongside with SMART is currently the country’s major
telecommunications leaders and providers. They are the largest and most diversified
telecommunications company in the Philippines. Although, that is the case currently,
there is a possibility that their competitors may surpass them, or a new competitor may
enter the industry. Without the proper short - term and long - term strategies, the
company may lose its position in the market. But with the help of the SWOT analysis
and Porter Five Forces, they may consider different factors and opportunities that let
them increase their profitability in order to plan for new projects which may result in
expanding further the business. Thus, help them to make strategic decisions in securing
their position in the industry.

V. Bibliography

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