The Philippines? total wireless communications subscriber base is fast approaching the 35 million mark as leading mobile service providers Smart Communications Inc., Globe Telecom Inc. and Pilipino Telephone Corporation (Piltel) report first quarter subscriber figures totaling 32.9 million. But with the market becoming more saturated, a slowdown in growth is anticipated.

Globe grew its total wireless subscriber base to 12.9 million as of end-March 2005, a 42 percent increase from a year ago. Meanwhile, Smart and Piltel?s net cellular activations of 1.04 million subscribers for the first quarter brought the PLDT Group?s total subscriber base to over 20 million.

The PLDT Group?s cellular subsidiaries continue to dominate the local market with 58 percent market share by the end of the first quarter. During the period, Smart added approximately 915,000 subscribers while PilTel?s Talk ?N Text added about 130,000 subscribers to end the quarter with 15.5 and 4.7 million subscribers, respectively. According to PLDT?s first quarter results, net activations for the period were 26 percent higher at 1.4 million.

Smart president and CEO Napoleon Nazareno disclosed that subscriber take-up is expected to slow down compared to the prior years? growth. ?As we had previously indicated, we have begun to see a slowing down of subscriber growth and we expect this trend to continue: a reflection, we believe, of changing market dynamics and SIM (subscriber identification module) swap activities,? he said.

Globe?s president and CEO Gerardo Ablaza shares the same observation, saying: ?Although Globe?s Pre-paid Plus gross take-up remains strong, net additions were softened by rotational churn from SIM-swap dynamics.?

With this, Abalaza said Globe will have to shy-away from ?SIM-Swap? promos as a subscriber-acquisition tactic. ?It took us some time before we responded to the competition?s SIM-Swap initiatives last year because I personally don?t want us to engage on such mechanism to acquire new subscribers,? Ablaza said. ?In the end, it will not be healthy for the industry,? he quipped.

As for Smart, Nazareno disclosed the company has started winding down its SIM-swap activities. ?It is anticipated that although the industry will experience a temporary correction phase in terms of subscriber count, this should not, impact usage and our underlying revenues. It should, in fact,

First quarter results

For the first quarter of the year, the PLDT Group reported a consolidated net income of 9.4 billion pesos (US$173 million) with cellular subsidiaries Smart and Piltel pushing the numbers up. Without the impact of the of the peso?s appreciation on foreign exchange translation, and derivative transactions, the adjusted consolidated net income rose to 7 billion pesos in the first quarter, up 14 percent from the adjusted net income of 6.1 billion pesos reported in a year before.

Service revenues for the PLDT Group increased by 4 percent to 29.4 billion pesos while consolidated EBITDA improved to 18.5 billion pesos. Consolidated cash flow grew by 17 percent from 9.7 billion pesos in end-March 2004 to 11.3 billion pesos a year after. This allows PLDT to reduce debts by $165 million and remain well on track to meet the 2005 debt reduction target of $500 million.

Net income from PLDT?s cellular subsidiaries increased to 5.8 billion pesos in the first quarter compared to a year earlier?s 5.2 billion pesos. Smart?s cellular network has expanded to 36 switches and over 5,400 base stations covering 97 percent of the country?s population. Capital expenditures were 1.8 billion pesos in the first quarter of 2005.

Globe, on the other hand, posted a consolidated net income of 3.0 billion pesos for the period ending March 31, almost the same level posted in the comparable period last year. Service revenues grew by a slower 5 percent to 13.5 billion pesos compared to the same period in 2004 as average revenue per user (ARPU) declined from wider penetration of the provincial markets. Operating costs and expenses, on the other hand, increased at a higher rate of 24 percent to 6.6 billion pesos as the company intensified its marketing initiatives as well as shouldered the costs related to the expansion of its network.

At the end of the first quarter, Globe had a total of 4,106 cell sites in service. Globe?s total asset base was at 125.1 billion pesos, with total debt dropping further by 4 percent from the previous year to 53.2 billion pesos as of 31 March 2005. Capital expenditures amounted to 5.1 billion pesos. Free cash flow was strong at 4.7 billion pesos, 35 percent higher than the 3.5 billion pesos recorded in the first quarter of 2004.