THE operator of satellite-television service Dream TV is opposing the planned entry of SkyCable Corp. into the direct-to-home (DTH) market.
Philippine Multimedia System Inc. Vice President for Finance Pauline L. Sarmiento said the entry of the Lopez-led company into the budding sector will prove to be another major roadblock to small and big players alike, as these firms have yet to hit the break even.
“The DTH players are projected to continue to incur losses in the next two to three years, as competition becomes tighter, more so with the high possibility of SkyCable’s entry in the DTH industry,” she said.
SkyCable earlier told the National Telecommunications Commission (NTC) that it plans to roll out direct broadcast satellite (DBS) service across 251 cities and municipalities in the Philippines through a P252-million investment.
This initiative will worsen the financial positions of several market players, Sarmiento said.
For instance, Cignal TV of Philippine Long Distance Telephone Co. (PLDT) will have a huge problem to address: How will it return its shareholders’ P5-million investment?
“Despite the significant improvement in Cignal’s annual losses, from P1.8 billion in 2012 to P427 million in 2013, it is yet difficult to foresee a financial recovery of its more than P4.8-billion investment in the near term, given the declining price preference of the subscribing public while maintaining a high cost of subscriber acquisition and aftersales support and maintenance,” Sarmiento said.
Global Satellite (GSAT), she added, is currently struggling with subscriber acquisition. It currently has a P173-million net loss.
Sarmiento’s company is also in a state of bleeding, with an accumulated net loss of P1.8 billion, which is mainly attributed to slow subscriber buildup.
This roadblock, she said, is paired with the declining price preference of consumers, whose home-based equipment are currently being subsidized by DTH providers.
“The subsidy in the subscriber hardware of around P1,000 to P3,000 per subscriber remains a significant yet necessary first for the DTH players to attain subscriber growth,” Sarmiento said. “With slow economic growth in the Philippines, the preference of subscribers to low subscription rates will continue to take a toll on the DTH players.”
Citing a study by Cable & Satellite Broadcasting Association of Asia, she noted the growth of the Philippine pay TV market had been “slow,” with an estimated 1.5 million cable TV subscribers and 100,000 satellite subscriber base.
“One of the factors it found to be restraining the growth of pay TV is the overbuilding of cable systems or multiple operators competing solely on price within a franchise area,” she said.
Currently, SkyCable is leading the cable TV sector, while Cignal has a hold of the DTH market.