Due to losses, ABS-CBN gives up mobile business

Media giant ABS-CBN Corp.’s cellular business, which has struggled financially, will soon end its services after a five-year run.

This came as ABS-CBN announced on Monday that a network sharing agreement between subsidiary ABS-CBN Convergence and Globe Telecom would not be renewed. The five-year agreement was sealed in 2013 and was supposed to be up for renewal in June this year.

“After a thorough assessment, ABS-CBN Convergence deemed its current mobile business model to be financially unsustainable,” ABS-CBN said in a stock exchange filing on Monday.

ABS-CBN said it was seeking the approval of the National Telecommunications Commission on when its mobile service would formally end.

Until then, ABS-CBNmobile prepaid, postpaid and Sky Mobi subscribers would continue to enjoy text, call and data services, the company noted.

ABS-CBNmobile had almost one million subscribers as of late 2017, a figure little-changed from its 2016 subscriber base. ABS-CBN officials had said the company needed around two million subscribers to hit the so-called break even point.

ABS-CBNmobile operated as a mobile virtual network operator, meaning it provided wireless services without owning the infrastructure. Instead, the deal with Globe allowed it to use the latter’s nationwide network for a fee.

ABS-CBNmobile used strategy that relied heavily on ABS-CBN’s mainstream media content through the iWant TV app.

Despite positive signs early on, coupled with ABS-CBN’s aggressive multipronged initiatives in the digital space, it decided the business no longer made sense given mounting losses.

The mobile unit saw losses of almost P600 million in 2016. That loss was reportedly similar in 2017. Those figures, however, represented a small slice of ABS-CBN’s overall business, which generated revenues of P40.7 billion and a profit of P3.16 billion last year.

ABS-CBN said it would pursue other areas of cooperation with Globe.

“ABS-CBN and Globe are exploring new ways and synergies that complement their business models,” it said.

“Leveraging on ABS-CBN’s expertise as top content provider to the Filipino audience and the vast reach of Globe as the leading telecommunications company, both companies have decided to shift their focus in maximizing synergies,” it added.