Curious about Cure
Is CURE ready to slug it out with the telco industry’s major league players?
By Karen B. Bitagun
When the National Telecommunications Commission announced last December that new player Connectivity Unlimited Resource Enterprises was one of four telecommunications companies awarded a license to operate 3G (third generation) mobile telecommunications services, the news was met with raised eyebrows. The question in many people’s minds was, how did CURE earn its place among the ranks of telco giants Smart Communications, Globe Telecom, and Sun Cellular? Moreover, how was it planning to make its mark in this highly competitive industry? In an interview with Philippine Business, CURE president Eric Recto discussed his company’s unexpected entry in the 3G race and his resolve to bring the new venture to new heights under his leadership.
What makes CURE different?
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| “We have the benefit of making choices and learning from the mistakes of the rest,” says CURE president Eric Recto |
We are the newest and, naturally, still the smallest mobile operator today. The fact that we don’t carry the same baggage that other telcos have, such as a legacy infrastructure and bloated bureacracy, also makes us different. The incumbent telcos have made substantial investments in their businesses, but I imagine that some of those investments are probably not generating the returns that they had expected. We do not have that problem.
It is both good and bad that we are where we are. It is good because we have the benefit of making choices and learning from the mistakes of the rest. But on the other hand, if you believe in the principle of the first-mover advantage, then we are probably the last-mover or the next-to-the-last mover, because there may be a fifth player in the 3G field. The fact that we don’t have a share of the market yet is clearly a disadvantage.
I think that is where the challenge lies for us as the newest operator in the mobile phone business. It’s how to get as big a chunk of the market, but it should be the right part of the market. The challenge is to identify the part of the market we want—and I have a pretty good idea what that is!—and how quickly we can get it.
Which market do you prefer?
We prefer the market that can pay more than the average. The question should be on the degree of payment. Who can pay more? What will they be willing to pay more for? Which part of the market has the highest growth prospects? Which part of the market is willing to pay for the nontraditional services? That’s what we are studying today.
A good example on how the market evolves is what happened with the Internet. When the Internet used to be dial-up only, consumers found it very easy to get into it because it didn’t cost very much. Then came a higher-value type of service, which is DSL (digital subscriber line). A real question facing telcos today is, are users willing to pay for DSL? I think the challenge is whether or not the market for DSL is as large as people really think it is. This is where the ability to focus on the right market comes into place. We are still in the process of understanding and deciding which segment of the market we really think is right for us to challenge.
Whether the big telcos like it or not, they are helping us in our market research. All of the offerings that they already have out there or those they intend to come up with are lessons for us. Clearly, before we get our service started, we will be able to learn a lot from them. I call this the next-mover advantage.
Who is CURE?
CURE is a company that has existed for a few years now. Certainly, it is not as old as Smart, Globe, or Digitel, but it’s one of the fairly new grantees of a franchise. For most of its existence, CURE’s operations were very limited. In 2004, we began the process of getting a 3G license, despite the fact that most of the other mobile telcos were opposing the entry of 3G technology, which is understandable given the amounts that have been invested in 2 and 2.5G technology.
How things have changed in the span of a year or a year-and-a-half. This whole 3G thing has evolved to where it is today as a result of improvements in technology and reductions in the cost of the same. Rightfully so, the National Telecommunications Commission decided to award the 3G frequencies in a more organized manner, where everyone was allowed to submit their applications and justify to the commission why they should be awarded a frequency for 3G. As I said, while other telcos where busy with their 2G deployments, we were already applying for a 3G license. So, it is clear we were one of the instigators of how the 3G deployment process evolved to where it is today. Our inputs became an important element of NTC’s program to see a smooth transition from what was a somewhat confusing process of awarding frequencies into a situation where the commission was able to determine in a well-organized manner who had the best qualifications.
CURE is a company with a very clear identity. We are in the business of mobile telecommunications, using the latest technology—which, for now, is 3G and its variants—with services that will be, to say it simply, unique. Trends in the telecommunications industry worldwide have given us a clear insight on where we think the opportunities will be locally, and that’s where we want to take CURE.
CURE’s investor group is led by [former trade and industry minister] Roberto Ongpin and Craig Erlich, the chairman of the GSM Association, the international association of GSM operators. Erlich was also responsible for starting up the cellular provider Sunday in Hong Kong some years ago. CURE’s initial capitalization was P120 million, but as of end-January 2006 we have expanded the capital base to over P400 million. By August, we expect CURE’s capitalization to hit P1 billion, in time for the awards of the equipment supply contracts, which we are currently processing.
Where are you now in your rollout plan?
We have not awarded to a particular vendor yet because we are still analyzing their tenders and finalizing the technical plans. These are the activities that I’m quite busy with right now. So I obviously don’t expect that we will be able to start the actual rollout until we are able to identify the supplier.
We need to start commercial operations within 30 months from the awarding of the 3G license in January 2006. We need to start the rollout within a year from the award. We will definitely meet all of those milestones.
Are you aiming to be No. 1?
Being No. 1 in terms of text subscribers? If that’s the definition of being No. 1, then we have no desire to be No. 1. We will not be No. 1 in terms of text subscribers. That is clear to me. What I do want is for CURE to be No. 1 in returns for its shareholders.
I don’t think displacing Globe, Smart, and Sun should be an objective. What we want to do is to compete well, and to give them a run for their money. This much you can be sure of: Consumers will have a great time choosing which provider they prefer and which content they would like to spend their money on. Not having the same baggage that the other telcos have should give us a platform from which we can be a lot more aggressive and imaginative in terms of how we will approach the market.
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