Manila Times and BusinessWorld reports on firing of Smart E-Load dealers

The Manila Times and BusinessWorld also published news about Smart Communication’s decision to fire E-Load dealers.

From the Manila Times:

Smart to downsize electronic load dealers
By Darwin G. Amojelar
The Manila Times
November 25, 2008

SMART Communications Inc. plans to terminate the services of its existing electronic load dealers, as the Philippines’ largest mobile phone company wants to tap distributors on condition they transact with no other telecom company, according to the Telco Entrepreneurs Association (TEA).

Robert Galon, Telco Entrepreneurs president, said Smart wants to establish designated regional and provincial distributors of e-load, resulting in job losses of more than 50,000 dealers nationwide.

“Smart wants us to stop servicing other telcos,” Galon said.

He said Smart’s modification of its business strategy “could hurt our families,” and kill small entrepreneurs nationwide.

“We have been trying to talk to Smart to settle the problem. But for two months now, Smart is not responding,” he said.

Smart would cut its service effective November 30, he added.

With the termination of the Smart e-load service, Galon said about P10,000 a month would be lost, adding that more than half of the dealers’ sales come from the telco.

Smart introduced its e-load system in 2002, tapping entrepreneurs as dealers, who in turn recruited retailer who sell e-load to end-users. The initial set up resulted in Smart expanding its nationwide reach and beating rival Globe Telecom in the prepaid market.

Ramon Isberto, Smart head of public affairs, said the company since September had changed its business structure for e-loading, under which it has set up a provincial and regional distributor that would directly transact with retailers.

The new business structure aims “ to organize and make it more transparent to make sure that everyone is making money,” Isberto said.

He said the company is willing to absorb a thousand sub-dealers in the new system as sales agents, regional or provincial distributors.

Isberto denied accusations that Smart had failed to communicate with the dealers, adding talks with sub-dealers were held twice.

“We asked them [to] stay working with Smart as a regional, provincial distributor or sales agent,” he added.

Smart is the subsidiary of Philippine Long Distance Telephone (PLDT) with 34.2 million subscribers at end-September this year.

TXTPower, a consumer group, wants the Senate and House of Representatives to look into a mobile carrier’s plan to summarily dismiss thousands of electronic load dealers who have helped the telco expand its market share since 2002.

“Both the National Telecommunications Commission and the Department of Trade and Industry have told Smart electronic load dealers that they do not have jurisdiction over their predicament, and so Congress must step in to fill the void, rescue these dealers from certain bankruptcy and exercise their oversight functions on the franchises granted to Smart and parent company PLDT,” Anthony Ian Cruz, TXTPower president said.

Below is the BusinessWorld article:

Smart cutting off e-Load middlemen, demands exclusivity; dealers cry foul
Nov. 25, 2008

SMART COMMUNICATIONS, Inc. is doing away with middlemen in its electronic loading (e-Load) business supposedly to make the system more efficient and transparent.

The mobile phone giant wants e-Load dealers to act as its sales agents and distribution coordinators under an exclusive contract.

The dealers, who will be replaced by distributors assigned to serve well defined territories, are protesting, saying the new system would rob them of their livelihoods.

“By the end of November, we have been informed that Smart will end its business partnerships with theses dealers after depending on them to lay down the network of hundreds of e-Load retailers from the start,” the Telco Entrepreneurs Association (TEA) said in a statement yesterday.

The group, formed last month to oppose the Smart plan to cut them off, is composed of around 3,000 e-Load dealers who buy prepaid mobile phone credits by bulk from Smart business centers nationwide. Dealers get the credits at a 5% discount and sell these to retailers — usually mom-and-pop stores — at a slightly higher price but still below the rate for subscribers.

Under the new system, the dealers will no longer be recognized, and will be replaced by distributors who will sell credits in defined geographical areas, which Smart said is a way to avoid overlapping territories that lead to inefficiency.

The dealers’ group said the new system would leave around 50,000 dealers who depend on Smart e-Load sales for their income.

“We also appeal to Smart to uphold corporate social responsibility and include these dealers who have helped them in their business since 2002,” Anthony Ian Cruz, president of telecommunications consumer group TXTPower, said in a statement.

Smart denied that the new setup was a cost-cutting measure in response to slowing demand brought about by the slowing economy.

It also said it was not abandoning the dealers, adding that it would give them a chance to become part of the new system.

“We are making our distribution system more efficient and transparent,” Smart Spokesman Ramon R. Isberto said in an interview yesterday.

He said Smart has been trying to contact these dealers to give them a chance to become part of the system. Some dealers, he said, have agreed to work for Smart as sales agents or distribution coordinators.

“The new setup is geographically defined. That makes it more orderly,” he added. Mr. Isberto urged dealers to go to Smart, which will advise them how they can take advantage of the new system.

But TXTPower and the dealers’ group said agreeing to Smart’s terms would mean becoming exclusive vendors of Smart e-Load, which will cut their incomes by as much as 50%.

“Most of us have already quit our former jobs just to be dealers,” TEA President Robert M. Galon said. “Effectively, what they are saying is that ’we are officially ignoring you,’” he added. Mr. Galon said a dealer can make around P30,000 a month by selling load from the Smart and rivals Globe and Sun Cellular.

“That is a choice they have to make if they want to align themselves to the new system,” Mr. Isberto said. “If they want to be part of the system, they have to abide by our rules. This is a business decision. The main objective here is to make every part of the distribution chain profitable,” he added.

Smart Communications, together with its sister brand Talk N’ Text, is the country’s biggest telecommunications network with 34 million subscribers.

It is followed by the Ayala-led Globe Telecom, Inc. with around 23 million subscribers and the Gokongwei-owned Sun Cellular, which has around seven million subscribers.