Local ICT spending to weaken

Published by rudy Date posted on January 22, 2009

THE US recession could derail spending in the information communication and technology (ICT) sector, as telecom companies reassess business plans, according to IDC Philippines.

Jubert Daniel Alberto, research manager for Association of Southeast Asian Nations (Asean) IT Spending at IDC Philippines, said IT spending in the Philippines would grew at 6.3 percent, weaker than its earlier “post-crisis” forecast of over 10 percent.

The IDC said the “post crisis” pertained to the period following the collapse of Lehman Brothers and Merrill Lynch last year.

“While the remittance level will remain comparatively stable, the meltdown in the United States, the country’s second-largest export market, may hamper overall ICT investment in the Philippines,” the research firm said.

The drop in ICT spending growth is significant due to the anticipated lower end-user spending habits in the face of the global economic crunch, it said.

“The continuing trend of market expansion outside the Metro Manila area, toward the provincial centers, is seen to greatly aid in maintaining a positive outlook in 2009,” it added.

Despite the anticipated cautious spending on ICT in the Philippines, IDC predicts that specific pockets of opportunities will exist, driven by regionalization and market expansion outside the Metro Manila area.

The research firm also projected that local telcos would adapt to the changing economic environment and eventually reconsider their marketing efforts, product focus, and, for some, even spending.

Earlier, Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc., separately announced that they would cut capital expenditure this year as consumer demand is expected to slow down.

Gerardo Ablaza, Globe president and chief executive, had said that the company reduced its spending plan to below $400 million this year.

Last year, the company also cut its capex to a range of $400 to $420 million from the original $450 million.

PLDT earlier announced that capex this year may be the same as last year at P25 billion.

PLDT’s capex last year was lower than the original P28.5 billion.

“Though IDC maintains that the telco sector will be among the industries moderately hit by the temporary slump, most players in this field will still be reassessing their business strategies for continued growth,” the research firm said.

IDC said it sees the continuous rise of the fixed wireless access (FWA) broadband market especially in terms of the number of subscribers. –Darwin G. Amojelar, Reporter, Manila Times

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