Telecom firms scale down expansion

AMID modest growth in the first quarter this year, Philippine telecom companies are scaling down their expansion plans, with the country’s leading industry player shelving a venture in Japan and India and the second-ranked operator trimming capital expenditures for the near term.

Philippine Long Distance Telephone Co. (PLDT) said it has put on hold a plan to offer mobile phone services in Japan, citing regulatory issues and the current economic downturn.

The company’s chairman, Manuel Pangilinan, said the company is also postponing plans to acquire a telecom company in India because of low average revenues per user and a crowded market in South Asia’s largest country.

“The plans to offer MVNO [Mobile Virtual Network Operation] service in Japan are put on hold because of the current regulations they have,” Napoleon Nazareno, PLDT president and chief executive told reporters.

Under MVNO, PLDT Global would provide mobile wireless and data services under the “Smart 158” brand by partnering with Japanese operators. These value-added services include Smart Load, Pasa Load, Smart Padala, Startext, StarCaller and Catextism, among others. Smart Communications Inc. is a PLDT subsidiary.

Nazareno said the company however will continue discussions with the Japanese government and its partner in the third quarter of the year.

PLDT’s planned mobile phone service in Japan is supposed to be through a partnership with NTT DoCoMo, one of the Philippine telco’s key shareholders.

Al Panlilio, PLDT Global president earlier said the Japanese market has a monthly telecom spending averaging $300 compared with $27 for Hong Kong and Singapore.

In the Philippines, the average monthly telecom spending stands at $8.

PLDT Global offers MVNO service in Hong Kong, Singapore and Italy, primarily for overseas Filipino workers.

Orlando Vea, Smart chief wireless adviser, said PLDT is looking at two other countries in Europe to offer the MVNO service.

Panlilio had said that PLDT Global is exploring ventures in the United Kingdom and Spain.

“We are also pursuing Macau and looking into Taiwan,” Vea said, adding, the “Middle East market is a bit difficult also because of their MVNO regulations.”

Globe set aside lower capex

In a separate briefing on Wednesday, Globe Telecom Inc. said it would set aside a lower amount for capital expenditures over the next two years as the company is on a wait-and-see mode with regards demand for its new products, particularly the wireless landline and broadband businesses.

Alberto de Larrazabal, Globe head for treasury, said capex would be within the $300-million to $350-million range over the next two years, lower than the $350-million to $400-million capital spending for this year.

 Larrazabal said the company may accelerate the capex depending on the demand for new products it has yet to launch amid near-saturation in the domestic mobile phone market.

 “The penetration [rate] of wireless business is much higher. There is still some growth in there, but we really don’t have to spend as much in incremental capacity. We will deepen the coverage [in] certain areas because demand will continue to grow. There will be some selective new sites but you really don’t have to continue [to] spend that much,” he said.

Ernest Cu, Globe president and chief executive. said the company’s growth business this year would be consumer broadband and the new cell phone-and-landline-in-one service called Globe Duo.

 Rivals PLDT, Bayan Telecommunications Inc., and Digital Telecommunication Phils. Inc. also offer wireless landline services.

 Cu said the mobile-phone business is approaching the level of saturation. “We have approximately over 70 million subscribers among three telcos against the population of 90 million. We are not so far from saturation in terms of subscribers,” he said.

 “In terms of areas of growth, we are counting on the consumer broadband. Broadband has very limited penetration as of today, maybe between 8 percent and 12 percent,” he added.

Ferdinand de la Cruz, Globe Consumer Wireless Business Group head, said the company expects DUO will further boost its revenue momentum this year.

“The DUO is very innovative because it has mobile and landline service in one SIM [subscriber identification module] and one phone,” he said.

Ayala-led telco to prepay debts

The Ayala-led telco also plans to prepay P1 billion in debts this year, Larrazabal said.

On Tuesday, the company reported a 17-percent increase in net income to P4 billion at end-March from P3.4 billion in the same three-month period last year.

Globe said last quarter’s net income includes an after-tax gain of P398 million arising from an equipment exchange transaction with a supplier.

Excluding this non-recurring item, the telco’s core net income still grew 5 percent to P3.7 billion from P3.5 billion a year ago.

Also last Tuesday, PLDT said its first-quarter net income dropped 8 percent to P9.6 billion from the P10.4 billion in the same three-month period last year.

Excluding foreign exchange gains or losses and other non-recurring income, its core profit however rose to P10.2 billion from P9.3 billion last year.

The company’s consolidated service revenues rose by 4 percent to P36.2 billion, fueled mainly by the 6 percent growth in data and broadband revenues. PLDT’s wireless service revenues were up by 6 percent to P23.9 billion from P22.5 billion last year.

The PLDT group’s total cellular subscriber base for the first quarter stood at 36.9 million, up 17 percent year-on-year. Of the total, Smart had 21.3 million while Talk ‘N Text of Pilipino Telephone Corp. (Piltel) had 15.6 million. –Darwin G. Amojelar , Senior Reporter, Manila Times