AMID rising prices, the country’s biggest telecommunications company has lowered its forecast for this year.
Philippine Long Distance Telephone Co. (PLDT) chairman Manuel V. Pangilinan said during PLDT’s annual stakeholders meeting Tuesday that the telco has tempered its growth expectations to five percent or a core net income of P37 billion at the end of this year.
PLDT reported a core net income of P35.2 billion in 2007, up 11 percent over that of 2006.
The telco still expects its service revenues to improve by P10 billion to P11 billion, to reach P145 billion to P146 billion, by year-end. PLDT’s service revenues reached P135.5 billion in 2007.
In his message during the meeting as chairman of PLDT, Pangilinan said this year is a “tough year,” with the rising prices of fuel and basic commodities.
“(But) the numbers up to May, June are pretty good,” he said, adding that PLDT management has done a “great job,” so far.
Still, he admitted that like everyone else, PLDT is affected by the fuel price hikes that, in turn, cause prices of goods and services to go up.
He said that like other companies, PLDT also faces the challenge of raising funds needed to finance its goals.
Consumption
“Growth in consumption will abate. Remittance-led spending (would) likely shift towards necessities (like) education, rent and food,” he said.
He admitted that PLDT’s income would have been higher had its growth not been hampered by the peso’s appreciation in 2007.
The peso appreciated by about 20 percent in 2007 against the dollar.
Pangilinan also sees a weakening of private sector investment and a slowdown in government spending on infrastructure, which would affect employment opportunities.
He said inflation or the rise in prices and related conditions would prompt the Bangko Sentral ng Pilipinas to adjust its monetary policy.
The BSP raised last week its key interest rates—lending and borrowing—by 25 basis points, a move that would eventually cause commercial banks to raise their interest rates and affect decisions of investors and companies to borrow funds for future investments or expansion.
Cash flow
With prevailing economic conditions, Pangilinan said PLDT will continue to “fortify its business and tighten cash flows.”
He said PLDT will work on keeping its net debt at $1 billion.
PLDT president and chief executive officer Napoleon L. Nazareno, in his report, said the PLDT Group’s net debt, as of end of 2007, was at $900 million.
Still, Nazareno announced that the telco is allotting P25.4 billion this year for capital expenditures (capex), particularly in building up its network infrastructure.
This year’s budget for capex, though, is almost the same as last year’s.
PLDT’s 2007 capex was higher by 20 percent over than in 2006. The company’s 2007 capex was used mainly to “accelerate the capacity and rollout” of its wireless and broadband network to cope with the growth of its subscriber base.
In his speech, Pangilinan assured that PLDT will raise revenues, not only by growing organically, but also by “investing in new areas that optimize our existing businesses.”
He said PLDT will focus on further growing its broadband applications in fixed and wireless platforms. He added that he expects its present subscriber base for broadband to grow to one million from the present 600,000 by the end of the year.
He said PLDT’s process outsourcing business will also grow along with the expected overall growth of the business process outsourcing industry in the country. He added that the telco will also work on further developing its remittance services.
Amid calls for telcos to help efforts to cushion consumers against price increases, Nazareno said PLDT does not favor the proposal to cut access charges that are imposed when a subscriber sends a message to a subscriber of another network.
“Bringing down the access charge is not the answer to inflation,” he said. He pointed out that unlike other utilities, telecommunications companies have continuously reduced rates amid competition.
He cited “sachet pricing” as a strategy used by telcos to offer affordable products.
“We will continue to dialog with government to come up with win-win solutions. Inflation also threatens to raise (our) costs and decrease (our) revenues,” he said. (LAP)
