Monday, October 29, 2007 Telecom hit by powerful peso, PLDT chief admits
MANILA -- Telecommunications giant Philippine Long Distance Telecommunications Company (PLDT) has admitted it has joined the lengthening list of losers to a powerful peso with a drop by P579 million in its revenues for every P1 appreciation of the peso against the US dollar.
This was revealed by PLDT boss Manuel V. Pangilinan while addressing participants to the Philippine Business Conference which culminated Friday at the Manila Hotel and urged the government to adopt measures to manage a glide and prevent drastic fluctuations and allow the peso a soft landing.
"The telecommunications and the contact center businesses are among the most significantly affected by a rapidly appreciating peso," the top executive said.
"In the case of PLDT, our revenues drop by P579 million for every 1 peso appreciation to the dollar. As to our BPO operations, operating margins have compressed because of lower dollar-to-peso revenue translations, while our operating expenses are in pesos and are subject to domestic inflationary pressures."
He added estimated that the appreciating peso has resulted in the loss of P189 billion in purchasing power of families of Overseas Filipino Workers (OFWs) since 2004.
"The situation has reached the point of urgency that coalitions of overseas workers and exporters have already broached the idea of dual exchange rate - not a good idea," Pangilinan said.
The top honcho of one of the country's most profitable companies warned that a peso that gets too powerful each day, driven by OFW remittances and business process outsourcing could not be sustained.
He warned that "at some point, the forces for a slow implosion can result in a situation where the increasing exodus of workers creates only as many jobs and incomes abroad as it destroys at home, leaving the economy unimproved or even worse off."
To guard against that eventuality, Pangilinan suggested that the government adopts several measures to allow for a soft landing to the peso. He said moves of the government to shift to domestic borrowing and the early payment of dollar-denominated debts must be accelerated.
Furthermore, he suggested to monetary officials to manage the rise and fall of the peso.
"This guided predictability," he explained, "will allow businesses to plan and operate better."
Of the five strategies to move the economy forward that Pangilinan proposes besides managing drastic fluctuations of the peso-dollar rate, he broached the idea of pushing a short list of catalytic public works projects that include power plants, seaports, airports and major highways in key growth areas.
"These," he explained, "would stimulate importation and the demand for bigger amounts of dollars that will have the effect of dampen further appreciation of the peso.(Philexport)
