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PHILIPPINE telecommunication companies will remain strong this year
owing to sustained demand for mobile phone service, according to
Moody’s Investors Service.
In its outlook for Asia Pacific telcos, Moodys
said the Philippines’ performance, which is dominated by 2G
(second generation) voice and SMS, stayed healthy as market growth
exceeded expectations last year, with the country’s two largest
operators posting better-than-expected financial results.
Philippine Long Distance Telephone Co. (PLDT),
partly owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s
NTT group, registered a net income of P36 billion last year, while
Globe Telecom Inc., partly owned by Asia’s biggest Singapore
Telecommunications Ltd., enjoyed profits of P13.3 billion.
“An expected slowdown in growth did not
happen, as penetration levels reached approximately 60 percent,
albeit distorted upwards by widespread subscriber use of multiple
subscriber-identity-module (SIM) cards,” Moody’s said.
PLDT, which cornered about 57 percent of the
cellular market, registered 30 million subscribers last year while
Globe had 20.3 million.
Moody’s however said the average revenue per
user has deteriorated, which typically occurs with increased
penetration of non-urban markets.
The credit rating company said this
deterioration has been countered by overall rising minutes of usage,
as absolute earnings before interest, taxes, depreciation and
amortization (EBITDA) levels continue to rise, with both Globe and
PLDT exhibiting strong performance.
“Their financial metrics remain high for their
rating levels. It is also worth noting that adjusted EBITDA margins
for the Philippine carriers are still some of the highest relative
to global peers,” Moody’s said.
Capital expenditure requirements for some
carriers, such as fixed-network operators with mature businesses,
are typically lower while, for other carriers, like cellular
operators experiencing rapid growth, investment requirements tend to
be even higher, the rating firm said.
“Despite this pattern, some operators, such as
in the Philippines, have generated positive free cash flows, even at
the peak of the capex cycle,” Moodys said.
For this year, Globe is allotting about $400
million to $450 million for its capex, which will include
investments in core mobile services as well as in wired and wireless
broadband technologies. PLDT has about P25.4 billion in capex to
finance mobile phone and broadband network expansion.
-- Darwin G. Amojelar
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