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By Darwin G. Amojelar, Reporter
HIGHER food prices and a global slowdown will
damp growth in the Philippine telecommunications industry this year,
according to industry players and analysts.
The country’s two largest telecom companies on
Tuesday announced first-quarter profit increases, but remain
cautious on the outlook for the rest of the year.
Philippine Long Distance Telephone Co. (PLDT)
reported a net income of P10.4 billion, while Globe Telecom Inc.
registered gains of P3.4 billion.
The first quarter results were released hours
after the government reported that inflation last month shot up to a
three-year high on record increases in rice and oil prices.
“We seem to have deflected, for the meantime,
the economic downturn that is affecting much of the world. Our
sustained growth in the first quarter indicates that the teeth of
inflation and rising prices have yet to bite deeply into our
business,” Manuel Pangilinan, PLDT chairman said.
“Nonetheless, we realize that a global
slowdown will undoubtedly take its toll on all businesses
eventually, and that the peso-dollar exchange rate will continue to
impact our financials,” he added.
PLDT has kept its forecast of P37 billion in
core net income and P145 billion to P146 billion in service revenues
for this year.
Gerardo Ablaza, Jr., Globe president and chief
executive, admitted the market environment is “challenging.”
“We will remain focused on the business
fundamentals during these difficult times, and continue to put
emphasis on value pricing, innovative service creation, cost
efficiency improvements, and expansion into new growth areas,” he
said.
Prince Yeung, equities analyst at AB Capital
Securities told The Manila Times that PLDT and Globe’s growth in
core profits and subscriber base were “better than expected.”
Even so, the analyst doubts whether this
performance can be sustained for the rest of the year. “I think
the growth will be there, but not as high. The growth will be driven
by additional subscribers, not spending,” he said.
Separately, Karen Rondon, communications
research manager of International Data Corp. (IDC), said the
country’s telco market would replicate last year’s performance
despite the looming economic challenges.
This jibes with the regulator’s outlook for
the year.
Edgardo Cabarios, National Telecommunications
Commission (NTC) director for common carriers and authorization,
said the number of mobile phone subscribers would grow by five
million to 10 million this year.
However, the increase in food prices is expected
to reduce subscribers’ spending for calls and text messaging.
“There may be some slowdown in the C, D and E markets,” he said,
adding the limited disposable income in this segment will be spent
on food.
He said the best way for telcos to recover lost
revenues from the mass market is to offer a pricing scheme or
services that will target the more affluent—those belonging to the
AB and upper C socio-economic brackets, as they are likely to have
disposable incomes.
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