High prices affecting telecom spending

PHILIPPINE NEWS SERVICE — Soaring food and fuel prices will affect revenues of telecom companies this year, said Globe Telecom president and chief executive Gerardo Ablaza Jr.

Ablaza, in a briefing at the New World Renaissance Hotel in Makati City yesterday, said that while revenues from wireless business would continue to grow, this will be at a pace slower than last year’s, as consumers are expected to reallocate spending amid rising prices that undermine growth prospects.

But Smart Communications president Napoleon Nazareno said the accelerating inflation rate had yet to affect the company’s revenues, which remain growing at a healthy pace. Smart is the country’s largest mobile phone service provider.

Globe Telecom, the country’s second largest mobile phone service provider, posted a flat growth in its revenues in the first quarter of 2008, although its net income surged 32 percent from a year ago, owing largely to last year’s prepayment of P1.3 billion in debt.

The company closed the first quarter with consolidated service revenues of P15.539 billion, at par with last year’s level of P15.609 billion amid a more difficult macro-economic environment in the first quarter of 2008.

Net income jumped to P3.4 billion in the first quarter from P2.6 billion a year earlier, which was traced to Globe’s prepayment of $300 senior notes last year.

But Ablaza said after posting a flat growth in the first three months, Globe’s revenues grew faster in April, with the net addition of more than 400,000 subscribers.

As of April, Ablaza said its SIM base topped 21.7 million subscribers. This was higher than the average monthly net addition of 320,000 new subscribers in the first quarter, he said.

Ablaza said the company would focus on building its broadband infrastructure for future growth. Globe’s broadband and corporate data continued to be the main drivers of growth for the business, posting revenue growth of 73 percent and 15 percent, respectively, he said.

While the company’s wireless business revenues fell 1 percent, wireline revenues rose 6 percent, driven by the continued growth in the company’s broadband and corporate data businesses.