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GOKONGWEI-OWNED Digital Telecommunications Philippines
Inc. has committed to invest $240 million, roughly P12
billion, this year to expand its wireless and wireline
infrastructures.
Of the
amount, $40 million will go to fixedline and data
businesses while Sun Cellular, the mobile brand of
Digital Telecommunications, also known as Digitel, will
eat up $200 million of the programmed capital
expenditure (capex) this year.
The
company will use internal funds and borrowings to
finance the expansion program this year. “There are
ongoing talks for borrowing,” said Digitel senior vice
president Tess Castillo.
During
yesterday’s annual general meeting, Digitel president
Lance Gokongwei said Sun Cellular allocates P11 billion
for additional network infrastructure every year.
This
will allow Sun Cellular to accommodate up to 10 million
subscribers and increase the number of its cellular
sites nationwide to 2,400 by the end of 2007.
Sun
Cellular chief executive officer Charles Lim said the
phone firm has now signed up three million mobile phone
subscribers from a little less than two million at
end-2006.
The
company is targeting to hit more than four million
subscribers by yearend but does not see a swing to
profit until 2008 or 2009.
“We are
growing significantly now in both postpaid and prepaid
segments. We now have three million cellular
subscribers. We expect that our subscribers this year
will grow to at least more than double from last year,”
said Lim.
Last
year’s network expansion, Lim said has helped enhance
the company’s capacity to handle more calls, text
messaging, as well as data and multimedia services.
“Last
year, we did a lot of network improvement which we
believe is what drives growth now for the company. We
realize that a lot of our subscribers are into unlimited
services.
As a
result Digitel changed its integrated network system,
the core of its prepaid service. It also continued the
rollout and expansion of its capacity so that by 2007,
the company would be able to deliver uninterrupted
service, Lim said.
Sun
Cellular handles up to 80 million text messages a day.
Lim said the network could handle 7,500 messages per
second.
According to Lim, Sun Cellular is now ‘technically 3G
capable.’
More
than a year after Digitel’s cellular arm, Digitel Mobile
Philippines Inc., was awarded a 3G (third generation)
license in December 2005, the firm is now ready to offer
3G services.
“Our 3G
service is technically available now. We can actually do
a soft launch in the second half of this year,” Lim
said.
Digitel
is waiting for 3G-handset prices to go down to a level
affordable to the mass market. A 3G handset now sells
for at least P12,000.
Digitel’s 3G investment is included in this year’s capex
allotted for wireless network expansion. “We utilize it
as necessary,” Lim said.
“We
expect to be Ebitda positive in the last quarter of the
year,” said Lim.
Originally, Sun Cellular wanted to break-even on Ebitda
last year and to start registering profits by 2007.
Parent Digitel suffered a net loss of P440 million in
the first quarter of the year.
The
company was in the red from January to March mainly due
to a stronger peso and an increase in expenses.
Also,
the higher use of cellular phones over landlines has
hurt the company’s fixed-line business.
“The
decline is partly attributable to the impact of the
continued appreciation of the peso, which affected
revenues from international tolls and monthly recurring
charges and accounts for about a quarter of the decline
over last year’s revenues,” according to Digitel’s first
quarter report.
Also,
the typhoons that hit the country in the last quarter of
2006, particularly in the Bicol region, continue to
adversely impact monthly recurring and toll revenues.
Digitel
wireline head Policarpio Pau said the company will spend
$40 million for its fixedline and data services. “The
capex will go to our backbone transmission to extend our
fiber optic reach. We are also spending for our wireless
project,” he said. |
