Monday, April 28, 2008

philippines - rising food prices puts pressure on mobile operators

Rising prices put pressure on texting, phone calls

More Filipinos are expected to own cellular phone units this year, but higher food prices are expected to reduce their spending for calls and text messaging.

“There may be some slowdown in the C, D and E markets,” Edgardo Cabarios, National Telecommunications Commission department director, said. He added that the limited disposable income in this segment will be spent on food.

He said the best way for telecom companies 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 A, B and upper C socio-economic brackets, as they are likely to have disposable incomes.

But despite higher inflation, the commission official said he sees the number of mobile phone subscribers growing by five million to 10 million this year.

The government earlier reported that inflation rose 6.4 percent in March owing to higher food and oil prices. For this year, the Development and Budget Coordinating Committee projects an inflation rate of 3 percent to 5 percent.

Philippine Long Distance Telephone Co. (PLDT) recorded 30 million subscribers last year, with units Smart Communications Inc. registering 20.3 million users and Piltel, 9.7 million. Globe Telecom Inc.’s subscribers stood at 20.3 million and Sun Cellular’s, more than 5.5 million.

Globe and PLDT have projected lower revenues this year because of higher food prices, the US economic slowdown and strong peso versus the greenback.

Last year, Globe, which is partly owned by Asia’s biggest telco, Singapore Telecommunications Ltd., posted a P13.3-billion profit. On the other hand, PLDT, which is partly owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT group, hit a P36-billion profit. Digital Telecommunications Philippines Inc. reported a net income of P1.17 billion last year.

The country’s three mobile phone operators registered combined revenues of P215.4 billion last year.

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