Bayantel to focus on 2 growth areas

The Lopez-owned Bayan Telecommunications Inc. (Bayantel) expects growth in the telecommunications industry to come mainly from data services and the mobile phone business, and is thus shifting its focus this year to these two growth areas.

The bulk of the company’s projected P1.5 billion in investments this year will go to the corporate and carrier group, with minimal investments going to the landline business. "Of course, everytime we have to install a phone, there is an accompanying investment. But in terms of network expansion, there won’t be any because we still have excess capacity of around 235, 000 subscribers," a Bayantel official said. Bayantel has 215,000 subscribers as against a line capacity of 450,000.

Bayantel officials expect a favorable ruling from the Court of Appeals in the next two months on a motion of reconsideration that it filed, paving the way for the company entering the highly competitive mobile phone business currently dominated by Globe Telecom of the Ayala group, and Smart Communications, owned by the group of businessman Manuel Pangilinan.

The CA nullified last year the provisional authority (PA) granted by the National Telecommunications Commission (NTC) to Bayantel allowing the latter to offer cellular mobile phone services. Bayantel said the process it followed to obtain the PA was consistent with NTC rules and did not violate anyone’s rights,

Another telecommunications company that was granted a license to engage in mobile phone services is the Gokongwei-owned Digital Telecommunications Phils. Inc. (Digitel). The PA was granted Aug. 7, 2000 and Digitel was given until middle of this year to start using its license. Digitel plans to invest $370 million for the project.

There are currently seven licensed cellular phone companies in the country owned by only five groups. These are Globe, Smart, Isla Communications (purchased by Globe), Philippine Telephone Inc. (bought by PLDT-Smart), Digitel, Bayantel, and Express Telecommunications, Inc. (Extelcom).

Since its inception in 1996, Bayantel has focused on the landline phone business, which has been marked by cutthroat competition and declining bottom lines due to poor economic conditions. Last year, it saw its subscriber base declining by 12 percent, which company officials said was also experienced by other companies.

As part of its business strategy, Bayantel announced that it is also focusing its business on data services this year.

Tunde Fafunwa, Bayantel chief consultant for its corporate carrier group, said the company will be introducing a number of new data services this year that should be very attractive to the corporate market and give it a competitive edge in the industry. These include the digital subscriber line (DSL) and video on demand (VOD).

Elizabeth Locsin, vice president for corporate and carrier management of the Lopez group’s Integrated Broadband Services (IBS), said that its data services business grew by 27 percent from January to October 2000 compared to the similar period in 1999.

Locsin said Bayantel is one of the two finalists for the Coca-Cola regional network outsourcing contract amounting to $15 million over the next five years. It has also bagged the contracts for several five-star hotels, including Shangri-La for the latter’s domestic frame relay (DFR) and Westin Philippine Plaza’s ILD (international long distance).

Its domestic carrier business also posted positive growths of as much as 78 percent in terms of net revenue and 85 percent in terms of gross revenue, translating to an incremental revenue of around P300 million. "We are confident that this year, we will be able to duplicate this growth if not exceed it," Fafunwa said, adding that revenues and growth in the corporate and data business will remain good, especially with the market still growing.