Nextel Phils eyes profit next year

After three years of being in the red, trunk radio operator Nextel Communications Phils., Inc. expects to finally be in the black next year with a projected net income of P20 million.

And while it may not be putting in new money in its local unit Nextel International Inc. (NII) said it is not abandoning the Philippines but merely reviewing its operations here.

Nextel president Emilio Festejo told reporters yesterday that the Philippines is the only local unit of NII that temporarily does not enjoy any financial support from its parent firm.

"We are practically saying that the Philippines is going to be disadvantaged significantly. The events do not allow us to be aggressive unlike NII’s investments in Mexico, Argentina, Brazil, Peru, Japan and Chile where they have grown significantly. There is an appreciation of value of investments there," Festejo pointed out.

NII has reportedly written off its $200-million investments in Nextel Philippines since it was established in 1998.

Festejo said the company has not posted any profits yet but assured that starting first quarter of 2002, Nextel Phils. will show an improvement particularly on its financial standing.

"Definitely, we will make numbers next year. I can’t disclose yet how much we lost but the number has significantly reduced. We are better than budget," he said.

In a statement, NII president for Asia-Pacific John Jones IV said the non-infusion of additional funding is not equivalent to abandonment.

"NII believes that the progress of Nextel Philippines in 2001 allows it to pursue a viable business plan that will not require additional funding support. Our decision is part of our strategy to meet our financial objectives as a global player," Jones said.

"Primarily, we aim to tailor and align our operations with anticipated sources of funding. The reported valuation of our exposure in the Philippines is purely a financial decision which recognizes a more realistic valuation of the company," Jones added.

For his part, Festejo said the review is normally done on a quarterly basis. NII will come out with its updated assessment in March. From there, it will be known if the parent firm will once again finance its Philippine operation.

"Every year we come up with a budget, that’s why we get feedback and a review of the business assumption plan is made. The current condition and availability of external money is being taken into consideration," he said.

Nextel has put together a business plan that leverages these gains to allow it to pursue a cash flow positive operations scenario. The company has right-sized its organization, adopted productivity-enhancing measures and pursued a product development plan that will lead to higher revenues and significantly improve margins.

"Nextel Philippines with its business partners are proceeding with product development and evolution of new services especially wireless data applications that will enrich its service offerings to its choice business customers. It has built enough resources this year that it can hedge a bit," Festejo said. – Mary Ann Reyes