PT&T to shift business focus

Philippine Telegraph and Telephone Corp. (PT&T) plans to shift its business focus from the traditional narrowband telephony to the long-hyped but little seen broadband services operation, along with the change in business strategy from post-paid to prepaid service.

PT&T senior vice president Gerardo de Leon told the Philippine Stock Exchange that the fundamental shift of strategy is contained in the company’s business plan presented to its creditors for the restructuring of about P6.3 billion in debts.

Last September, PT&T secured the approval of the majority of its creditors with a memorandum of agreement (MOA) that would restructure the company’s obligations and hopefully bring back PT&T into profitability.

For the three-month period ended Sept. 30, 2001, the company registered a net loss of P150.7 million, higher compared to the previous year’s net loss of P102.7 million due to the decline in revenues and increase in operational expenses.

PT&T said the decrease in revenue was principally due to stiff competition and the difficult economic conditions in the country. During the quarter period, the drop in revenues was due to lower national long distance (NLD) traffic tolls, connection fees, lower subscription revenues and rescheduling of value-added programs.

The company is principally engaged as a local exchange carrier (LEC) and corporate business (CorBiz) service provider. LEC offers basic telephone and long-distance services whose revenues contribution consists of a fixed monthly recurring rate plus long distance charges based on per minute of usage. CorBiz, meanwhile, include mainly digital data services and other data communication services applications such as automated teller machines and wide area networking.

With LEC contributing 55 percent to total company revenues, PT&T is preparing to further improve its billing scheme from post-paid to prepaid, as already evidenced by the increasing trend in access card sales and increasing share of these customers now accounting for 29 percent of the LEC subscriber base.

At the same time, PT&T is also preparing to shift into broadband communication services in order to fortify its share in the fast-growing data communication market and to diversify its retail outlets nationwide with Internet access services and network gaming.