JG Summit earmarks P20B for capex this year

JG Summit Holdings Inc., the holding firm for the Gokongwei family’s business interests, has set aside P20 billion for capital expenditures this year, more than half of which would fund the continued expansion of Sun Cellular, the mobile phone unit of subsidiary Digital Telecommunications Philippines Inc. (Digitel).

"We’re still in the investment mode. We intend to further strengthen the group’s operations," JG Summit chairman and chief executive officer James Go said.

He said part of the funding would be sourced from a planned issuance of P800 million worth of preferred shares. These non-voting shares will carry a par value of P1 and non-convertible to common shares.

According to JG Summit corporate planning director BJ Sebastian, at least two-thirds of the conglomerate’s spending this year will go to Digitel, which operates the Sun Cellular mobile phone brand.

Digitel’s cellular service remains the group’s top priority this year as it aims for a bigger slice of the profitable and highly-competitive mobile phone service market, currently dominated by Smart Communications Inc. and the Ayala-controlled Globe Telecoms Inc.

As of end-2003, Sun Cellular’s subscriber base stood at 650,000, surpassing the company’s target of 500,000. The company intends to attract more subscribers by offering better and cheaper service.

Sebastian said a portion of the capital budget will also be allotted for the regionalization of the group’s branded consumer food products and the construction of new malls and convenience stores.

JG Summit’s flagship unit, Universal Robina Corp., is set to begin the construction of a $10-million food manufacturing plant in Vietnam.

Already a powerhouse in the domestic market, URC is aiming to become a major regional player in the snacks and confectionery segment (candies, wafer, biscuit and chocolate products)

In Singapore, URC enjoys a 30-percent share of the potato chips market. It also holds a 28 percent share of the wafer market in Thailand where it is also a major player in the sugar confectionery business.

In Malaysia, the company controls 33-percent of the potato chips market while in Hong Kong, URC controls 22 percent of the salty snack market.

As for its real estate development business, Robinsons Land Corp. expects to open three to four new malls this year. RLC also intends to put up 50 more convenience stores to expand its growing Mini-Stop chain.