At the end of 2003, NMI registered a net income of P23 million but posted P875 million in losses last year, mainly due to depreciation of around P780 million.
"But in a business such as ours, EBITDA is a better measure of profitability especially when a company is in the investment mode," NMI chairman and CEO Mel Velarde said.
NMI officials said that the losses can also be attributed to the company’s review of its operations, part of which included "letting go of the wrong customers."
‘We made a rigorous analysis of the market segment that we are in and made sure that our organization was consistent with our market strategies. Thus, we go where we are most needed such as in the freight, logistics, and courier businesses which value us for their mission-critical needs," NMI president and chief operating officer Lamberto Ramos said.
NMI is raising about $35 million to finance its long-term requirements. At least three groups have expressed interest in putting up the amount which will consist of $25 million in equity and $10 million in debt. Velarde disclosed that the three groups include a global investment technology group, a Middle East telecom operator, and a New York-based investment house.
Velarde said the $35 million will be equivalent to a 22 to 23 percent ownership in NMI. He revealed that they have decided to keep the equity portion at only $25 million so that if Nextel International decides to exercise its option to reacquire a 20 percent stake in NMI, the latter will still be able to comply with the 40 percent foreign ownership limit under the Constitution.
However, NMI said it may still engage in backdoor listing because according to Velarde, the potential investors want an exit strategy.
For its short-term requirement, the company was able to secure local financing for its expansion to Cebu.
As for other areas in the country, such as in Davao, Iloilo, and Cabanatuan, Velarde revealed that NMI may enter into management agreements with local businessmen who want to invest in putting up the cellsites in these areas. The cost of a cellsite is around $300,000 and computations made by the company revealed that the investor can break even in 2.5 to three years which may even be shorter because the computation does not include the impact of NMI’s expansion of operations to the United States.
NMI earlier revealed that it has established an affiliate in the US called Verdict Mobile which has strategic relations with Sprint-Nextel, America’s third largest telco. Verdict Mobile will not only act as a marketing agent of Sprint-Nextel, but will also be marketing the products and services of NMI to Filipino-Americans in the US.
Verdict is immediately targeting around 350,000 Fil-Am households in Daly City, San Francisco, Long Beach, and Los Angeles in California, Jersey City, and Honolulu. By next year, the company will train its sights on the middle states.
NMI expects Verdict’s efforts to result in around 20,000 to 25,000 new subscribers for the former, which currently has 30,000 subscribers.
Velarde said that NMI is happy being a niche player in the telecommunications industry. "We are happy with where we are right now and we are not aiming to collide with the giants," he pointed out.