PLDT poised to spend more on 3G tech

Telecommunications leader Philippine Long Distance Telephone Co. (PLDT) has spent over P3 billion (around $60 million) for its foray into 3G or the third generation of mobile communications technology and is prepared to spend more as the price of 3G handsets go down to more affordable levels. 

PLDT president and CEO Napoleon Nazareno said the group’s wireless subsidiary Smart Communications Inc. is looking at how to migrate its subscribers to 3G, which he notes is a natural evolution of 2G (GSM or the global system for mobile communications, the technology that made text messaging possible). 

Of Smart and Piltel’s 20.9 million subscribers, around 250,000 have 3G handsets. However, only 40,000 to 50,000 are actually using the 3G service, Nazareno revealed. 

"We intend to promote the (3G) service. As the prices of handsets go down, we’ll proceed with the expansion of the 3G service. Ideally, handsets should go down below $100 for 3G to become viable here," he added. 

Nazareno also disclosed that gross subscriber take-up in May was about the same level as April, but last month’s net take-up was lower due to higher churn. He explained that the churn in April was abnormally low at 1.7 percent. "In May, we just went back to out normal churn of slightly more than three percent," he said.

Due to higher levels of investments, Pangilinan expects core earnings in 2006 to grow moderately by 10 percent to P32 billion.

"We see continued subscriber growth and expenses are down. Moderate growth in subscribers and decline in expenses are contributing to higher profitability," the PLDT chairman noted. In terms of number of mobile subscribers, he said "second quarter is better than the first quarter." Smart and Piltel posted a combined 20.6 million subscriber base as of end-March 2006.

He also pointed out that foreign exchange gains, which in the past contributed largely to PLDT’s earnings, are much harder to predict now with the peso depreciating. 

Pangilinan earlier revealed that PLDT’s new wave of investments will require capital expenditures of around $1 billion over the next three to four years.

He explained that 2006 is a year of transition for the company that will lay the foundation for growth starting 2007 and beyond.

He noted that the current year is critical for PLDT as it lays the foundation for the next phase of its growth. "And as we build this foundation, its benefits will emerge starting only next year," Pangilinan emphasized.