Competition in Phl telecom industry more fierce: Fitch

MANILA, Philippines (Xinhua) - Bucket-priced promos and more subsidies to mobile customers will make competition among top telcos in the Philippines more fierce in the upcoming years, debt watcher Fitch Ratings forecasts.

In a statement at the weekend, Fitch said that the practice would gradually decrease the industry's profit margins.

Growth of fixed-line revenue will keep weak as the contribution from long-distance calls continues to be replaced by low-margin data services," the debt watcher said.

The country's largest telco Philippine Long Distance Telephone Co. (PLDT)'s Long-Term Local-Currency IDR and National Long-Term ratings were affirmed at 'A-' and 'AAA (phl)' respectively, or two notches above their Philippine government counterparts, Fitch said.

The company's Long-Term Foreign-Currency Issuer Default Rating and senior unsecured rating was upgraded to 'BBB' from 'BBB-', or one notch above Fitch's ratings for similar securities issued by the Philippine government.  

Fitch said PLDT's ratings reflected the company's dominant market shares with well over 60 percent in the wireless, fixed- line, and broadband segments at the end of last year. "The ratings also demonstrate the company's strong financial profile, including a high earnings before income tax, depreciation and amortization margin of 46 percent."

With its major spending activities out of the way, PLDT's capital expenditure budget for 2013 is expected to decline from record 37 billion peso in 2012 to below 29 billion peso this year. As a result, Fitch said the firm's debt levels would likely stay the same this year compared to last year.