Lower forex gains push down Digitel Q1 income

By Lenie Lectura, Business Mirror

Posted at May 17 2011 07:49 AM | Updated as of May 17 2011 03:49 PM

MANILA, Philippines - Digital Telecommunications Philippines Inc. (Digitel) posted a 54-percent drop in net income during the first three months of the year to P151.3 million on account of lower foreign exchange gain.

Revenues were actually higher by 15.9 percent from P3.9 billion to P4.52 billion at end-March brought about by a robust increase in wireless and wireline data service revenues.

The company, which is being bought by dominant player Philippine Long Distance Telephone Co. (PLDT), registered 14.06 million cellular subscribers at end-March across its prepaid and postpaid options and its 2G and 3G networks and over 450,000 subscribers across its data and wireline segments.

Sun Cellular, Digitel’s mobile brand, had 1.31 million postpaid subscriptions and 12.75 million prepaid accounts during the period.

The company said it continues to attract more subscribers as its products are specifically designed to provide subscribers with the best-value choices tailored to fit their specific needs and wants.

Sun Cellular is known for its unlimited call and text products which allow subscribers to enjoy?24 hours of Sun-to-Sun voice calls and texts for P25 per day.

The company’s wireless services posted a 22.2-percent growth in operating revenues to P3.72 billion brought about by the continued success of Sun Cellular’s unlimited service portfolio and increase in subscriber count primarily from the group plans.

The company’s wireline data services also registered growth of 5 percent during the period at P121.4 million from P114.9 million, mainly due to higher revenues coming from new connections on domestic data and Internet.

But Digitel’s wireline voice business dropped by 8.5 percent to P678.7 million from P742.1 million due to lower revenues from international and domestic tolls and local exchange.

Digitel, which is 47.4-percent owned by JG Summit Holdings Inc., has three key business segments: wireless telecommunication services, data transmission and Internet services, and wireline telecommunication services.

In March, JG Summit and PLDT inked a sale and purchase agreement in which the country’s largest telco will acquire the Gokongweis’ stake in Digitel for P69.2 billion in exchange for a 12.8-percent stake in PLDT.

PLDT will pay the 51.55-percent interest in Digitel through a swap of shares. As a result of this transacton,?PLDT shareholders First Pacific Co. Ltd. and the NTT group would dilute their interest in the telco from 26 percent and 21 percent, respectively, to 22 percent and 18 percent.

On Friday, JG said it will sell part of its stake in PLDT to NTT DoCoMo, Inc.

JG Summit said it signed an option agreement with NTT, entitling the Japanese phone firm to purchase 4.56 percent of PLDT for P2,500 per share for a total consideration of P11.4 billion. JG Summit’s stake in PLDT would then be decreased to 10 percent.

But even with the reduced stake in PLDT at approximately 10 percent, JG will still be represented in PLDT with one board seat.

The PLDT-Digitel deal is expected to be completed on or before end-June. Significant cost efficiencies are envisaged from the transaction via capex optimization, colocation of base stations, consolidation of overlapping technical systems, implementation of shared services, bulk purchasing of network equipment, communication devices and other materials and elimination of other duplicated costs.