Globe Telecom says it needs at least 10 years to r

Philippine mobile phone service provider Globe Telecom said yesterday it would take more than a decade for the company to recover the P6.5 billion in foreign exchange losses which it incurred from 1997 to June of this year, even with the reduction in free text message allocation for both prepaid and postpaid subscribers.

Industry analysts say that assuming that Globe will only get 30 percent of the free text message allocation, this will translate to additional revenues of P400 million a year.

"Even with this, it will take us 11 years to recover the accumulated losses due to the peso depreciaton," Globe senior vice president for fixed network Gil Genio said.

Some members of Congress have asked for an investigation as to why Globe and subsidiary Islacom and rival Smart Communications (as well as sister company Piltel) have decided to reduce the free text message allocation of cellular phone subscribers.

Globe, owned jointly by Ayala Corp., Singapore Telecoms, and Deutsche Telecom, currently has 3.4 million subscribers who transmit around 50 million text messages per day. Industry-wide, some 120 million text messages are transmitted daily in the country, now tagged as the unofficial text messaging capital of the world.

Also yesterday, Globe SVP for corporate and regulatory affairs Rodolfo Salalima said that while the National Telecommunications Commission has already authorized Globe to increase cellular rates by one percent for every 50 centavo increase in the value of the peso against the dollar, the company just decided to go for the ‘lesser evil’ or the option that had the least negative impact on its subscribers.

Due to rising network and technology costs due to upgrades and expansion and to cover for forex losses due to the peso depreciation against the dollar, Globe considered three options: first, increase the voice tariff from the current P6 to P7 per minute base rate; second, increase the charge for text message; and third, reduce the free text message allocation. The company chose the latter.

The new free monthly SMS allocations for prepaid and postpaid subscribers effective Sept. 10 are as follows: Prepaid – 50; Advantage – 120; Personal – 300; Business – 400; Executive – 600; and CEO plan – 800. The free text message allocation applies only to messages sent to other Globe cellular phones.

Smart Communications and Pilipino Telephone Inc. (Piltel), as well as Globe subsidiary Islacom, are also implementing free text messaging allocation reductions.

Salalima said that had Globe decided to avail of the foreign currency adjustment (FCA) clause as auhtorized by the NTC to recover losses from dollar-denominated loans, the voice rate could have increased by P2 per minute.

When Globe first introduced the per message charging on SMS, the exchange rate was P40.25 to $1 in October 1999. As of June 30, 2001, the forex rate was P52.43-$1, or a 30.3 percent depreciation rate.