Piltel loses P21.7B, junks paging service

The continuing popularity of text messaging has forced mobile telephone service provider Pilipino Telephone Co. (Piltel) to shut down its paging service.

This as Piltel reported a net loss of P21.7 billion last year, which includes extraordinary charges taken in connection with the debt restructuring and the asset writedown. Without the extraordinary charges, the loss would have been P6.6 billion. In 2000, the loss was P5.15 billion.

Because of the debt restructuring last year which was approved by 98 percent of its creditors as well as its shareholders, Piltel was able to reduce its overall debt by around P20.5 billion.

For the first quarter of 2002, preliminary reports show that Piltel posted a positive EBITDA (earnings before interest, taxes, depreciation, and amortization). "We hope to use this positive development as a springboard to reduce our losses from this point on. Our goal is to be cash break-even after servicing our financing costs this year," Piltel president and chief executive officer Napoleon Nazareno said.

Meanwhile, starting last month, the company has discontinued its paging service which went by the brand name Beeper 150 and contributed only 1.1 percent of Piltel’s total revenues last year.

Nazareno noted that with the continued popularity of texting, paging has become obsolete. In fact, their paging subscribers had dwindled to 13,706 at the end of 2001 from 22,842 as of Dec. 31, 2000. "Revenues have likewise decreased (from P188.2 million in 2000 to P36.3 million, or an 80.7 percent drop) and we could no longer justify the maintenance of the network," he said.

Paging operators, including Piltel, have experienced a decline in customer numbers due to competition posed by cellular service providers which emphasized their text messaging service. Cellular price competition has also brought handset costs down, which has enticed new and potential paging customers to choose cellular over paging services.

The company terminated its paging services in the Greater Manila area and the rest of Luzon last month, following the shutdown of the Visayas and Mindanao operations third quarter of last year. Piltel, however, said it will try to keep the paging subscribers in its prepaid GSM service by offering discounts on prices of its Talk ‘N Text phone kits.

Piltel is the third largest cellular mobile telephone service (CMTS) provider in the country and also provides fixed line telephone services. Telecommunications industry leader Philippine Long Distance Telephone Co. (PLDT) is Piltel’s principal shareholder, owning 45.3 percent, which the rest owned by creditors and minority stockholders.

Piltel generates revenues from three services: prepaid GSM (branded as Talk ‘N Text), prepaid analog/CDMA (Phone Pal), and postpaid Analog/CDMA (under the name Mobiline). The prepaid GSM service uses the GSM network of sister company Smart Communications.

During yesterday’s stockholders’ meeting, Nazareno reported that Talk ‘N Text had 1.33 million subscribers at the end of 2001 generating revenues of over P1.6 billion, a 360 percent increase from just P354 million in 2000.

Piltel as of end March 2002 had over 1.5 million subscribers. Talk ‘N Text now accounts for around 70 percent of the company’s cellular revenues. The cellular business, on the one hand, remains the largest contributor to the company’s consolidated revenues at 71 percent last year.

On the one hand, given the phenomenal growth of GSM in general and Talk ‘N Text in particular, Piltel’s analog subscriber base continued to decline. From about 200,000 subscribers at the beginning of 2001, this has declined by 27 percent to 147,680 as of end of last year and has dropped by another 15 percent at the end of March 2002.

This rapid decline in subscriber base and corresponding decrease in revenue contribution has forced Piltel to write down the carrying value of its analog/CDMA systems by P14 billion.

Nazareno said that in due time, the analog infrastructure will be phased out as the company’s core business increasingly becomes digital based.