Digitel allots $350 million for broadband this year

MANILA, Philippines - Gokongwei-owned Digital Telecommunications Phils. Inc. (Digitel) is spending $350 million this year for capital expenditure , about 40 to 50 percent of which will be used to expand and enhance its broadband network.

On the sidelines of yesterday’s stockholders’ meeting, Digitel president James Go also said by the end of next year, the number of their cellsites (2G, 3G and 3.5G or HSDPA) will almost match those of the two other networks (PLDT and Globe).

Go likewise revealed that once Digitel has built its broadband network, investing in content is a logical next step. “Moving into triple play (providing telephone services, Internet and video over a single device such as the mobile phone, or via a single broadband connection) is something we would like to get into,” he said.

He also said that with their fixed and wireless broadband subscriber base now at over 300,000, investing in an international cable system to increase bandwidth is something they will consider once the number of subscribers reach one million.

Going into business process outsourcing (BPO) is also a logical extension of the businesses that the group is currently in. “It doesn’t necessarily have to be through Digitel though,” Go said. While Digitel supplies the requirements of BPOs, it has not gone into it itself.

This year’s capital expenditure of $350 million is the same as last year’s capex. Go revealed that with the company’s earnings before interests, taxes, depreciation and amortization (EBITDA) expected to reach about $150 million, that will leave around $200 million to be financed via bank borrowings as well as those from export credit agencies.

As of end-April this year, Digitel’s 2G and 3G cellsites number around 6,000. This number is expected to reach 7,000 by yearend. “By the end of 2011, we will have 8,000 to 9,000 cellsites that will give us more than 90 percent coverage in terms of cities and municipalities. As for our 3.5G (HSDPA) cellsites, we would like to get to 2,400. So starting 2012, our capital expenditure will be lesser because we would have covered more than 90 percent,” Go said.

For this year, Go emphasized that their focus will be on strengthening Sun Cellular’s 2G unlimited voice services and expanding the 3G and HSDPA broadband Internet access reach.

As for the company’s wireless broadband network, he said by the end of August this year, they will have 2,400 cellsites that will give them nationwide coverage.

Meanwhile, Digitel also wants to expand the coverage of its wireless landline business. “Digitel is looking at expanding beyond Luzon toward the VisMin area,” Go added.

During the interview, Go pointed out that every year has been a challenge for the telecommunications industry, adding that the entry of new competition is not something that Digitel considers as a threat. “We should always welcome competition so long as it makes business sense, the pricing is based on economics,  and it benefits the consumers,” he said.

He also stressed that with over 90 percent of the mobile phone service customers on prepaid and the churn rate at three to six percent per month, it does not matter whether the current mobile penetration rate is already over 80 percent.