Telco growth seen to slow down on peso’s strength

Telco growth seen to slow down on peso’s strength

By Darwin G. Amojelar, Manila Times Reporter

THE Philippine telecom industry is expected to slow down this year owing to weak consumer spending because of the rapid appreciation of the peso, the country’s second largest mobile phone service provider said.

Gerry Ablaza, Globe Telecom Inc. president and chief executive officer, told reporters that the company is cautious given the local currency’s rise vis-à-vis the dollar.

“Hopefully, not a slowdown but maybe slower growth. Maybe revenue growth for the entire market this year will be in the 8 percent to 10 percent vicinity, whereas it was over 10 percent last year,” Ablaza said.

Ablaza said the strong peso could continue to hold back the company’s international long distance revenue growth.

The Globe executive said the industry will continue to grow but the pace will depend on develop-ments in the broader economy such as the peso and the rise in crude oil prices that could weigh on consumer spending.

Ferdinand dela Cruz, Globe Telecom head for Consumer Business, said the overseas Filipino workers’ purchasing power is shrinking because of the peso appreciation.

“There will be a softness in consumer spending [because of the stronger peso],” dela Cruz said.

A Nielsen Media Research report said that majority of OFW households spend between P101 and P499 a month to communicate with their loved ones. Another 13.7 percent spend between P500 and P999, while less than 10 percent spend more. The great majority at 97.4 percent uses prepaid cards.

Despite the expected slowdown, the subscribers identification module (SIM) penetration rate is expected to reach 70 percent this year from 60 percent last year, Ablaza said.