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Business News/ Companies / Philippines’ telecom firm eyes acquisitions in India
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Philippines’ telecom firm eyes acquisitions in India

Philippines’ telecom firm eyes acquisitions in India

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Manila: The Philippines’ largest listed company, telecom firm PLDT, said on Tuesday it was eyeing acquisition opportunities in India that could see investments of up to $2 billion.

“I think there are opportunities in India that could have an investment range of anywhere between $500 million all the way up to $2 billion," Philippine Long Distance Telephone Co (PLDT) chairman Manuel Pangilinan said.

“It’s a market where the valuation of telcos has gone down significantly, so if we could take a look at it, it must make sense obviously for us," Pangilinan said.

PLDT is currently “in various degrees of discussions" with several firms in India, he added, but did not disclose details.

PLDT, which is owned by Hong Kong’s First Pacific Co Ltd and Japan’s NTT Communications and NTT DoCoMo, earlier forecast a smaller rise in core profit this year as a slowing domestic economy hits subscriber growth.

Core earnings are expected to rise 5% in 2009 to 40 billion pesos ($819 million) from 38.1 billion pesos in 2008. Last year’s earnings marked an 8% increase over 2007.

PLDT, which runs the country’s dominant fixed line business and is also the biggest wireless phone provider, has a market value of about $8.5 billion.

The company said 2 billion pesos of this year’s core profit, which strips out currency and derivatives gains, will come from the reduction in the corporate income tax rate to 30% from 35%. That would indicate that without the tax benefit, the company’s bottomline will largely be flat.

“The economic conditions are difficult and, second, as you increase the penetration rate, it will of course be a little bit more difficult to gain more subscribers," Napoleon Nazareno, PLDT president and chief executive, told the briefing.

Full-year net profit was 34.6 billion pesos, down 4% from 2007 and below forecasts of 37.2 billion pesos, according to Reuters Estimates.

PLDT said 2008 earnings were dragged down by asset impairment charges from earlier investments in information technology and foreign exchange losses.

“It’s a good set of results, especially in the current environment," said Macquarie analyst Rama Maruvada. “The outlook obviously is a little bit challenging, more so because it’s a macro thing, it’s not really an execution issue."

For 2009, PLDT expects service revenues to rise 5% to 150 billion pesos.

The company has allocated 27 billion pesos for capital spending this year, up from last year’s 25.2 billion pesos, but officials said the amount can be tweaked.

PLDT last month said it raised 5 billion pesos through an issuance of fixed rate notes to fund its capital outlay and officials said there could be more similar debt issues.

“We’re trying to shift more of our borrowings to peso-denominated borrowings with respect to capex financing as well as replacing our maturities with debt," said PLDT treasurer Anabelle Chua. “Over time, it minimises our exposure to forex revaluation," she said, adding the company has more than $300 million in debt maturing this year.

PLDT shares closed up 0.5% at 2,185 pesos on Tuesday, compared with the main index’s 0.2% rise.

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Published: 03 Mar 2009, 04:38 PM IST
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