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THE
nation’s oldest phone company, Eastern
Telecommunications Philippines Inc., or ETPI, has
earmarked P600 million for capital expenditure this
year.
Eastern
Telecom said it will finance new services, currently
being developed by its engineers, designed to propel
revenues.
Eric
Recto, president of ISM Communications Corp., which
holds 57.7- percent stake in Eastern Telecom, said that
ETPI is developing new, Internet Protocol-based products
and services. “There will be add-ons such as voice over
Internet protocol service in our network to make sure
that our investment produces revenue for the company,”
he said after the company’s annual general meeting over
the weekend.
Eastern
Telecom’s capital requirement this year is double the
P300 million spent last year.
In 2006,
ETPI embarked on a Next Generation Network project,
replacing the company’s outdated and obsolete core
network.
It was
also last year when ETPI posted a remarkable turnaround.
After six consecutive years of losses, Eastern Telecom
recorded a P31-million profit in 2006, from a net loss
of P540 million a year earlier.
Earnings
before interests, taxes, depreciation and amortization
last year also improved substantially to P234 million, a
seven percent increase from a year earlier. “These are
significant milestones for Eastern,” Recto said.
The
turnaround was driven mainly by a massive cost savings
program that saw a 29-percent reduction in overhead,
corporate reorganization that improved both sales
coverage and delivery of services, restructuring of an
overdue loan and settlement of vendor claims, and
dividend income from ETPI’s investment in a cable ship
operator.
“Basically, there was better housekeeping. These
improvements and changes, which continue to be
implemented, will bear more fruit in 2007 and onwards,”
Recto said.
ETPI
currently has 15,000 subscribers, Recto said. The
company has yet to report its first quarter financial
performance.
ISM took
control of Eastern Telecom in 2005, buying a 40-percent
stake from Australia Gigahertz Network International
Pty.
ISM
earlier said it will raise P300 million from its stock
rights offer priced at P0.01 per share this month.
PhilWeb
Corp. plans to subscribe 10 billion shares. Proceeds
from the share sale will be invested in
telecommunications assets, including the purchase of
additional shares in ETPI.
ISM
shareholders are given a one-for-one rights offers for
common shares held as of June 8. The offer period will
run from June 20 to 29.
The
Securities and Exchange Commission has approved the
rights offer.
PhilWeb
said last Friday that it will be increasing its stake in
ISM to 22 percent from 17.5 percent, for about P100
million.
Recto,
who is also a director of PhilWeb, said ISM would use
the proceeds to acquire an additional 10 percent to 20
percent of ETPI.
ISM was
also in talks with the government and Smart
Communications Inc. on the purchase of additional shares
in ETPI. |
