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SMART
Communications Inc. is spending $10 million more to
finance the expansion of its 3G (third generation)
mobile-phone network, president Napoleon Nazareno said.
In an
interview, Nazareno said that the $10 million is on top
of the $60 million it has spent so far for the 3G
project.
“We will
be spending $10 million more or less for our 3G [for the
rest of the year]. All in all our 3G investment will
amount to $70 million,” he said.
The
additional investment will be spent to put up additional
base stations starting this month until the second
quarter of 2008. “We will install 50 more base
stations,” Nazareno added.
In a
report to the National Telecommunications Commission (NTC)
last month, Smart said its 3G network then has total
coverage of 217 cities and towns. The cellular firm now
offers 3G services to all chartered cities and
provincial capital cities. But in provincial capital
municipalities and additional cities and municipalities,
Smart’s network coverage is 39 percent and eight
percent, respectively.
The
company told the Board of Investment (BOI) that it has
programmed some P33 billion to bankroll its 3G operation
for the next six years. Based on its five-year roll-out
plan, a total of 1,611 cities and municipalities,
ranging from 1st class to 6th class, will all benefit
from the project.
Smart is
expected to incur losses during the first two years of
its 3G operation, and breaking even only in the third
year.
However,
considering the slow 3G subscriber take-up being
experienced by Smart, losses might extend up to the
fourth year of operations, the company wrote the BOI
last year.
Nazareno
said there are 400,000 to 500,000 Smart subscribers who
subscribe to 3G services.
Smart is
a unit of Philippine Long Distance Telephone Co. (PLDT).
The phone giant’s chairman said 3G business is doing
better. “We are seeing better service revenue in 3G as
more facilities for Internet access are opened up,”
Manuel Pangilinan said in a separate interview.
Video
streaming and video downloads are currently offered
through 3G cellular networks.
“The
rate for 3G services such as video calling remains very
affordable. It is even pegged at the same rate for local
voice calls. So, the rate for 3G services is not the
main factor why demand is not picking up. Handset price
still remains the major factor,” Nazareno said.
The
cheapest 3G phone out in the market carries a price tag
of about P6,000 to P8,000. Demand is starting to pick up
with the offering of affordable 3G phones to be
manufactured by LG.
LG had
been awarded the preferred 3G handsets vendor during the
annual GSMA (Global System for Mobile Communications
Association) meeting in Barcelona, Spain. “Certainly,
this will help stimulate demand for 3G services,”
Nazareno added.
Smart,
he said, will continue to sell other brands of 3G
phones, particularly the popular Nokia and Sony Ericsson
units.
Apart
from affordable 3G phones, Nazareno said Smart will
offer more content and applications to spur 3G use among
current and future subscribers. “The drop in the cost of
handsets is one of the factors that will drive demand.
With more applications at affordable rates, we hope that
demand will pick up.”
“We
went into 3G prematurely given not only the price of the
handsets but also the apparent… lack of a killer
application in other parts of the world because
government wanted us in and because we were counting on
the incentives,” Nazareno said in an earlier interview.
The
incentives have since been recalled by the BOI.
Smart
had appealed to the BOI to reconsider its decision. It
stressed that the 3G project, which involves huge
capital investment would need tax incentives to help
subsidize the cost of accelerating the deployment of 3G
technology in less developed areas.
“The
impact of an income-tax holiday on Smart’s 3G project
would only occur in the medium term. The government will
not have any actual foregone revenues in the short-term
because of expected tax losses at least for the first
two years of the 3G project,” Smart chief financial
officer Anabelle Chua wrote BOI executive director for
project assessment group Lucita Reyes. |
