BayanTel may post net loss as peso’s fall affects dollar debts

MANILA, Philippines - Bayan Telecommunications, Inc. (BayanTel) expects to post losses this year due to the weakening peso, despite an increase in subscribers to the company’s Internet broad-band service. In a briefing yesterday, BayanTel Chief Executive Consultant Tunde Fafunwa noted that with the peso now at more than P47 per dollar, the company’s dollar-denominated debts have become more expensive. "With the current rates, we’ll end up with negative figures because of foreign exchange losses, not operational losses," he said. Last year, BayanTel profits went up fourfold to around P2.2 billion from a year earlier. But Mr. Fafunwa said the exchange rate then was only around P41 to P42 against the dollar. BayanTel has debts of around $325 million, incurred in 2004 when the company started restructuring. As of end-2007, the company said it had paid around $50 million or around P2.37 billion. Company revenues also went up by almost a fifth to P3.07 billion. But Mr. Fafunwa said the company expects sales growth to slow by yearend to 12% to 15%. He said the company expects to hike its wireless landline subscribers by more than two-thirds to over 200,000 by yearend. As of June, BayanTel had 160,000 wireless landline subscribers. The company is also eyeing to increase its fixed digital subscriber line Internet subscriptions by more than half from a year earlier, when the company had around 60,000 subscribers. Its fixed-line telephone subscriber base, however, is expected to continue declining up to next year. BayanTel’s fixed landline subscription base is expected to fall by more than 10,000 to 230,000 by yearend. Despite economic concerns, company sales are not expected to dip. BayanTel is targeting families of Filipinos working abroad for a fixed landline service that will allow them to make unlimited number of calls from the Philippines to their loved ones abroad who also have BayanTel subscriptions, for a fee of around $30 a month. — Paolo Luis G. Montecillo, BusinessWorld