Philippine Operators Look Toward the Future

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Cebu, Phillipines-Convergence and foreign investment moved to the front of the line at the Philippine Cable Television Association's annual trade show this month, with the country's two largest operators making some news on those fronts.

Philippine Long Distance Telephone Co. (PLDT) president Manuel Pangilinan outlined his plans for the future following the company's 1999 purchase of No. 2 MSO Home Cable. Topping the list were a combined call center and operational support for the telephony and cable businesses, as well as an upgrade of the company's packet-switching facilities.

PLDT has 2 million lines, which it hopes to boost to 3.7 million in two years, and provides Internet-access and satellite services. Home Cable has between 180,000 and 200,000 subscribers.

Pangilinan also said that Japanese telco Nippon Telephone & Telegraph Corp. agreed to invest $386 million in PLDT. Even though PLDT owns Home Cable, it doesn't fall into the "broadcast" category-as does cable-and can receive foreign investment. Cable operators cannot receive direct equity investments until the country's long-delayed cable bill is passed.

Meanwhile, Sky Cable Central CATV, a unit of leading MSO Pilipino Cable Corp., said it launched its own Internet-access service, dubbed ZpDee Cable Internet.

While lauding potential revenue gains from an Internet-access business, Sky Cable managing director Carlos Tria said his company must address technological and cultural issues and make large capital investments in the project. Sky is currently upgrading its network in the Manila metropolitan area.

He also encouraged Philippine operators to embrace foreign investment. Should the cable bill pass, cable operators would no longer be deemed "broadcast" companies and would be able to receive foreign equity investment of up to 40 percent. "There are concerns that Filipino ownership may drop to 60 percent, but that will be 60 percent of a much bigger pie," he said.

The legislation is currently under review in Congress. Philippine Sen. Ramon Magsaysay told convention attendees it will likely be passed in June, or by year-end at the latest. However, lawmakers gave similar assurances last year.

Meanwhile, industry executives said the merged PLDT and Home Cable possesses a number of competitive advantages.

"With the telephone company having the biggest subscriber base in the country, Home Cable will now have direct access to all those customers," said MTV Asia's senior vice president for network development Richard Cunningham. "Home can take full advantage of PLDT's existing network infrastructure."

Some Philippine cable executives, however, expressed worries over PLDT's growing pool of assets, which also includes broadcaster ABS-CBN and the country's biggest electric company.

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