Friday August 21, 2009
International investing expert Yiannis Mostrous suggests that investors ring up Philippine Long Distance Telephone (NYSE: PHI). Here's the latest from The Silk Road Investor.
"Philippine Long Distance is the dominant provider long-distance and cellular services in the Philippines.
"Recently its wireless subsidiary, Smart, launched an aggressive unlimited call promotion to compete with similar offers from other providers. The decline in price for voice services could lead to higher voice usage and bolster revenues.
"Note that short messaging service (SMS) is far more popular in the Philippines; subscribers send about 600 SMS texts per month but use just 10 minutes of voice per month.
"The launch of this new promotion is Smart's first significant attempt to gain market share in the under-penetrated voice market.
"With a penetration rate of 70%, cellular operators are increasingly targeting the lower-income segment while looking for the new revenue opportunities such as wireless broadband services to grow revenues.
"Broadband competition is intensifying in pricing but also in quality, speed and technology. PLDT's competitor Globe Telecom (Philippines: GLO) now offers Wi-Max broadband plans to compete against PLDT's DSL offerings.
"Smart has countered by offering unlimited broadband use anywhere in the country for USD32 per month, with speeds of up to 2mbps under a 24-month contract. It remains to be seen how this new product 'war' will affect top line growth.
"Though it operates in a risky market, Philippine Long Distance remains one of our most conservative holdings as it continues its steady growth."
