Future looks bleak for Sun Cellular

26 Jul 2004

Fixed line operator Digital Telecommunications Philippines (Digitel) has announced that it does not expect its mobile subsidiary Sun Cellular to be profitable this year. The cellco which launched services in April 2003, and is the country’s newest mobile operator, has managed to attract 750,000 customers to its network in its first year of operation, a figure which it expects to grow to one million by the end of the year. However, this has not been enough to enable it to gain a footing in the competitive mobile sector, and last year it inflated Digitel’s losses to PHP1.26 billion (USD23 million) from PHP106 million the previous year. Digitel, however, said it hopes to see Sun Cellular break even in 2005 and post its first profit by 2006. It has already invested around USD230 million in the mobile unit over the last two years, and said it will spend around USD250 million in the second half of 2004, with a further USD50 million scheduled for 2005.

At the end of March 2004 Sun Cellular claimed a market share of just 3.08%, compared with its larger rivals Smart Communications, which held 45.96%, Globe Telecom (37.39%) and Piltel (13.44%); it also competes with smaller operator Extelcom, a subsidiary of fixed line telco Bayantel, which held just 0.12% at the same date. Sun Cellular has signed an interconnection deal with Globe allowing customers to call and text on each others’ networks, and in November 2003 it awarded Alcatel a USD100 million contract to increase network capacity and install its Evolium GSM/GPRS and EDGE-ready solutions in a bid to attract more customers. It will have to buck up its ideas further, however, as the threat of new competition is looming: fixed line telco Bayantel is looking to expand into the mobile market in its own right, and, according to local press sources, the Filipino regulator has also received an application from Connectivity Unlimited Resource Enterprise (Cure) to launch 3G services.

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