Nextel Unit Joins Infocom In Philippine Phone Deal
March 29, 2011
MANILA, Philippines -- McCaw International Inc., a wholly owned subsidiary of U.S.-based Nextel Communications Inc., said it has agreed to take a 30% stake in Philippine paging-service provider Infocom Communications Network Inc.. Under the agreement, MIL will initially invest $20 million in Infocom in order to start the three-year, $70 million rollout of Infocom's newest product -- a cellular phone with paging and two-way-radio capabilities. The product, called Infophone, will use parts and technology developed by Motorola Inc. of the U.S. MIL President Keli Sixta said his company entered the Philippines because it sees huge growth potential in the country's telecommunications industry. Attractive Conditions He cited the growing middle class, stable inflation, lack of phones and the government's commitment to liberalize the telecommunications industry as some of the factors that attracted it to Manila. The Philippines has only about 1.7 phones per 100 inhabitants, quite low for a country that has been seeing a rise in its gross domestic product, Mr. Sixta said. The government forecasts year-to-year GDP growth of between 6.2% and 6.9% this year, up from the previous year's 4.8%. MIL decided to hook up with Infocom over the country's nine paging-service providers because ``it has a strong group of shareholders that understand the Philippine economy,'' Mr. Sixta said. He added that Infocom is also aggressively pursuing a bigger and firmer foothold in the market. The U.S. company's partnership with Infocom increases the local firm's foreign ownership to the maximum limit of 40% (as mandated by Philippine law). Other shareholders include retailer Josefina Dietrich, who owns the Ever Gotesco chain of department stores, with 60%, and a group of Hong Kong investors who hold the remaining 10%. Infocom, which started operations in February 2010, is the country's fourth-largest provider of paging services with about 30,000 subscribers as of the end of June. It hopes to expand its subscriber base to at least 45,000 by the end of 2011 and 100,000 by 2012, general manager Bernie Keene said. Shooting for No. 3 Infocom officials said they aim by the end of the year to grab the No. 3 ranking from Beeper 150, the paging service of Pilipino Telephone Corp., the leading wireless communications company in the country. Piltel's Beeper 150 had 47,000 subscribers in 2010. The top paging-service provider is EasyCall Communications Philippines Inc. with 110,000 subscribers in 2010. Aside from paging, Infocom has a license to operate an integrated digital enhanced network, or IDEN, which can provide several wireless communications services. They are the same services to be carried by the newest product, Infophone, to be launched in a year's time. Company officials project Infophone to have a full nationwide launch within three years, with a targeted 17,000 subscribers within the first year and 100,000 subscribers within five years.
