Small cable firm gets OK to operate in Pasig

Tag : Small TV
Small cable firm gets OK to operate in Pasig By Lenie Lectura Reporter
CABLE Link & Holdings Corp. has been given the green light tooperate in Pasig City but a major rival wants this reversed.
Lopez-owned SkyCable Corp. has asked the NationalTelecommunications Commission (NTC) to revoke the provisionalauthority (PA) awarded to the small cable TV firm.
SkyCable pointed out that Cable Links entry will result inruinous competition because there will be duplication of servicewhich, to date, is being adequately provided by existing operators.
The major cable firm said the NTC should revoke Cable Links PAbecause it suffers from financial and technical defects. Cable Linkhas been in the red since 2000. In 2005, net loss amounted toP2.139 billion. Cable Link operated at a loss in 2006 and 2007,with net loss after-tax increasing from P101,789.13 in 2006 to2007s P910,722.39, which should additionally pose a negativeeffect on the financial capability of the applicant to put up,maintain and operate the proposed network, said SkyCable.
And while Cable Link has implemented several initiatives to improveits profitability, SkyCable pointed out that the sheer amount ofprevious losses would simply dissipate whatever positive effectsthese initiatives may contribute to the small firms financialwell-being.
In the light of the existing financial condition, such unnecessaryduplication of services will needlessly result to the extremesaturation of the market such that the ideal number of existingCATV service providers would far exceed and therefore gravely tollon the potential of the limited subscriber base, said SkyCable.
Cable Link projects to corner at least 35,000 subscribers in aperiod of five years, representing 24.5 percent of the maximumpotential subscribers in the area.
In its proposal, Cable Link also plans to borrow P15 million at12.5 interest for its foray in to a new area.
Cable Link said it will charge subscribers a monthly fee of P500during the first five years of operation and expects to post totalrevenues amounting to P24.75 million in the first year; P71.77million in the second year; P114.09 million in the third year;P127.44 million in the fourth year; and P139.44 million in thefifth year.
But SkyCable noted that Cable Links projections are highlyimprobable because the data failed to include any analysispertaining to the projects internal rate of return.
The Lopez company also said Cable Link failed to specify expensesfor commissions. This puts doubts the effectiveness of Cable Linkssales efforts, it said. Cable Link also did not cite its capitalexpenditure and is also silent on its key assumptions forcollection efficiency, thereby casting grave doubts on the veracityof the figures for receivables.
The financial study failed to make an exhaustive analysis of theimplications of the presence of a prior operator&It did not takeinto account the problem of illegal connections in sizing themarket...It will only achieve its projected 4,500 subscribers atthe end of the second month of the first year on account of theaggressive marketing campaign cited in the financial study despitethe fact that the study did not even make provisions forcommissions for marketing personnel, said SkyCable.
Cable Link is based in Paranaque City and has a pending applicationto operate in Manila. It is one of the closest competitors ofSkyCable that serves Metro Manilaincluding Pasig, Manila andPara