Globe Telecom Inc. on Friday looked forward improved business performance in the second half of the year due to the continued downtrend in inflation, potentially boosting the purchasing power of Filipino consumers.
“The business is doing well. We saw a slight uptick in demand around May this year that seems to have continued on in June. We’re very happy about that,” Ernest Cu , Globe Group president and chief executive said.
Cu expressed optimism the current situation eventually leads to more positive results for the telecommunications business.
“Of course, inflation has been affecting the lower end of our market, which is the biggest segment of the population in the Philippines. But I’m hopeful with the signs we’re seeing with inflation now going below 6 percent. This will show good results for us in the latter half of the year,” he said.
Due to the aggressive tightening cycle by the Bangko Sentral ng Pilipinas (BSP) and the non-monetary policy measures implemented by the national government, inflation cooled to a 12-month low of 6.1 percent in May from 6.6 percent in April.
However, the 7.5 percent average from January to May remains well above the 2-4 percent target range set by the central bank.
Based on its latest assessment, the BSP expects inflation to average 5.5 percent instead of 6 percent this year and 2.8 percent instead of 2.9 percent next year. It has also raised key policy rates by 425 basis points since May last year but decided to keep interest rates steady at the last rate-setting meeting of the Monetary Board on 18 May this year as inflation trended down.
Cu said prices have remained stable in the telco sector the last 15 years, or since he joined Globe in 2008. Although there was a minor rise in prices attributed to cost increases, the company has been trying to make up for it with efficiencies of scale.
Given this scenario, he said: “Our real hope is that the government continues its fight against inflation. They’ve shown some very good restraint when it comes to interest rates, so that’s very good as well.”
