February 17, 1998 (MANILA) -- Philippine Long Distance Telephone Co. (PLDT), the country's dominant telecommunications carrier, said it will sign an agreement with AT&T; Corp. of the United States to reduce telephone accounting rates.

PLDT said the agreement is expected to be signed in February. The accounting rate refers to the per-minute cost shared by a Philippine company with its foreign counterpart for every minute of an international call, and it is now at US$1.00.

"The negotiations have been finalized, and we are looking at anywhere from US$0.79 to US$0.85," said Edgardo del Fonso, PLDT's executive vice president.

Of the current US$1.00 charge, half goes to PLDT and the remaining amount to its foreign counterpart. The U.S. Federal Communications Commission has informed U.S. carriers that they should cut their rates to increase call volume.

The regulatory body said it favors lowering accounting rates to US$0.38 over a two-year period.

Del Fonso said discussions on the accounting rate began early in 1997. He said that PLDT would inform local international gateway facility (IGF) operators on the agreed accounting rate before it signs a contract.

The rate agreed upon with AT&T; will be used by PLDT as the accounting rate for other U.S. carriers. PLDT officials earlier said that the company hoped the revenue loss from the reduction in the accounting rate would be offset by a rate restructuring scheme approved by the government in November 1997.

The rate rebalancing scheme raised rates for local calls and lowered international charges in December. A fixed monthly rate is paid by subscribers for local calls regardless of their length.

On the currency crisis, Del Fonso said PLDT expects improved earnings as a result of the peso's fall because a large portion of the company's revenues are dollar-denominated.

PLDT had earlier been allowed to pass to subscribers additional costs from foreign exchange movements.

The peso has lost around 35 percent of its value against the dollar since it was effectively devalued in July 1997.

"With the possibility of more business failures, slower demand and increasing credit exposure, we are reviewing our capital expenditures for the year. We may defer or cancel projects depending on the review," Del Fonso said.

Del Fonso said that when the peso was trading at 28-29 against the dollar, PLDT had expected to make capital expenditures of 27 billion pesos.



(Margarita Roa, Asia BizTech Correspondent)