Wednesday, July 30, 2008

Can Globe Telecom recover from the negative effects of the seemingly unseizing soar in the Philippines's oil price?

Globe Telecom had its biggest gain in almost a year in Manila trading on speculation lower oil prices will boost mobile phone use.

Globe, the Philippines' second-largest phone company, climbed 5.1 percent to 1,125 pesos at the noon close in Manila. That's its biggest gain since August 21.

"Lower oil prices would mean more spending power for consumers," said Richard Laneda, an analyst at in Manila. "Consumers will spend more of their budget on telecoms instead of oil." Phone use "is one of the things that people can cut on, unlike electricity and oil, so when oil prices are lower they would again spend on text messaging and calls."

Crude oil fell to a 12-week low, rounding out a 17 percent decline from the July 11 record. Philippines inflation accelerated to a 14-year high of 11.4 percent in June on higher prices of oil, almost all of which the country imports.

Does lower oil price mean more revenue for the Philippines's Telecom Industry?