Gov’t sees as much as P10 billion from Philpost sale

BY BERNARDETTE S. STO. DOMINGO, BusinessWorld Reporter THE GOVERNMENT could earn as much as P10 billion from the privatization of the Philippine Postal Corp. (Philpost), once the benefits of the agency’s P5.7-billion modernization and computerization program are realized. Philpost Postmaster General and Chief Executive Officer Hector R. R. Villanueva said the sale of 55% of the agency could coincide with benefits from the ongoing modernization, which is up for completion in two years. "The selling price will not be the same. It could easily [rise] to P10 billion if the modernization project, which is already P5.7 billion, is adopted [sic]," he said in an interview on the sidelines of the 14th ASEANPOST Business Meeting in Makati. Philpost was formed under Republic Act 7354, or the Postal Service Act of 1992. Under its charter, the government cannot sell shares lower than par, which is P100 per share. At this price, government had hoped to raise P5.5 billion from the privatization. No good offer yet Mr. Villanueva said a number of companies have expressed interest in bidding for Philpost, but "nobody has made any good offer." These include Pangilinan-led telecommunications giant Philippine Long Distance Telephone Co. (PLDT), while state-led Development Bank (DBP) of the Philippines and Land Bank of the Philippines are eyeing Philpost’s postal banks. "The potential is big, especially if we expand our networks further and convert all our post offices to savings banks," Mr. Villanueva said. In a separate interview, DBP President Reynaldo G. David did not confirm interest in Philpost, but admitted his agency will have to study the matter. Plans unclear Ramon R. Isberto, Smart Communications, Inc., Public Affairs Group Head, confirmed that PLDT had looked into the business. "Some of our officials had meetings with Philpost and discussed possible synergies of their business," Mr. Isberto said. "But it has not progressed beyond that specially since the status of their privatization remains unclear to us," he said. Philpost last year inked a build-lease-transfer agreement with Japanese information technology giant ROA Systems Co. Ltd. to computerize Philpost’s operations and interconnect 2,000 existing post offices. The project is up for completion in two years. With the completion of the modernization project, Philpost plans to engage in international money order and compete head-on with existing money transfer companies. Mr. Villanueva said his agency will also take advantage of its monopoly of the rural market. Mr. Villanueva admitted that letters are no longer the agency’s core business, due to widening use of electronic mail. "The competition now is in parcel and bulk mail such as bank statements, credit card renewals, flyers, brochures, and annual reports." Mr. Villanueva said Philpost needs to raise its standards to compete with Hong Kong, Singapore and Malaysia, whose postal system are highly modernized. Philpost operates more than 2,000 post offices, distribution centers and mailing outlets nationwide. It has a work force of 13,000 employees and more than 2,500 mail vans and motorcycles. Last year, the agency posted a turnaround to P46 million in net profit, due mainly to cost cutting. This year, it is targeting about P147 million in net income. Under the proposal, ROA would computerize the Philippine postal system by leasing computers and other equipment. It would then build and maintain modern postal applications and business systems for a period of nine years at no cost to Philpost. With the computers and new business systems, Philpost revenues are projected to rise to P13 billion, from about P3.5 billion it makes a year.