PLDT posts 8% decline in Q1 net profit to P9.2B

Philippine Long Distance Telephone Co. (PLDT) said its net income for the first quarter declined 8 percent to P9.2 billion, mainly on lower financial gains and employee termination expenses, but officials stayed upbeat despite the shifting trends in its key business units.

PLDT, which posted flat growth in service revenues at P40 billion during the quarter, remained on track to hit core net income of P38.3 billion, up 2.7 percent, a regulatory filing showed.

In a press briefing yesterday, PLDT officials also discussed the company’s operating results so far this year as they outlined changes in the company’s revenue model due to the rise of broadband and Internet services.

PLDT president Napoleon Nazareno noted declines in its “legacy” national and international long-distance revenues, double-digit growth in the broadband and Internet business and flattening revenues for the flagship wireless unit.

Nazareno said national and international long-distance revenues, which accounted for 17 percent of service earnings, dropped 9 percent to P6.6 billion with further declines forecast to continue due to the appreciation of the peso and growth in broadband.

Broadband and Internet revenues grew 10 percent to P6.4 billion, although Nazareno noted that margins remained lower than its legacy business.

“Double-digit growth in data and broadband are not yet sufficient to fully offset the decline in legacy revenues,” Nazareno said. “But the margins should improve once we increase network efficiency.”

Most of the company’s service revenues still came from the wireless business, which grew just 0.34 percent to P28.5 billion.

“As we have seen in the past few years, our service revenue levels are challenged by an evolving revenue mix,” PLDT chair Manuel V. Pangilinan said. “Fortunately, we saw a solid 10-percent growth in our broadband and Internet revenues. Overall, we are encouraged that the growth in these data revenues is offsetting the softness in other revenue segments.”

PLDT shares rose 0.06 percent to P3,076 each, giving the telecommunications giant a market value of P664.6 billion as of Tuesday’s close.

Meanwhile, the company’s combined subscriber base, which comprises Smart, Sun and Talk ‘N Text, grew 3 percent to 71.7 million subscribers quarter-on-quarter.

Nazareno said that competition for subscribers with Globe Telecom, the country’s second-biggest player behind PLDT’s brands, remained intense even after PLDT acquired Digitel Telecommunications Philippines Inc. two years ago.

“The competitive situation remains the same although moving forward we are looking at trying to grow the market by increasing our value-added services in broadband,” Nazareno said.

PLDT is set to receive an earnings boost in the second quarter when it books a P1.6-billion exceptional gain from the sale of its business process outsourcing (BPO) business.