THE COUNTRY’S largest telecommunication services provider intends to “reset” its business strategy after core earnings are expected to decline for the third straight year in 2016 to a level not seen in over a decade.
The admission by top managers of Philippine Long Distance Telephone Co. in a briefing yesterday as core profit in 2015 sank 6 percent to P35.2 billion, above expectations, but nevertheless underscored a broader shift in the business toward Internet services and away from PLDT’s legacy units.
PLDT said its full-year service revenue was down by 1 percent to P162.9 billion in 2015, as legacy business slowed with more consumers shifting to online platforms and social that offer free calls and messaging.
Investors reacted swiftly yesterday as PLDT chair and CEO Manuel V. Pangilinan’s forecast that the company’s 2016 core profit would end at P28 billion, a level not seen since 2004. He said competition from rival Globe Telecom and the planned entry of San Miguel Corp. would also put pressure on margins.
PLDT shares yesterday fell 17.7 percent to P1,830 per share.
“We have come to the realization that we have to reset the dials of the company as you move from legacy to digital. It won’t happen without any pain,” Pangilinan said yesterday.
Pangilinan, who assumed the post of CEO in December, said PLDT needed “space” from pressures to continue producing profit growth as it retooled its strategy to adapt to the Internet age. A turnaround, he said, could take three years and would involve higher capital spending and a halt to special dividends.
“We have to take our foot off the financial pedal for a bit,” he said. “So you give more space, more breathing room for the company to turnaround and face the digital challenges.”
The immediate challenge, Pangilinan said, was to cut the decline in the pre-paid market share of mobile unit Smart Communications. He said Smart lost five million pre-paid subscribers to Globe in 2015. PLDT ended last year with 65 million cellular subscribers.