PLDT Inc., the country’s biggest telecommunications provider, likely saw a “tough” third quarter as it continued to face challenges from declining traditional cellular services, its top official said.
PLDT chair Manuel V. Pangilinan told reporters Friday the telco giant also saw “slight erosion” in its mobile subscriber base. He said this was possibly on account of subscribers shifting to competition. PLDT ended the first six months of the year with a cellular subscriber base of 64.47 million, down 6 percent year-on-year.
“It’s really wireless being the epicenter of the issue,” Pangilinan said at the sidelines of PLDT’s #Betheboss awards. “It’s going to be a tough third quarter,” he said, referring to the period covering July to September.
Pangilinan noted that its data business continued to grow, with big gains coming from its retail fixed-line and corporate segments.
“Home and enterprise are doing much better than last year,” Pangilinan said.
The year has been challenging thus far for PLDT, which early on sought to manage expectations. In the first half of 2016, PLDT said core profit was down 6 percent to P17.7 billion.
Moreover, its reported net income in the first six months of 2016 fell 33 percent to P12.5 billion following a P5.4-billion impairment charge from Rocket Internet, a Germany-based technology company it entered in 2014.
That digital shift involved consumers moving away from traditional call and text services, once the major driver of revenues. Today, consumers are demanding faster internet for watching videos, playing games and accessing social media mainly on their smartphones.
The shift was better illustrated in PLDT’s revenues. Its fixed-line business, 59 percent of which comes from data and broadband, rose 7.4 percent to P30.9 billion in the first half of 2016.
Wireless revenues, 27 percent of which come mainly from data and broadband, slipped 5.1 percent to P52.7 billion. Wireless was down due to declines in text and voice revenues, PLDT said.
Overall, the company said data and broadband revenues stood at P29.3 billion in the first semester, increasing its contribution to total revenues to 41 percent, compared to 33 percent a year ago.
PLDT said last month that full-year 2016 core profit would hit P30 billion, down almost 15 percent from 2015. The full-year expectation was slightly improved, after PLDT sold part of its stake in power retailer Manila Electric Co. This was to partially fund its share of a joint acquisition with rival Globe Telecom of San Miguel Corp.’s telecommunications unit on May 30.
PLDT and Globe said the deal, valued at P70 billion, was needed to free up SMC’s unused radio frequencies and improve the quality of mobile internet services in the Philippines. The Philippine Competition Commission earlier wanted to review the transaction, but that effort was temporally blocked by the Court of Appeals.