MVP: 2016 horrible for PLDT

Telco giant PLDT Inc. is forecasting a steep drop in core profit this 2016, to round out what company chair and CEO Manuel V. Pangilinan described as a “horrible year.”

He said full-year core net income was seen at P20 billion, a figure much lower than earlier internal expectations since PLDT stripped out certain exceptional items—like the sale of part of its power assets—to achieve a new “baseline” moving into 2017. PLDT posted a core profit of P35.2 billion last year.

“We might as well call a spade a spade,” Pangilinan said in a media briefing Monday. “That’s why we have to establish a baseline position.”

Including items like the sale of part of its stake in Beacon Electric Asset Holdings Inc., the main holding company of the group’s Manila Electric Co. stake, core profit for full-year 2016 was seen at P28 billion.

“It’s annus horribilis (horrible year),” Pangilinan said, when asked what he thought about this year’s performance.

The company’s earnings slipped on a combination of competition with main rival Globe Telecom, rise in product subsidies, and higher than expected capital spending following the acquisition of San Miguel Corp.’s telco unit.

This was all underpinned by the changing nature of the telco business, which is moving away from traditional services like calls and text messaging and into internet-related applications.

In the third quarter alone, PLDT lost three million subscribers to Globe. All told, Pangilinan noted the group lost about 17 million cellular subscribers to Globe since 2013.

Total revenues in the nine months through 2016 slipped 2 percent to P125.4 billion, while core income, again stripping out exceptional items, was at P16 billion. Full-year Ebitda was seen at P60 billion, lower by P4 billion.

Pangilinan expects the company to grow its core earnings and Ebitda in 2017.

“We are looking at an annus mirabilis (remarkable year) in 2017,” he said, referring to a possible turnaround. “We had a year to work out many kinks and issues internally.”