PLDT allocates P6.7B for undersea cable to US

Telco giant PLDT Inc. is setting aside $136 million (P6.7 billion) to complete a new undersea cable to the United States to meet growing demand for international bandwidth.

PLDT chair and CEO Manuel V. Pangilinan told reporters the company recently approved the investment, which would see the cable facility to the United States, via Japan, being finished in three years.

He said the amount was PLDT’s share in an international consortium building the cable facility. This will serve the internet needs of the group’s mobile customers as well as its growing home and enterprise clients.

“That will provide an additional 12 terabytes of data,” Pangilinan said.

Exploding demand

Demand for high-speed internet continues to explode in the Philippines and Pangilinan said PLDT needed to keep pace with changing market requirements.

“It’s a massive effort,” Pangilinan said, referring to plans to also bolster its fixed-line network, which he described as the next telco battleground in the Philippines.

While the wireless segment would see flat to slight growth over the next few years, fixed-line could grow anywhere from 8 to 12 percent, Pangilinan said. Service revenues in this segment were up 7 percent to P46.8 billion in the first nine months of 2016.

PLDT has about 140,000 kilometers of fiber optic cables, which it said was the most extensive network in the country.

Its PLDT Home Fibr now serves 2.5 million homes in about 3,000 locations across the Philippines. These include areas such as the cities of Laoag, Baguio and Tuguegarao, Davao, General Santos, Koronadal and Zamboanga.

Separately, the company’s enterprise group already provides cloud-based digital solutions to companies via its data centers in different parts of the country.

By mid-2017, PLDT will have 10 data centers with a total capacity of more than 9,000 racks—the biggest data center network in the Philippines.

Higher expenditures

PLDT has allotted a record P48 billion in terms of capital spending for 2016. This was much higher than the P43 billion it initially intended to spend this year. The increase was mainly due to the add-on investments to its network following the acquisition of San Miguel Corp.’s telco unit in tandem with Globe Telecom. That transaction included a co-use agreement to use SMC’s valuable radio frequencies, including those in the 700-Megahertz band.

Challenging year

For next year, Pangilinan said capital spending would decline to near the P40-billion mark.

The current year has been challenging thus far for PLDT, which has seen a sharp decline in profits mainly due to an ongoing digital shift and as price competition increases with main rival Globe Telecom.

For the full-year 2016, PLDT expects core profit to fall to P28 billion from P35.2 billion last year. However, Pangilinan said the company’s actual core profit should be lower at P20 billion when removing exceptional gains like PLDT’s sale of a portion of its power assets. He said the P20 billion should be the new profit “baseline” heading into 2017.

Pangilinan said that while 2016 would be “annus horribilis,” or a horrible year, he expected 2017 to be “annus mirabilis,” or a wonderful year, on expectations of a turnaround.