Telco giant PLDT Inc. is expecting massive savings after outsourcing most of its IT operations to a unit of United States-based IBM within the year—a key part of the company’s strategy to stabilize earnings and regain its growth momentum.
PLDT chair and CEO Manuel V. Pangilinan told reporters after the company’s annual meeting yesterday that PLDT would realize about P7 billion in savings over at least five years.
Pangilinan said a final agreement with IBM would be signed by the end of June. He earlier said PLDT’s IT operations compromised about 1,000 workers, with the plan of having IBM absorb most of them. PLDT ended 2016 with over 18,000 workers.
Pangilinan said PLDT would retain the people in the IT department, or those he described as the “brains of the IT organization.”
He said the cost-cutting initiative, done along the company’s plans to further boost its fast-growing fixed-line broadband segment and roll out LTE to bolster slowing growth in mobile, had touched all parts of the PLDT organization.
“It’s painful, it involves expenses that people were used to spending,” Pangilinan said, adding that there were cuts on overseas travel and “non-essential entertainment.”
“We’ve had a salary increase freeze for the past year or two. Everybody is pitching in in terms of helping out in the cost reduction,” Pangilinan said.
PLDT earlier announced that core profit for 2016 hit P27.9 billion, down 21 percent, while its “recurring core income,” a figure that removes the gain from the sale of part of its Manila Electric Co. stake last year, was down 26 percent to P20.2 billion.
Total service revenue hit P147.6 billion, down 3 percent.
PLDT said it hit the “reset” button for 2017, saying recurring core income this year would hit P21.5 billion, up 6 percent.
Pangilinan said the telco would sell its remaining stake in Manila Electric Co., which would boost earnings this year.
A big focus was also its fixed-line segment for homes and businesses, which Pangilinan said would grow by about 8 percent yearly in the next three years. Wireless growth, a previous revenue driver, would grow by about 2 percent yearly.