Telcos see higher profits in Q2

Local telecommunications firms expect their second-quarter earnings to be above the 2010 levels, as their nontraditional businesses help keep profits up despite a dip in call and text service revenues.

Network giant Philippine Long Distance Telephone Co. (PLDT) earlier said its second-quarter profit had so far been up year on year, better than the government’s goal for the year.

“Second-quarter revenues are a little bit challenged but our bottom line is still okay,” PLDT president and CEO Napoleon Nazareno said in an interview. “We’re doing well,” he said, adding that its second-quarter performance would likely be better than that in the first quarter.

PLDT reported a 6-percent drop in profit in the first quarter to P10.7 billion, down from the P11.4 billion registered a year ago.

Its core net profit, which strips out currency and derivative losses, was up 1 percent to P10.6 billion in the first quarter.

The company said service revenue fell 4 percent to P34.6 billion in the first quarter due to the strengthening of the peso. Call and text service earnings, which accounted for two-thirds of the group’s service revenue, also slid by 4 percent.

Rival network Globe Telecom Inc. said its net income “continues to be okay,” but noted that the Ayala-led firm was expecting competition to further intensify as companies fight for bigger market shares.

“Last quarter, we were up in terms of market share and PLDT was down. I think the second half could be more competitive,” Globe chief financial officer Alberto de Larrazabal said in an interview.

“We’re already feeling the pressure on pricing,” he said, noting that its rival, which controls 55 percent of the market, has been bringing down its rates.

Globe earlier said its net income rose 1 percent in the first quarter, the first increase in quarterly profit since the start of last year.

Net income after tax of P3 billion in the first quarter was also a 30-percent improvement from the fourth quarter of 2010.