PLDT profit for first 9 months dips to P30.6B

MANILA, Philippines—Telecommunications giant Philippine Long Distance Telephone Co. posted a 4-percent year-on-year drop in nine-month consolidated net profits to P30.6 billion as unlimited wireless offerings continued to gnaw at operating margins while service revenues slowed as consumers increasingly embraced Internet-based communication.

Core consolidated net profit likewise stood at P30.6 billion for the nine-month period, down by 3 percent from the core bottom line in the same period last year, partly due to foreign exchange adjustment. About 26 percent of service revenues were linked to the US dollar, which weakened versus the peso during the period.

“In this light, and as the year draws to a close, our near-term outlook requires us to consider a guidance number lower than the P40.5 billion core net income we provided in the early part of this year. For the full year 2011, we anticipate core net income to be P39 billion,” said PLDT chairman Manuel V. Pangilinan.

“However, I am confident that with the requisite people, networks, products and quality of service in place, we can return to more profitable times as soon as practicable. We have been there before, we have done it,” Pangilinan added.

Earnings before interest, taxes, depreciation and amortization (Ebitda) margin dipped to 59 percent from 60 percent a year ago.

In a disclosure to the Philippine Stock Exchange, the country’s dominant telecommunications company said its revenue mix was changing, with revenues coming from traditional businesses being replaced by new revenue streams. Consequently, consolidated service revenues dropped by 3 percent, weighed down by a 7-percent decline in combined cellular and fixed-voice revenues and the 4-percent reduction in cellular data/text revenues.

On the other hand, there was a 13 percent rise in wireless broadband and mobile Internet revenues, with the latter growing by 109 percent.  Among other growth areas in the nine-month period were DSL revenues (up 13 percent to P6.9 billion) and business process outsourcing and data center operations (up 3 percent to P8.2 billion).

The group’s combined broadband subscriber base increased by 14 percent to 2.3 million from the end-2010 level. Total broadband and Internet revenues grew by 10 percent to P13.9 billion from a year ago, now accounting for 13 percent of consolidated service revenues.

Wireless service revenues declined by 5 percent to P67.3 billion for the first nine months from a year ago.  Cellular voice revenues dropped by 7 percent to P29.3 billion which PLDT attributed to “continuing intense competition” and unlimited voice packages even as voice traffic increased by 50 percent.

The PLDT group’s total cellular subscriber base at end-September stood at 47.7 million, 5 percent or 2.1 million higher from end-2010. Smart Buddy has 26.6 million (up by 900,000), Talk ‘N Text has 19.5 million (up by 600,000 million) and Red Mobile has 1.6 million (up by 700,000 million)

Smart’s postpaid subscriber base rose to 476,000, with the net addition of 55,000 post-paid subscribers for third quarter alone being “one of the highest in recent memory.”

“We continue to manage the long tail of our traditional telco business, cognizant that revenues will continue to be pressured by declining yields brought about by the unlimited services. That said, we are elated with the growth of our broadband business and our massive investment in network modernization has already raised our network performance, with our subscribers enjoying a significantly enhanced customer experience,” said Napoleon Nazareno, president and CEO of PLDT and Smart Communications.