PLDT’s 6-month core profit seen falling below year-ago level

MANILA, Philippines—Philippine Long Distance Telephone Co.’s core net income in the first half of 2012 is expected to be lower than that in the previous year, company chairman Manuel V. Pangilinan said.

Pangilinan said this could be blamed on the continued pressure on average revenue per user and margins on the legacy cellular phone, the decline in traffic and pricing for international and national direct dial services, and increased depreciation and capital.

Last year’s P21.02-billion first-half net profit was a “record,” Pangilinan said, noting that the second-half core net profit in 2011 was also lower than that in the first semester.

PLDT is expected to announce first-half results on August 14.

Despite the weaker first semester, the telecommunications giant may still meet its full-year core net income guidance of P37 billion, he said. That would be lower than the core net profit of P39 billion last year.

PLDT, however, is aiming to return to posting earnings growth in 2013, when heavy investments for network upgrade and expansion since 2010 will start paying off.

In 2014, PLDT is expected to hit its record profit of P42 billion, which was posted in 2010. “That was our highest core net income in the history of PLDT. We want to match that in 2014,” Pangilinan said. “We are on track.”

The three-year core profit guidance has factored in the impact of PLDT’s acquisition of Digital Telecommunications Philippines Inc. (Digitel) from the Gokongwei group, but not the prospective acquisition of broadcasting giant GMA Network (GMA 7).

PLDT posted P9.3 billion in consolidated core net income in the first quarter of 2012. This was 12 percent lower year on year and was attributed to higher operating expenses, lower equity share in earnings of Manila Electric Co. (through Beacon Holdings) and a higher provision for income taxes. Digitel contributed P200 million in core earnings during the first three months.

Mediaquest Holdings, a unit of PLDT Beneficial Trust, may become the PLDT group’s vehicle to acquire GMA 7.

MediaQuest has various media investments, such as a majority stake in TV5 operator Associated Broadcasting Corp. and a minority interest in several newspapers.