Record profits and strong subscriber gains keep PLDT at No.1

19 Feb 2004

Philippine Long Distance Telephone (PLDT), the country’s dominant fixed line and cellular services provider, said its 2003 net profit rocketed threefold to a record PHP11.2 billion (USD200 million), from PHP3 billion in 2002, thanks to a strong performance from its mobile units Smart Communications and Pilipino Telephone Co (Piltel). In 2003 PLDT’s flagship division Smart more than doubled its net income to PHP16.1 billion (PHP6.2 billion) on the back of what the company called ‘unparalleled’ growth in its subscriber base following the launch of a pre-paid product that allows its customers to sell on blocks of pre-paid airtime to other users. At the end of the year Smart boasted around 10.1 million customers and Piltel just under 2.9 million, with the two having added a total 4.3 million wireless customers in the twelve-month period to retain PLDT’s dominant position with a market share of 57.57%. The new service had a marked impact in Q4; PLDT said over ten million pre-paid subscribers were using the system by the end of the year, leading to a significant reduction in production and insurance costs for pre-paid cards. Although the telco has not published data for the fourth quarter, profits for the nine months to 30 September reached PHP5.8 billion, suggesting that net income for the final period of the year may be as high as PHP5.4 billion.

PLDT’s group revenues rose from PHP80.17 billion to PHP97.72 billion, with Smart contributing PHP49.9 billion, and the better-than-expected performance enabled PLDT to cut USD252 million of debt in 2003 and protect it from the threat of a peso depreciation; the company holds a high proportion of foreign-denominated liabilities that it wishes to reduce. PLDT’s fixed line unit reduced debt by USD180 million, helping cut total debt to USD2.47 billion, but in the words of incoming chairman Manuel Pangilinan, the unit ‘remains under pressure’ due to dwindling income from local calls and DLD operations. The Group’s information and technology arm ePLDT entered the black in Q3, thanks to the success of its call centre operations; ePLDT reported full year revenues of PHP1.5 billion, up from PHP948 million a year earlier.

Smart’s continued success is welcome news for PLDT which is rumoured to be facing the threat of new competition in the shape of Connectivity Unlimited Resource Enterprise (Cure). According to local press sources, the country’s industry regulator, the National Telecommunications Commission (NTC), has received an application from Cure to offer third-generation (3G) digital cellular mobile services. If successful, Cure hopes to sign up a minimum 200,000 subscribers within a few months of launch, but though it has secured a legislative franchise, it still needs to seek a provisional authority from the NTC. The industry watchdog, however, has yet to issue guidelines on Cure’s application and its director Edgardo Cabarios is on record as saying that such a move could be ‘unfair’ to existing operators as the new entrant would be spared from existing telecom rules such as the stipulation requiring the installation of a minimum 700,000 lines.

PriMetrica’s GlobalComms