PLDT says 3Q net income down on weaker mobile revenue, strong peso

3 Nov 2011

The Philippines’ largest telecommunications company, Philippine Long Distance Telephone (PLDT), has reported a 10% fall in net profits for the three months to 30 September 2011, attributed to lower revenues at its mobile arm and the impact of a strong local peso. The group posted net income of PHP9.3 billion (USD217 million) in the three-month period, down from PHP10.3 billion a year earlier, and below analyst projections of net profit of PHP9.7 billion. Further, core net profit, which strips out the impact of currency and derivatives-related items, declined 6% year-on-year in the July-September quarter to PHP9.6 billion. For 9M11, PLDT’s net income and core income both reached approximately PHP30.6 billion, down 4% and 3% respectively when compared to the same period a year ago. The telco noted that had the peso remained stable, its core net income for 9M11 would have been higher at PHP31.3 billion. However, the peso has gained more than 2% in the year to date, and hit a three-year high against the US dollar in August.

PLDT booked service revenue of PHP33.6 billion, down 3% y-o-y, as again, the strong peso had a negative impact on turnover which fell by PHP1.4 billion to PHP103 billion in the third quarter. Mobile service revenue, which contributes nearly two-thirds of the group’s total service revenue, dipped 5% y-o-y to PHP67.3 billion in 9M11, it added. PLDT closed out September with a total of 47.7 million cellular subscribers, marginally lower than the 47.8 million reported at end-June.

Reuters adds that PLDT is also predicting further pressure on its group revenue due to planned CAPEX on its data and broadband infrastructure, and the upgrades it will undertake after acquiring fellow operator Digital Telecommunications Philippines Inc (Digitel), in a USD1.6 billion deal approved last week. PLDT chairman Manuel Pangilinan said: ‘We are therefore faced with the sobering prospect that revenues are likely to continue declining for the foreseeable future, and costs rising in the near term – as we need to follow through with improving and upgrading our networks, including Digitel’s.’ Although PLDT’s takeover of Digitel, which markets mobile services under the Sun Cellular banner, gives the enlarged group control of roughly 70% of the domestic mobile phone market, analysts note that it will take time for PLDT to fully integrate Digitel and begin to reap benefits from the deal.