PLDT sees net profit decline 4% in 2014, sets conservative forecast for this year

3 Mar 2015

Filipino telecoms giant Philippine Long Distance Telephone Company (PLDT) reported net income of PHP34.1 billion (USD775 million) in FY 2014, down 4% from the figure of PHPY35.4 billion it recorded the year before, due to what chairman Manuel V Pangilinan termed ‘the combined effect of the intense domestic competitive situation and the changing global landscape’, particularly from a new breed of disruptive over-the-top (OTT) players. In the fourth quarter alone, PLDT booked a 5% year-on-year slump in net earnings to PHP6.13 billion from PHP6.47 billion, it said. Group service revenues edged up 1% y-o-y to PHP165.02 billion from P164.05 billion in 2013, although in 4Q14 turnover declined by 1% to PHP42.02 billion from PHP42.45 billion the previous year.

PLDT’s core profit (which strips out the impact of foreign exchange gains/losses and other non-recurring income) dropped by 3% on an annualised basis to PHP37.4 billion, although once again the group noted a worrying trend in Q4, with core profit slumping 11% to PHP8.85 billion from PHP9.93 billion previously.

Pangilinan says his company needs to adapt to the threat of OTT start-ups which, in his words, are ‘disintermediating the traditional telcos’, meaning that ‘data services and social media are overtaking legacy services’. PLDT is aware of the need to react to the threat in future he says, by ‘participating in the digital world beyond providing access and connectivity’.

The Group closed out last year with a combined mobile subscriber base of 69.9 million users, down from 70.05 million a year earlier, broken down as 25.9 million (Smart users), 28.1 million (Talk ‘N Text subscribers) and 15.8 million (Sun Cellular connections). Of the total, the overwhelming majority – 67.1 million – were pay-as-you-go, although PLDT noted a net rise of 387,000 post-paid users in the year to nearly 2.8 million. Meanwhile, PLDT also counted more than 1.1 million (fixed) broadband subscribers at the year end, up 16% y-o-y and giving it a market share of 49%. Smart Broadband had over 2.3 million wireless broadband connections (1.8 million pre-paid) and Sun Cellular’s wireless broadband base reached 676,000.

In FY 2015, PLDT has set its earnings guidance at a modest PHP35 billion, due to the anticipated impact of higher depreciation and other financing costs, and additional outlay it needs to defend its market share. The company has allocated a capital expenditure budget of PHP39 billion for 2015, with Pangilinan confident of ‘brighter prospects for PLDT’ after 2015.