PLDT reports 34% slump in net income in Q1 as revenue flat-lines

4 May 2016

Filipino communications heavyweight Philippines Long Distance Telephone Company (PLDT) has reported a 34% year-on-year decline in net income for the three months to 31 March 2016, as it weathers the knock-on effects of trying to shift its business to meet the demands of a modern digital age. The losses had been expected by the market, The Manila times reports, as PLDT sets out its stall to upgrade its legacy network – part of what its chairman and CEO Manuel Pangilinan calls the ‘digital pivot’ strategy. Attempting to put a brave face on the results, Pangilinan told reporters at the side-lines of the quarterly operating results briefing: ‘Three or four months does not make a year.’ Nevertheless, with revenue from its traditional local voice calls business sliding 6% y-o-y and national long-distance calls down 16%, and effectively wiping out service revenue growth in the period under review – revenues of PHP42.779 billion (USD929 million) were up just 1% on the PHP42.553 billion reported in Q1 2015 – declines in PLDT’s core business are placing a heavy toll on the operator.

PLDT recorded a 27% annualised fall in pre-tax income to PHP8.962 billion, core income of PHP7.211 billion (down 22%) and a 14% drop in EBITDA to PHP16.606 billion; an EBITDA margin of 41% marked a seven percentage point fall y-o-y. More positively, however, turnover derived from data and broadband services expanded by 21% y-o-y as PLDT continues to ramp up efforts to deploy mobile (3G and 4G) infrastructure, fibre-to-the-home (FTTH) services and to enhance its legacy DSL offerings. In Q1 2016 it spent PHP4.6 billion in capital expenditure programmes – a four-fold increase from Q1 2015 – prompting Pangilinan to note: ‘Our results for the first quarter confirm our view that the digital pivot will be a difficult and complicated process.’

Operationally, PLDT and its mobile subsidiaries Smart Communications and Digital (Sun Cellular) closed out 31 March with a total of 64.449 million mobile users, down 7% from 69.622 million a year ago, while fixed broadband users rose 17% to 5.286 million and fixed telephony connections climbed 5% to 2.339 million.