PLDT revenues, core net income drop in 2016; mobile and fixed network upgrades continue apace

7 Mar 2017

PLDT Inc. has reported a 3% year-on-year drop in consolidated service revenue in FY 2016 to PHP147.6 billion (USD2.9 billion), as core net income slumped 21% to PHP27.9 billion – its third consecutive year of decline – mainly due to lower EBITDA and costs arising from higher capital expenditures to support ongoing expansion of the group’s fixed and mobile networks. Net income attributable to shareholders, meanwhile, dipped to PHP20.0 billion from PHP22.1 billion as the country’s largest carrier by revenue bore the brunt of costs relating to its shift to digital. ‘We faced very tough tests in the past year as competition intensified and the shift to digital services accelerated. Our results reflect the impact of these challenges, but also point to us the way forward,’ PLDT Inc. chairman Manuel Pangilinan said. In addition, the company said that consolidated core EBITDA declined by 6% to PHP65.8 billion, representing a margin of 42%, due largely ‘to lower wireless service revenues and higher provisions, moderated by lower cash operating expenses’. Including one-time provisions and handset subsidies, the underlying EBITDA amounted to PHP61.2 billion.

In terms of operating segments, PLDT reported that its wireless division, which comprises subsidiary units Smart Communications and Sun Cellular, generated service revenue of PHP66.4 billion, down 9% y-o-y, largely the result of declines in SMS and domestic voice revenues. More positively, mobile data increased by 20% from FY 2015 and now accounts for 34% of total service revenue, compared to SMS and voice with shares of 33% each. The carrier had a total of 62.763 million mobile subscribers at 31 December 2016, down from 68.612 million twelve months earlier, of which 59.952 million are pre-paid (65.063 million). Furthermore, PLDT Home – the area responsible for data and broadband – saw a 14% improvement in turnover to PHP17.6 billion (equivalent to 60% of service revenue), while enterprise sales climbed by 22% to PHP19.2 billion. The unit reported more than 1.720 million broadband subscribers by the start of 2017 – including 1.450 million fixed line and 270,203 wireless at home customers – up from a total of 1.441 million at end-2016 (1.138 million and 303,303 respectively), while fixed telephony lines had grown by 9% to 2.439 million.

PLDT Inc. invested PHP42.8 billion into its networks and services last year, out of a budget of PHP48 billion, and has set aside PHP46 billion in 2017, including the carry-over. In 4Q16 it completed the integration of the mobile networks of Smart and Sun Cellular, trimming operational costs in the process. Additionally, it enhanced its 3G and 4G service coverage using the lower 700MHz band (completing deployment in Borocay and Metro Davao, with work ongoing in Matro Manila and Metro Cebu), and as a result, Smart’s LTE outdoor coverage reached 98% of Metro Davao at end-2016, while indoor coverage increased six-fold to 66%. Moreover, in some areas LTE-Advanced (LTE-A) has been deployed using carrier aggregation (CA), realising peak throughput of >90Mbps. As part of Smart’s three-year deployment plan, PLDT Inc. intends to extend LTE coverage to 70% of the population by end-2017 and 95% of cities and municipalities by 2018. Simultaneously, it is rolling out fibre-to-the-home (FTTH) and is aiming to boost its current homes passed figure of 2.8 million (end-2016) to 4.4 million (end-2017) and six million (2020). Complementing its FTTH, PLDT is also rolling out and targets 1.7 million homes covered this year.