PLDT H1 net income up 33%, despite fall in revenue

10 Aug 2017

The Philippines’ largest telecoms operator by revenue PLDT Inc. reported consolidated net income of PHP16.561 billion (USD327.5 million) for the six months ended 30 June 2017, up 33% from PHP12.486 billion in 1H16. Total revenues in the semester dipped 7% year-on-year, however, to PHP79.015 billion, primarily due to the combined effects of the following: (i) lower revenues from mobile services, home broadband, and MVNO and other services, partially offset by higher digital platforms and mobile financial services from the group’s wireless business; (ii) higher revenues from data and miscellaneous services, partially offset by lower revenues from voice services at PLDT’s fixed line business; and (iii) lower non-service revenues from its wireless and fixed line businesses. Operating costs, meanwhile, eased to PHP62.746 billion from PHP69.646 billion, partly as a result of lower expenses related to cost of sales, asset impairment, and cash operating expenses related to interconnection costs and other costs. Pre-tax profit rose by 21% to PHP20.737 billion, with the company also noting that earnings before interest, taxes, depreciation and amortisation (EBITDA) edged up 4% y-o-y to PHP32.010 billion.

Wireless revenues in the six-month period under review declined 16% on an annualised basis to PHP46.665 billion from PHP55.474 billion, with PLDT noting its cellular business saw falls in mobile services, home broadband, and MVNO and other services, partially offset by higher revenues from digital platforms and mobile financial services. Nevertheless, the group’s mobile arm Smart (including Sun Cellular) continues to ramp up network upgrades across the country, boosting LTE and 3G coverage in Metro Cebu and Metro Manila, with expansion that includes deploying low-frequency bands like 700MHz and 850MHz to improve network coverage, network capacity and to enhance indoor signals. Smart says the network upgrade has been completed in Metro Davao, Metro Cebu, Rizal and in large parts of Metro Manila, and it expects to complete the rollout in the remaining parts of Metro Manila by the end of 2017. Further, the mobile division confirms that its earlier target to achieve 95% LTE coverage by the end of 2018 is on-track. Smart closed out June 2017 with 58.704 million mobile subscribers, down from 68.258 million a year earlier, continuing a long-term downward trend in the volume of reported customer accounts, exacerbated by a change in the active user definition at the beginning of Q2 2017, from which date a pre-paid mobile subscriber is considered inactive if failing to reload credit ‘within 90 days after the full usage or expiry of the last reload’ (revised from the previous 120-day definition).

Revenues generated from PLDT’s fixed line business amounted to PHP38.658 billion in the first half of 2017, an increase of PHP2.721 billion, or 8%, from PHP35.937 billion in the same period in 2016. Fixed service revenues increased to PHP36.829 billion from PHP33.989 billion in the same period in 2016, due to higher revenues from data and miscellaneous services, partially offset by lower voice service revenues. The total number of fixed lines in service stood at 2.546 million at end-June 2017, up from 2.380 million y-o-y. At the same date the total number of broadband subscribers had increased to over 1.833 million (+14%), of which 1.576 million are fixed broadband and 257,187 are wireless broadband connections.