PLDT expects ‘brighter’ prospects for this year
PLDT, Inc. is looking at “brighter” prospects this year, pinned on growth in its fixed line business, and cost-cutting measures to temper expenses.
The telecommunications giant reported a P27.9 billion consolidated core income in 2016, 21% lower than the previous year, due to lower EBITDA ( earnings before interest, tax, depreciation and amortization) and higher costs from its capital expenditures which was used to fund ongoing expansion in its fixed, mobile business, PLDT Chief Financial Officer Annabelle L. Chua told a press briefing on Tuesday.
The company’s recurring core income, which excludes asset sales, depreciation, onetime provisions and subsidies, reached P20.2 billion, in line with expectations but 26% or P7 billion lower than 2015’s level.
In its presentation, PLDT said it expects its recurring core income from telco operations to rise to P21.5 billion this year, as EBITDA is seen to grow to P70 billion from the P61.2 billion recorded last year.
As revenue from traditional voice and text services — still its biggest moneymaker — continue to be under pressure, PLDT said it is also looking to focus on its broadband business, as well as dominating the mobile Internet space, particularly long- term evolution (LTE).
“All told, I think you could see some green shoots of recovery. I don’t think we will be completely out of the woods yet. I think there are still lots of improvements to be done. But the picture seems to be brighter for 2017 and the job of the management is to continue moving forward positively all the way up to 2019,” PLDT, Inc. Chairman, President and CEO Manuel V. Pangilinan said on Tuesday.
“[ Our] new reference point is the P20.2 billion in recurring core income attained in 2016. From there, we are setting out to achieve sequential recovery in profitability, starting with an increase in recurring core income to P21.5 billion in 2017, a growth of 6% — the first in three years,” he added.
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Amid its digital pivot, PLDT budgeted P46 billion for capex this year, inclusive of “carryovers” from 2016. Of the P48 billion allocated for capex last year, P42.8 billion was spent.
This year’s capex will be used for its ongoing comprehensive network modernization and expansion program, which will see an increase in fixed line spending. PLDT is planning to deploy technology to achieve fiber- like speeds over copper, and to service 4.4 million homes with fiber by end 2017.
The telco giant also wants to assert its superiority in LTE, and achieve 70% population coverage in LTE. PLDT will rollout 2,165 sites with LTE in low spectrum bands and 3,568 sites with LTE in high spectrum bands this year.
“We will already take over Globe in terms of LTE coverage… We will increase focus on fixed line, upgrade slow lines, increase fiber rollout to 4.4 million homes by end of next year,” PLDT Chief Revenue Officer Eric R. Alberto said.
Consolidated service revenues, net of P9.6 billion in interconnection costs, slipped 3% to P147.6 billion in 2016. Sales from its wireless business fell 9% to P66.4 billion despite PLDT Home’s 10% rise in consolidated service revenues to P29.3 billion and Enterprise business’ 9% growth to P30.6 billion. International business posted P20.5 billion in service revenues, down 15% from a year ago.
“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. We are focused on growing our data and digital services… We are capitalizing on the momentum of our Home and Enterprise businesses, which have more headroom for growth,” Mr. Pangilinan added.
PLDT Home and Enterprise, its “fastest growing segments,” comprised 47% of its business as of 2016. This year, Home and Enterprise will account for 51%, and by 2019, its share will hit 56%. Both are expected to sustain “double- digit” growth this year.
Mr. Pangilinan said the company wants to ensure its dominance in fixed line continues.
“In 2016, PLDT and its subsidiaries have all recognized the need to undertake a digital pivot to maintain and enhance its market leadership, amid major shifts in technologies and market. As a result, we have embarked on a three-year journey to profoundly transform our business and organization,” he added, further noting that it has revamped its organization.
PLDT broadened its fixed line subscriber base to 3.7 million last year. Its cellular subscribers, which include both postpaid and prepaid, stood at 63.03 million in 2016, still the market leader.
Meanwhile, PLDT said its plan to outsource bulk of its back- office operations to International Business Machines Corp. ( IBM) this year — part of its turnaround strategy — might affect around 1,000 employees.
“We will keep some of them, and we will ensure that bulk or 100% of them will be absorbed,” Mr. Pangilinan added.
PLDT shares closed at P1,454 on Tuesday, down P16 or 1.09%.
Hastings Holdings, Inc. — a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — has a stake in BusinessWorld through the Philippine Star Group, which it controls.