PLDT lowers its full-year profit guidance for ‘horrible’ 2016

PLDT, Inc. lowered its full-year profit guidance on Monday after reporting a 49% slide in third quarter earnings, prompting PLDT Chairman, President and Chief Executive Officer Manuel V. Pangilinan to describe 2016 as “annus horribilis” ( horrible year).

In a quarterly report, PLDT said its net income attributable to equity holders stood at P3.402 billion in the July to September period, 49% lower year on year as the telecommunications giant continued to incur higher depreciation and financing costs arising from higher capital expenditures.

Its consolidated net income for the first nine months reached P15.900 billion, down 37% from last year’s P25.355 billion.

PLDT’s consolidated core income for the nine-month period amounted to P21.7 billion, 20% lower year on year largely due to lower EBITDA (earnings before interest, taxes, depreciation and amortization) and increased depreciation and financing costs — both arising from higher capital expenditures.

Core net income is derived from the company’s main business and excludes both expenses and revenue from non- core activities.

Consolidated EBITDA dipped 15% to P45.7 billion on account of lower wireless service revenues, a rise in product subsidies, content costs and higher provisions, it added. EBITDA margin stood at 38% for the first nine months of the year. The financial results so far prompted PLDT to lower its 2016 core income guidance to P28 billion from its original target of P30 billion, “due to the decline in EBITDA, increases in financing costs and depreciation due to higher capex, equity losses from the telco business acquired from San Miguel Corporation, offset by the net gain from the sale of PLDT’s 25% interest in Beacon Electric Assets Holdings.”

Excluding the impact of the sale of the rest of its stake in SPI Global Holdings Incorporated and its 25% stake in Beacon, PLDT said it expects a core income of P20 billion and an EBITDA of P60 billion this year.

Mr. Pangilinan appeared eager to close the book on “horrible” 2016, saying he is hopeful 2017 will be “annus mirabilis” ( wonderful year).

“This year has been a particularly challenging period for PLDT, as we grappled with both intense price competition and the continuing shift from voice/ SMS services to data demand impacting adversely our wireless revenues; as well as internal adjustments in our senior ranks and in our processes which we are undertaking,” he said in a media briefing in Makati City.

Mr. Pangilinan said the company’s “digital transformation remains on track” as it remains focused on the critical initiatives that will steer its business to the new direction where “growth is driven by data and digital innovation.”

PLDT’s third quarter revenues slipped 6% to P40.1 billion. The nine-month total reached P125.38 billion, 2% lower than the same period in 2015. Service revenues for the July to September period likewise dipped 6% to P38.32 billion, while the nine-month period saw a 3% drop to P118.93 billion. In terms of the contributions of the various business units, the telco giant said revenues of PLDT Home registered a 9% increase to P24.5 billion, due largely to an 11% rise in data revenues and a 25% increase in revenues from digital services such as entertainment and home security services..