Philippine Long Distance Telephone Co. (PLDT) Chairman Manuel Pangilinan has announced that the company has increased its 2015 capital expenditure (capex) to P43 billion.
“We’ve fallen in the saddle, and it is our full intention to climb back to that saddle and ride on it,” Pangilinan said during the company’s first half results conference on Tuesday. “It would take a while, [and]we anticipate that perceptible changes will only be seen in the course of 2016, so it could be a tough year for 2015 from the profit stand point.”
Consequently, capex levels will remain elevated at least through 2015 and 2016, Pangilinan said.
“Our goal is to be nothing less than the consumer’s preferred digital services provider. And we will achieve this by offering the consumer a superior value proposition by continuously broadening the array of our products and service offers, including leveraging on fixed and wireless assets, underpinned by a network that will enable a quality customer experience,” Pangilinan explained.
He also said “We are investing heavily in the “digital spine” for our networks and platforms that will serve as the foundation for this transformative process, and we expect to see the benefits of these initiatives to fully manifest themselves by 2016 at the earliest.”
PLDT announced its unaudited financial and operating results for the first six months of 2015 with Consolidated Core Net Income, before exceptional items, amounting to P18.9 billion, 5 percent or P0.9 billion lower than the P19.8 billion recorded in the same period last year.
The decrease was due mainly to lower EBITDA, reflecting the impact of expenses relating to the manpower reduction program and higher financing costs, offset by the gain from the sale of Meralco shares by Beacon.
Reported Net Income, after reflecting exceptional transactions for the period, declined 6 percent to P18.7 billion, from P20 billion in the first half of 2014, as a result of the dip in core net income and net foreign exchange and derivative losses.
EBITDA margin for the period was at 44 percent. Consolidated EBITDA for the first six months of 2015 was 7 percent lower at P35.5 billion compared with the same period last year, due to lower service revenues from the wireless business, higher cash operating expenses, which include the costs arising from the manpower reduction program, and higher provisions.
Consolidated service revenues for the period dropped by 2 percent to P81.2 billion, as revenues from the international and national long distance (ILD/NLD) segments continued their decline. Excluding ILD/NLD revenues of P10.2 billion, consolidated service revenues grew by 1 percent year-on-year, from P69.9 billion to P70.9 billion.
Consolidated free cash flow for the first half of 2015 stood at P16.3 billion. Consolidated capital expenditures for the period amounted to P13.9 billion, nearly P6 billion higher than the capex level in the same period last year as investments were made in support of improved 3G and 4G access networks, increased fiber reach and capacity, continued network optimization, increased data center capacity, and other initiatives.
The Group’s consolidated net debt remained stable at $2.3 billion as of June 30.
Gross debt amounted to $3.2 billion. The Group’s debt maturities continue to be well spread out, with over 60 percent due after 2017.
Earlier today, the company’s Board of Directors declared an interim regular dividend of P65 per share, representing 75 percent of First Half 2015 Core Earnings.
Broadband and postpaid growth
The Group’s combined broadband subscriber base reached 4.9 million at the end of June, 3.7 million of whom use wireless broadband mainly from Smart Broadband, Smart’s wireless broadband service offered through its wholly-owned subsidiary Smart Broadband, Inc. Another 1.2 million users subscribe to PLDT’s fixed broadband service.
The fixed line subscriber base reached about 2.3 million at the end of the first half of 2015, about 53 percent of whom have fixed broadband subscriptions.
Postpaid revenues now account for 23 percent of total cellular revenues, having improved by 12 percent to P11.6 billion for the first six months of 2015.
The PLDT Group’s total cellular subscriber base at the end of the period stood at 68.9 million, broken down as follows: Smart had 25.3 million subscribers under its mainstream Smart brands; value brand Talk ‘N Text ended with 27.9 million subscribers; and there were 15.6 million Sun Cellular subscribers.
The Group’s combined postpaid cellular subscriber base grew by over 461,000 from the first half of 2014 or over 253,000 from the end of 2014, rising to just over 3.0 million at the end of the period, while the combined prepaid base stood at 65.8 million.
“PLDT will capitalize on its unique ability to offer a seamless, connected consumer experience to our subscribers who are rapidly evolving to the digital space. Our value proposition will provide connectivity + entertainment + peace-of-mind + convenience,” Napoleon L. Nazareno, PLDT President and Chief Executive Officer said.
Enterprise segment expanding
Consolidated corporate data and other network services were higher 14 percent at P5.3 billion, riding on the 12 percent growth in corporate data and a 26-percent jump in data center revenues.
“The upward momentum in the Enterprise segment continues, underpinned by revenues from data-rich business solutions, data center, as well as from emerging cloud and big data services,” Nazareno added.
Cignal TV continued to lead its pay-TV sector with more than 938,000 subscribers at the end of the first half of 2015, a 24-percent growth versus the same period last year.
Smart e-Money, for its part, continues to extend its reach. With a throughput of P83.7 billion in the first six months of 2015, it is the biggest domestic remittance platform in the Philippines.
Despite the good news from some segments, PLDT cautioned “the rapid decline in our toll revenues continues to bear down heavily on our medium-term revenue growth, with the onslaught of the Internet causing adverse substitution. The annualized impact of this decrease is P4 to P5 billion for the full year 2015 and toll traffic could reduce even faster in the coming months as smart phone penetration accelerates.” Rosalie C. Periabras