As expected, telecommunications giant PLDT Inc. has seen a 34 percent dip in net income in the first quarter of the year, a harsh jolt from moving out of its comfort zone as it fully shifts to digital communications.
PLDT, for years, has excelled on legacy network, the foundation for its powerful stance in the duopolistic telco industry in the Philippines.
This year, the company employs what its Chairman and Chief Operating Officer (CEO) Manuel Pangilinan calls the “digital pivot” strategy. But as the telco carries out the said game play for the year, pains seem to be inevitable.
On Tuesday, PLDT reported a 34 percent decline in its net income in January to March.
“Three or four months does not make a year,” Pangilinan, however, told reporters at the sidelines of the quarterly operating results briefing in Makati City.
The 34 percent decline to P6.2 billion is the result of a reduction in core net income and a rise in impairment charges related to the company’s investment in Rocket Internet, PLDT said.
What used to be the telco’s strongest business – voice calls – continues to put a heavy toll on its growth.
PLDT’s data and broadband revenues evidently grew robustly by 21 percent year-on- year, but revenue from domestic voice calls dropped 6 percent while international long distance calls (ILD) and national long distance calls (NLD) fell by 16 percent – bringing the company’s total consolidated service revenues to zero percent.
“PLDT has posted strong gains in data, broadband, and digital services, compensating in large part for the continued declines in long distance and SMS revenues.” the telco’s CEO said.
The company continues to strengthen its digital network with investment in network expansion, particularly in 3G and 4G access networks, and the integration of Smart and Sun mobile networks.
The company is further deploying fiber-to-the-home service and the enhancement of DSL service.
This year, the company allotted four times more than the capital expenditure for the same period last year which amounted to P14.6 billion in the first quarter.
“Our results for the first quarter confirm our view that the digital pivot will be a difficult and complicated process.” Pangilinan said.
The company’s experience with fixed line business show how growth can be restored by progressively building up on data and broadband revenues, he added.