• PLDT Q3 net income falls 49% to P3.4B

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    PANGILINAN-LED Philippine Long Distance Telephone Co. said Monday its net income in the third quarter dropped by 49 percent from a year ago to P3.4 billion as it continued to invest on a pivot to digital services.

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    Net income for the first nine months fell 37 percent to P16 billion, while consolidated revenues slipped 2 percent to P125.4 billion. Excluding international and national long distance (ILD and NLD), and interconnection costs, consolidated service revenues totaled P101 billion, flat from last 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,” PLDT chairman and CEO Manuel Pangilinan said.

    Consolidated revenues dropped to P125.4 billion in the nine-month period, down 2 percent from the year-earlier comparative figure. Excluding international/national long distance (ILD and NLD) and interconnection costs, consolidated service revenues totaled P101 billion, steady from the corresponding period last year.

    On the same basis, fixed line revenues grew 9 percent to P42.2 billion, while wireless revenues declined by 6 percent to P64.7 billion.

    The company said it trimmed its full-year EBITDA projection by P4 billion to P60 billion, as SMS and voice revenues are seen continuing to wane, while growth in its data and broadband business will be steady.

    “We are making this adjustment, anticipating that while data and broadband will keep posting steady growth, toll, cellular voice and SMS revenues will, however, continue to wane,” Pangilinan said.

    “All that said, our digital transformation remains on track. We remain focused on the critical initiatives that will definitively shape our businesses to the new direction where growth is driven by data and digital innovation,” he added.

    Data gains in service revenue mix

    PLDT said the continuing shift to digital services is evident in the changing service revenue mix – Data/broadband/digital services and platforms set the pace for growth, posting P44.6 billion in service revenues in the first nine months of this year, up 19 percent from 2015.

    This has raised its share of total service revenues to 40 percent from 33 percent a year ago. Meanwhile, the share of SMS/Domestic Voice/and Others declined to 50 percent from 56 percent, while that of International Voice slipped from 11 percent to 10 percent.

    “And the march of data raising its share of our total service revenues continued inexorably in the third quarter; for this quarter, data accounted for 60 percent and 32 percent of fixed line and wireless service revenues, net of interconnection costs,” PLDT said in a statement.

    “We continue to pursue our network improvement program for both mobile and fixed services for which we have set aside P48 billion this year. This initiative has produced encouraging initial results and is laying a solid foundation for our efforts to build our data and digital businesses moving forward,” Pangilinan said.
    Income projections

    Meanwhile, Pangilinan said they expect consolidated core income for 2016 to amount to P28 billion due to a decline in EBITDA, increases in financing costs and depreciation due to higher capex, equity losses from the telco business acquired from SMC, offset by the net gain from the sale of PLDT’s 25 percent interest in Beacon Electric Assets Holdings.

    “As we close 2016, and look to next year and beyond, I believe it is critical that PLDT establish a baseline position from which we could pivot to a higher plane in the coming years. In this regard, I would offer that this launchpad, so to speak, would be (i) underlying core profitability without exceptionals; and (ii) normalized EBITDA of PLDT,” he said.

    “For 2016, these would be (i) P20 billion; and (ii) P60 billion. We shall be able to achieve escape velocity from this take-off point,” he added.

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