PHILIPPINE Long Distance Telephone Co. is expected to report quarterly profits rose as much as 50 percent after attracting mobile users with innovative products, but rival Globe Telecom Inc. may post flat earnings after failing to launch new products.
Analysts said the fourth quarter should be better for both companies as people buy new mobiles with their Christmas bonuses.
PLDT is expected to have performed strongly after it launched in July a service for transferring money via text messaging and hooked up with Hong Kong’s CSL to offer cheaper mobile services to overseas Filipino workers.
Globe Telecom, jointly controlled by conglomerate Ayala Corp. and Singapore Telecommunications, failed to match PLDT’s aggressive wireless products expansion, but may have captured new users in the low-end market after heavily promoting its cheap prepaid services.
Globe is due to announce its quarterly results on Thursday. PLDT, the nation’s biggest listed company, with a market capitalization of $4.25 billion, reports on November 4.
Three brokerages polled by Reuters forecast PLDT’s profits for July to September would range from P5.2 billion to P6 billion ($92.4 million to $106.6 million), up from P4.01 billion in the third quarter of last year.
PLDT is a quarter owned by Hong Kong’s First Pacific Co. Ltd. Globe was expected to post third-quarter profits of P3 billion to P3.6 billion, compared with P3.2 billion a year earlier, because it did not launch any mobile services during the period.
‘Text me the money’
At least one-third of the country’s 82 million people owns a mobile thanks to cheap text messaging and low-cost, prepaid cards.
PLDT, through its banner mobile firm Smart Communications Inc. and smaller unit Piltel, has 59 percent of the mobile-phone market, followed by Globe with 40 percent.
PLDT said it added more than 1 million subscribers in the third quarter to pass the 17-million mark. Globe has yet to release figures.
“The Philippines is one of the bright lights in the telecommunications sector in Asia,” said Citisecurities analyst Mark Canizares.
“Now they [PLDT and Globe] are targeting the overseas Filipino to send money home by means of text messaging. If the two players get a significant chunk of that market, that alone would be instantly earnings accretive.”
Some 8 million Filipinos work abroad, usually sending money back home using banks or transfer agencies—a key lifeline for both their families and the Philippine economy. The central bank projects the remittances will hit $8.1 billion this year, up 6 percent from 2003.
PLDT’s Smart unit launched its money-transfer service in July for Filipino workers in Hong Kong and the United States. The text message contains an authorization code that relatives in the Philippines show to the agent receiving the money.
Smart has a transaction fee of 1 percent of the value of the transfer for both sender and recipient. Banks charge about 8 percent on every $200, and money transfer agency Western Union has an average fee of 10 percent.
PLDT said about P120 million in transfers had coursed through Smart’s text remittance service as of September.
Globe launched its own text message money transfer service on October 18—a full quarter behind Smart. While profits from PLDT’s money-transfer service may be small at present, an analyst from a foreign brokerage house said it may have helped retain subscribers.
“Such a mobile-phone service keeps subscribers loyal to their network, besides attracting new users,” the analyst said.
According to Reuters Estimates, analysts expect PLDT to have full-year net profits of P21.7 billion, nearly double the P11.2 billion of 2003. Globe’s net profit is seen rising 38 percent to P14.2 billion.
PLDT shares gained 21.3 percent in the third quarter, outpacing an 11.5-percent rise in the main index, while Globe jumped 33 percent.