Philippine Long Distance Telephone Co (PLDT), the country’s most valuable listed company, posted a sharper-than-expected 11 percent drop in second-quarter net profit as a nearly saturated mobile phone market crimped revenue growth and rising competition ate into margins.
The company is pinning its growth hopes on broadband services to offset the slowdown in its traditional mobile phone business, as mobile penetration rates in the Philippines hit a high 95 percent.
PLDT, owned by Hong Kong’s First Pacific Co Ltd, Japan’s NTT Communications and NTT DoCoMo, said its net income in April-June was 9.4 billion pesos ($225 million) compared with 10.6 billion pesos a year earlier.
Analysts had expected net profit of 10.1 billion pesos in the second quarter, based on consensus estimates of Thomson Reuters I/B/E/S.
PLDT maintained its core net income guidance this year of 37 billion pesos. Core profit excludes currency and derivatives-related items.
Chair Manuel Pangilinan said in a statement the company will pay an interim dividend of 60 pesos per share, in line with its plan to pay out at least 70 percent of core earnings.
Service revenues in the second quarter rose 11 percent to 42 billion pesos. The wireless phone business now accounts for more than two-thirds of total service revenues.
PRESSURE OF COMPETITION
PLDT, which acquired third-ranked competitor Sun Cellular last year, remained in tight competition with Globe Telecom Inc amid a price war in the industry.
Globe, owned by local conglomerate Ayala Corp and Singapore Telecommunications Ltd, said on Tuesday its first-half net profit fell 10 percent partly due to the market’s preference for value offers that put pressure on margins.
PLDT’S mobile phone subscriber base expanded to 67.4 million at the end of June from 66.1 million at the end of March. Globe’s mobile phone subscribers were less than half of PLDT’s at 31.7 million at the end of June.
Shares of PLDT, which has a market value of around $14 billion, have been laggards so far this year, rising only 8 percent compared with the market’s nearly 21 percent rise.
The stock market was shut on Tuesday due to heavy monsoon rains and flooding in the capital. ($1 = 41.85 Philippine pesos)