Telecom industry registers growth

But bottom lines diverge on one-off items
 
THE Philippines’ telecom sector registered modest growth in the first quarter this year despite the tough economic environment, but the country’s leading player saw its profit fall as foreign exchange losses pulled down its performance.

In a briefing, Philippine Long Distance Telephone Co. (PLDT) on Tuesday reported that its profits fell in the first quarter of the year on foreign exchange losses.

Partly owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT group, PLDT said net income at end-March dropped 8 percent to P9.6 billion from the P10.4 billion in the same three-month period last year.

Excluding foreign exchange gains or losses and other non-recurring income, its core profit however rose to P10.2 billion from P9.3 billion last year.

The company’s consolidated service revenues rose by 4 percent to P36.2 billion, fueled mainly by the 6 percent growth in data and broadband revenues.

PLDT’s wireless service revenues were up by 6 percent to P23.9 billion for the first quarter from P22.5 billion last year.

The PLDT group’s total cellular subscriber base for the first quarter stood at 36.9 million, up 17 percent year-on-year. Of the total, Smart Communications Inc. had 21.3 million while Talk ‘N Text of Pilipino Telephone Corp. (Piltel) had 15.6 million.

“We are buoyed by our strong start for 2009—we have sustained our growth in both subscriber numbers and revenues across business lines. On this basis, prospects for our full year performance are quite encouraging,” Manuel Pangilinan, PLDT chairman said.

The country’s largest telco said this year’s core earnings would increase 6 percent to P40 billion.

“It [core earnings] would likely fall north [of P40-billion guidance]” Pangilinan said.

He said the company expects net income to be higher than the P34.6 billion last year if the average foreign exchange rate stays within P48 to P49 a dollar this year.

Globe to focus on process improvements

In a separate statement, rival Globe Telecom Inc. reported a 17-percent increase in net income to P4 billion at end-March from P3.4 billion in the same period last year.

Globe said this quarter’s net income includes an after-tax gain of P398 million arising from an equipment exchange transaction with a supplier.

Its core net income still grew 5 percent to P3.7 billion from P3.5 billion a year ago.

The country’s second-biggest mobile-phone service provider said its consolidated service revenues of P16 billion in the first quarter were up 3 percent given the steady performance of its wireless business and the sustained expansion of its broadband and wireline data business.

The Ayala-led telco’s subscriber base grew 21 percent to 25.7 million at end-March.

“We are encouraged by the continued growth of our overall business, especially considering the challenging environment against which it was achieved,” Ernest Cu, Globe president and chief executive said.

“Moving forward, we will remain focused on enhancing our services, strengthening our brand propositions and product offers, and improving our processes to compete effectively in this highly demanding and competitive market.” Cu added

PLDT to raise more debt on Meralco purchase

For its part, PLDT would “focus on Meralco,” Pangilinan said, when asked if the company plans to acquire more companies. “Certainly, Meralco is a big investment.”

He said the company’s investment in Manila Electric Co. is expected to close not later than end-August.

Piltel, the unit of PLDT is buying a 20-percent stake in the country’s largest electricity distributor for P20 billion, while PLDT Beneficial Trust Fund is acquiring another 10.2-percent.

“We expect to raise additional debts this year to fund our investment in Meralco,” Pangilinan told reporters.

Anabelle Chua, PLDT treasurer said the company expects to issue peso-denominated bonds worth P15 billion in the second or third quarter of the year.

Chua said the planned peso bond offering would likely be undertaken in several issuances.

Earlier, PLDT raised P5 billion from a fixed-rate notes issue to partially fund its capital expenditure worth P27 billion this year. –Darwin G. Amojelar, Senior Reporter, Manila Times