PLDT to retrench 1,200 employees

PHILIPPINE Long Distance Telephone Co. said Thursday it planned to cut nearly 1,200 jobs after intensifying competition led the phone operator to its slowest profit growth in six quarters.

PLDT, which employs 13,000 workers, will book a charge of P2 billion for the retrenchment costs, PLDT chairman Manuel Pangilinan said.

Sales fell for a fourth straight quarter as PLDT, Globe and Sun offered cheaper packages to compete in a saturating market where four out of five people already own a mobile phone.

The growing popularity of Facebook Inc. and Twitter Inc. has also trimmed the revenue that phone companies derive from text-messaging.

“The industry is slowing down because of competition,” said Erwin Balita, research head at SB Equities.

“Competition in technology is now catching up on pricing and has reached a point where margins are not as abnormal as five years ago.”

The reduction was announced after PLDT reported P10.3 billion in third-quarter net income, little changed from a year earlier and lower than the P11 billion JPMorgan Chase & Co. analyst Vishesh Gupta had estimated.

The smaller workforce might save the company as much as P1 billion annually, PLDT president Napoleon Nazareno told reporters.

Sales decreased 2 percent to P35.1 billion while expenses fell 3 percent to P21.6 billion, PLDT said.

“The operating environment is becoming increasingly price-competitive and market-share sensitive,” Pangilinan said.

“We expect to reduce headcount by a significant number by year-end.”

New hires would limit the reduction in the workforce to about 850 positions, he said.

PLDT fell 1 percent to close at a one-month low of P2,652 before the company reported earnings.

The stock has risen 3.7 percent this year, the fourth worst performer among the 31 components of the benchmark Philippine Stock Exchange Index. Bloomberg