PLDT profit slips 8% to P19.5B in H1

MANILA, Philippines - Dominant carrier Philippine Long Distance Telephone Co. (PLDT), partly owned by First Pacific Co. of Hong Kong and NTT Group of Japan, announced yesterday that its profits slipped by eight percent in the first half of the year as it continued to consolidate the operations of a telecom provider acquired from business tycoon John Gokongwei late last year.

In a statement, PLDT reported that its net income reached P19.5 billion from January to June this year or P1.8 billion lower than last year’s P21.3 billion, reflecting the consolidation of the operating performance of Digital Telecommunications Philippines (Digitel).

Data showed that PLDT’s core net income dropped 11 percent to P18.7 billion in the first half of the year from P21 billion in the same period last year due to the consolidation of the operations of Digitel as well as the recognition of a P2 billion deferred gain relating to the transfer of shares of the Manila Electric Co. from PLDT Communications and Energy Ventures to Beacon Asset Holdings Inc.

“Core Net Income declined as a result of higher operating expenses relating mainly to the manpower reduction programs at PLDT and Digitel and selling and promotions initiatives,” PLDT said.

It will be recalled that the PLDT Group shelled out P69.2 billion to acquire Gokongwei’s controlling stake in Digitel in a transaction that was closed last Oct. 24.

Amid the lower income in the first half of the year, PLDT chairman Manuel V. Pangilinan said the dominant carrier is still well on its way to meeting its profit guidance of P37 billion for this year.

“We will continue to exert our utmost effort to get back on the profit growth track as quickly as we can, as we harness the opportunities for synergy within the Group. We maintain our Core Net Income guidance for the full year 2012 at P37 billion,” Pangilinan stressed.

Data showed that PLDT’s overall consolidated service revenues jumped 12 percent to P84.7 billion for the first six months of the year from P37.91 billion in the same period last year.

The revenues in the first half included the P11.1 billion revenue contribution from Digitel and reflecting the combined effect (before Digitel) of a four-percent decline in wireless revenues, one-percent decrease in fixed line revenues, and a 17-percent rise in revenues from business process outsourcing (BPO) services.

“Our first half results support our position that we are gradually seeing our way out of the trough – second quarter financial metrics showed no deterioration vis-à-vis the first quarter and those second quarter figures are ahead of the average quarterly numbers in the second half of 2011,” Pangilinan said.

He announced that PLDT’s board of directors declared an interim dividend of P60 per share, in line the Company’s continued commitment to pay out a minimum ratio of 70 percent of core earnings.

“It is noteworthy that, despite the earnings pressure from the competitive state of the local industry and continuing pressure on margins, our free cash flows remain strong, thus enabling us to sustain our customary dividend levels,” he added.

Latest data showed that PLDT Group’s cellular subscriber base increased by 3.7 million to 67.4 million while total broadband subscribers at 3.1 million. Wireless subsidiary Smart Communications Inc had 26.9 million subscribers under its mainstream Smart brands, while value brand Talk ‘N Text ended has 24 million subscribers.

Digitel had 15.9 million Sun Cellular subscribers while Smart subsidiary CURE’s Red Mobile brand had 600,000 subscribers.

On the other hand, the Group’s combined broadband subscriber base hit the 3.1 million mark at the end of the first half of 2012, representing net additions of about 134,000 for the PLDT Group’s various broadband services including SmartBro and PLDT’s DSL.

The PLDT Group spend P9.3 billion for its capital expenditures in the first half of the year as part of its P38 billion budget for the entire year. The group is spending P67 billion to produce a network that is unrivalled in terms of coverage, capacity and resiliency.

The Group’s consolidated net debt stood at $2 billion as of end-June while gross debt amounted to $2.7 billion with the inclusion of Digitel’s debt amounting to $500 million.