PLDT braces for Telstra entry, keeps core net income guidance

MANILA, Philippines - The country’s leading telecommunications and digital services provider Philippine Long Distance Telephone Co. (PLDT) is confident it will meet, if not exceed, its core net income guidance of P35 billion this year but is cautious for next year amid the possible entry of new player Telstra.

“In terms of core income, we affirm our guidance number at P35 billion… Based on the track record for the first three quarters, we are averaging about P9 billion so it is within scope we can achieve full-year guidance of P35 (billion), and we may exceed it slightly depending on how the final two months of this year pan out,” PLDT chairman Manuel V. Pangilinan said during a briefing yesterday.

PLDT’s core net income reached P27.1 billion in the first nine months, five percent lower than the previous year’s P28.6 billion.

The decrease was attributed to lower EBITDA (earnings before income tax, depreciation and amortization), reflecting the impact of expenses relating to the manpower reduction program, and higher financing costs, offset by lower provisions for income tax and a decrease in depreciation and amortization.

PLDT’s net income also declined by nine percent to P25.3 billion as of end-September from P28 billion in the same period in 2014, as a result of the dip in core net income and higher foreign exchange losses.

The PLDT Group’s consolidated service revenues, excluding revenues from the international and national long distance segments, rose two percent to P107 billion from January to September compared with last year’s P104.5 billion.

Revenues from data and broadband as well as fixed line services, registered year-on-year increases of 15 percent and five percent, respectively.

The company has yet to provide its core net income guidance for next year but Pangilinan said their outlook would take into consideration the possible entry of Telstra.

“Our planning assumption for 2016 includes the prospect of Telstra’s entry into the market by 2016,” he said.

While he said it is difficult to say how Telstra’s possible foray to the Philippine market would affect PLDT for now, the company is getting ready if and when Australia’s biggest telephone firm comes in.

Telstra is currently in talks with San Miguel Corp. for a possible joint venture in the wireless business in the Philippines.

“There are certain essential things we have to do. The network has got to be up to snuff. (It) has got to have standards across the board. 3G, 4G, service delivery platforms must be up to global standards as well. International circuits, the resiliency and capacity of our fibre optic backbone must be improved,” Pangilinan said.

On the content side, PLDT is also working to improve the digital experience of subscribers.

As the speed of Internet in the country has been a common complaint by users, Ray Espinosa, regulatory affairs and policies head of PLDT said in the same event the firm is working to address the issue but noted the government would also have to help.

In particular, the National Telecommunications Commission has to step in by looking at how to provide access to incumbent telco players to the 700 megahertz (MHz) frequency or so called digital dividend that would help hasten speed of Internet service.

“We are focused on speed and we are focused on basically asking for our fair share on the 700 MHz…Government should work hand-in-hand with incumbent players and even new entrants to ensure the scarce range of frequency spectrum that will enhance the speed of mobile telecommunications is made available on a fair and reasonable basis,” Espinosa said.