Higher expenses drag PLDT’s net profit in the third quarter

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By Arjay L. Balinbin, Senior Reporter

PLDT, Inc. on Thursday reported an attributable third-quarter net income of P5.9 billion, down 20.3% from P7.4 billion in the same period a year ago, as expenses increased.

In a disclosure to the stock exchange, the company said its revenues for the period increased 3.7% to P48.2 billion from P46.5 billion previously.

Broken down, service revenues for the quarter grew 5.6% to P46.9 billion from P44.4 billion in the same period a year ago, while non-service revenues dropped 33.2% to P1.4 billion from P2.1 billion previously.

However, expenses for the quarter reached P11.2 billion versus P11.8 billion in the same period a year earlier. Other expenses totaled P3.5 billion from P1.4 billion previously, bringing the company’s income before tax to just P7.7 billion, down 26.7% from P10.5 billion in the same period last year.

For the January to September period, the company’s attributable net income declined 4.6% to P18.8 billion from P19.7 billion a year ago.

“Reported net income declined… after taking into account revaluation losses due to the peso’s depreciation this year vis-a-vis the peso appreciation last year,” PLDT said.

PLDT Chief Finance Officer Anabelle L. Chua said at a briefing that the company’s telco core income for the third quarter, which excludes the impact of asset sales and Voyager Innovations, hit P7.9 billion versus the P7.1 billion reported in the same period last year.

It climbed “10% year on year, or P2.1 billion, to 23.1 billion in the first nine months of 2021, helped by lower tax rates,” PLDT said.

The company believes it remains on track to reach its full-year telco core income guidance of P30 billion.

Total home revenue for the first nine months grew 25% to P35.3 billion, according to the company.

Meanwhile, individual wireless revenues grew 3% to P65.1 billion during the period, with data or broadband contributing 80% of the total.

Alfredo S. Panlilio, president and chief executive officer of PLDT and Smart Communications, Inc., said: “We are optimistic that once the lockdowns are not there, there is a probability that it will help the wireless business.”

Jane J. Basas, senior vice-president and head of consumer wireless business at PLDT’s Smart Communications, Inc., said: “As we see mobility improving in the fourth quarter, we do see improvement in revenues.”

The enterprise segment’s revenues for the third quarter increased 2% to an all-time high of P10.7 billion. The segment’s revenues grew by 2% to P31.1 billion in the first nine months.

The group intends to start building the first hyperscaler data center in the country next year. It will be completed by the first quarter of 2024.

The data center will serve the massive power and IT requirements of global tech giants.

“I think the [budget] for the new data center would be approximately about P5 billion,” Ms. Chua said.

PLDT’s Maya Bank, a digital bank, will also be launched by the first quarter of 2022.

“We have integrated financial services into our digital ecosystem by maximizing the synergies among PLDT, Smart, and PayMaya. And that is just the beginning. We will eventually expand this to include other customers, including those we provide with home broadband,” Mr. Panlilio said.

PLDT and Smart spent P63.3 billion for their network buildout in the first nine months of the year. They said they are “on track” to meeting the 2021 full-year capital expenditure guidance of at least P88 billion.

PLDT Chairman Manuel V. Pangilinan said the company remains committed to sustaining its “radical leadership” amid rapidly shifting patterns of business.

“In many ways, we have to adopt revolutionary aspects of leadership, adapting to abrupt changes where really needed, while maintaining the values that are important to the company,” he said.

“At the center of it all is the customer experience. In the old days, the value of companies was defined mainly by traditional metrics. Nowadays, companies are measured on two additional metrics which define their market value: sustainability and digitalization. These are no longer options but imperatives.”

Hrushikesh Mahananda, a telecoms analyst of the UK’s GlobalData, said PLDT is expected to lead the fixed-line voice services segment in terms of subscriptions through 2026.

“The operator will also top the fixed broadband services market, by subscriptions, supported by its strong position in DSL (digital subscriber line) and FTTH (fiber to the home) service lines,” he said in a statement.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.