The Philippines' PLDT revealed this week that its Q411 net profit fell 87% year-on-year to 1.1 billion pesos.
The company had already reported declining Q1 to Q3 revenues from its traditional call and text messaging services, which it attributed to “bucket” and “unlimited” type offers.
At a press conference, the country’s largest telco announced that its consolidated core net income dipped by 7% in 2011 to 39 billion pesos, from 42 billion in 2010.
These figures already include the operating performance of Digitel, of which PLDT now owns 98% after a much-debated acquisition that closed in October 2011. PLDT’s full-year net profit decreased by 21% in 2011 to 31.7 billion pesos, missing analysts' expectations of around 40 billion.
PLDT, which is owned by Hong Kong's First Pacific, Japan's NTT Com and NTT DoCoMo, attributed decline in net income to lower service revenues and higher operating costs. These include a one-time asset impairment charge from an ongoing two-year 67 billion peso network modernization program that commenced in early 2011.
The company’s overall consolidated service revenues dropped by 1% to 154 billion pesos, including 3.8 billion pesos from Digitel’s revenues and already reflecting the combined effect of a 2% decline in wireless revenues, 1% decrease in fixed line revenues, and a 6% rise in revenues from business process outsourcing.
At the press conference, PLDT chairman Manny Pangilinan said that the company was forecasting a decline in 2012 core profit to 37 billion, calling the figure “the bottom of this unavoidable period of integration and alignment. We will find ourselves back on an upward growth curve starting 2013,” Pangilinan concluded. It expects profit growth from 2014, with a guidance of 42 billion pesos in core net profit.
Last month, rival Globe Telecom also reported a 28.8% drop in its Q4 2011 core net income to 1.85 billion, due to beefed up market spending targeted at countering the merger of PLDT and Digitel. Despite the dip, however, the company managed to increase by 11% its 2011 full-year profit to 10 billion. This was said to be the result of an all-time high revenues from mobile and broadband services.
PLDT, Smart and Digitel together have the largest network in the country, with 10,482 cell sites, 14,876 cellular/mobile broadband base stations, and 4,918 fixed wireless broadband-enabled base stations.
Globe’s network comprises of 12,741 base stations and 6,533 cell sites to support its 2G, 3G and Wimax services. As of 31 December 2011, the total cellular subscriber base of the PLDT Group (Smart, Talk ‘N Text, Red Mobile, Sun Cellular) stood at 63.7 million, while Globe Telecom’s (Globe and Touch Mobile) reached 28.6 million. PLDT had 2.9 million broadband subscribers, while Globe had 1.4 million.