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NEWS UPDATES 4 August 2010

Philippine telecoms slip

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Philippine telecom industry profits slipped in the second quarter amid a price war and regulatory restrictions on the load validity of prepaid plans, previously the main income source of leading players.

Industry leader Philippine Long Distance Telephone Co. (PLDT) on Tuesday reported flat growth in its second-quarter net income because of weak revenues from its cellular business.

Owned by Hong Kong-listed First Pacific Co. Ltd. and Japan’s NTT Group, the Philippines’ largest telecom company said its net income inched up by 1 percent to P10.26 billion in the second quarter of the year from P10.14 billion in the same period last year.

Consolidated net income grew by 10 percent to P21.7 billion in the first half, from P19.7billion last year.

Excluding foreign exchange gains and other non-recurring income, PLDT recorded a core profit of P21.2 billion, up by 2 percent from P20.8 billion last year.

Consolidated service revenues fell a percent to P72.2 billion year-on-year.

Napoleon Nazareno, PLDT president and chief executive officer, blamed the drop in revenues on the weakness of its mobile phone business.

Manuel Pangilinan, PLDT chairman said the company’s core profit guidance for 2010 is in excess of P41 billion, while capital investments would remain at P28.6 billion

One of the company’s initiatives to improve revenue, Pangilinan said, is the partnership with TV5’s text promo.

He said that the TV5’s Tutok Sabay Text (TST) promo would boost PLDT unit Smart Communication Inc.’s subscriber base at the same time to increase the network’s household ratings.

Separately, Globe Telecom on Tuesday said its second-quarter net income reached P2.39 billion, down from P3.25 billion in the same period last year.

This led its profit to fall by nearly a third in the first half of the year to P5.1 billion from P7.2 billion in the same six-month period last year.

Its core net income amounted to P5.2 billion, lower than the P6.9 billion last year.

Consolidated service revenues stood at P30.7billion, down three percent from P31.7 billion last year.

“Our first half results are reflective of the challenges facing the industry—traffic is growing, but revenues are declining with the market’s increasing preference for unlimited services. Competition is becoming more intense, and will likely further intensify as the market slows,” Ernest Cu, president and chief executive officer, said.

At end-June, Globe’s subscriber base stood at 24.6 million, or 2 percent lower than last year as the company deliberately churned out marginal subscribers and recalibrated its acquisition efforts.

“Our immediate goal is to recover revenue market share in our mobile business. We will adapt to the changing industry dynamics, persist in our efforts, and dedicate our resources to putting our business back on the growth track,” Cu said.

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