Telcos post higher revenues

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    Despite stiff competition, the country’s two telecom providers yesterday reported improved revenues and core net income in the first nine months of the year, driven by growth in broadband and data which contributed over 60 percent of the revenues, offsetting declines in traditional voice and short messaging services (SMS).

    PLDT Inc. said consolidated service revenues grew 8 percent year-on-year to P116.3 billion in three quarters, the highest nine-month revenue level it attained since 2013.

    “By posting its highest-ever nine-month revenues, PLDT is providing more evidence that it is firmly back on the growth path. It is worth noting that we have started to make inroads in recovering market share in revenue terms in the mobile business in the last two quarters, indicating that we have reached a turning point,” said Manuel Pangilinan, PLDT chairman, president and chief executive officer.

    PLDT’s telco core income rose 1 percent to P19.4 billion. This excludes the impact of equity in losses from Voyager Innovations and gains from the sale of Rocket Internet shares.

    However, reported net income dropped 2 percent to P16 billion on higher manpower rightsizing program (MRP) expenses and lower gains from the sale of Rocket Internet shares, PLDT said.

    MRP expenses amounted to P2.4 billion, higher compared to P400 million last year.

    Consumer wireless business revenues grew 20 percent to P52.6 billion, of which 68 percent are from data, while PLDT Home business rose 2 percent to P27.6 billion in the first nine months.

    “With two-thirds – and growing – of our revenues now coming from data and broadband, we have made significant progress in the digital transformation of our business. Data will continue to be the main driver of the business, with the ability to provide superior customer experience being the key to market leadership, and our best defense against competition,” Pangilinan said.

    Globe Telecom Inc.’s core net income, which excludes the impact of non-recurring charges and foreign exchange and mark-to-market charges, grew 20 percent to P17.9 billion, from P14.9 billion in the same period last year.

    “We are happy that the sustained topline and profit growths we have achieved over the past three quarters have positioned us well as we head into the fourth quarter,” said
    Ernest Cu, Globe president and chief executive officer.

    Net income jumped 20 percent to P17.7 billion due to the upside in earnings before interest, tax, depreciation and amortization (EBITDA), offsetting the increase in depreciation charges and non-operating expenses for the period.

    Consolidated EBITDA stood at P57.9 billion, with EBITDA margin remaining high at 52 percent, Globe said.

    Consolidated service revenues grew 13 percent to P110.6 billion fueled by the strong growth across all data-related products and services.

    Mobile revenues increased 13 percent to P83 billion, besting the P73.7 billion reported in the same period of 2018 and still the top contributor accounting for 75 percent of the total service revenues led by the company’s prepaid brands.

    Mobile data now accounts for 63 percent of mobile revenues from 49 percent a year ago, which offset the declining revenues from voice and SMS.

    Mobile voice and mobile SMS revenues for the period ended at P18.5 billion and P12.3 billion, down 15 percent and 22 percent, respectively, as usage continues to shift from traditional to data-based services, Globe said.

    Stiff competition between the two telcos on the mobile and fixed line businesses continue, with Globe leading on mobile and PLDT on fixed line.

    Alfredo Panlilio, Smart Communications Inc. president and chief executive officer and PLDT executive vice president and chief revenue officer, said PLDT remains the leading telecom player in the country in terms of revenues with 51.9 percent market share, with 70 percent on the fixed line business.

    According to Fitch Ratings’ 2020 outlook, the telcos’ revenue growth is expected to be sustained in 2020 despite the entry of the new telecom player Dito Telecommunity.

    “We expect industry revenue momentum to be sustained into 2020, as stable competition in the interim supports gradual data monetisation. PLDT and Globe Telecom, Inc. (BBB-/Stable) are competing at higher price points to monetise 4G network capacity,” Fitch Ratings said.

    It also expects the telcos’ average capital expenditure to stabilise by next year.

    “We forecast average capex intensity to stabilise at 35 percent to 37 percent in 2020, as incumbent telcos strengthen their network ahead of the launch of the third telco, Dito Telecommunity, some time in 2020,” Fitch Ratings said.

    Dito is set to start operating by next year and pledged to provide coverage for 37 percent of the population by July 2020 with 27 megabits per second minimum broadband speed and up to 84 percent by 2024, and suggests limited coverage in the short term.