Philippine Long Distance Telephone Co. said Monday net income in 2015 fell 35 percent to P22.1 billion from a year ago, after it incurred a net loss in the fourth quarter, the first time in 12 years.
PLDT, partly owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT group, said it booked a net loss of P3.27 billion in the October-December period, dragging down the full-year profit in 2015 from a P34.1-billion income registered in 2014.
PLDT chairman Manuel Pangilinan said the company was now looking at a profit guidance of P28 billion in 2016. This was significantly lower than PLDT’s usual annual income target of at least P35 billion. The company earned a record P42 billion in 2010.
The announcement weighed on PLDT’s stock, which plummeted 17.9 percent to close at P1,830 Monday. PLDT said it won’t declare a special dividend for 2015 earnings, the first time it’s skipping the payment since 2006.
“The next two to three years would be challenging for PLDT. The goal is still with the baseline of P28 billon is to raise the profitable level after 2016,” Pangilinan said.
“We expect it to be a long and difficult process with many critical adjustments to be made along the way. We certainly don’t expect results overnight. In fact, we estimate it will take three years before we make a complete turn,” he said.
Core profit, which excludes foreign exchange gains or losses and other non-recurring income, fell 6 percent in 2015 to P35.2 billion from P37.4 billion in 2014.
Pangilinan blamed the decline in net income to the higher foreign exchange and derivative losses and rise in impairment charges relating to both fixed assets and investments.
Pangilinan said the impairment loss from PLDT’s investment in Rocket Internet reached P5 billion. At present, the value of its investment in Rocket Internet was P14.6 billion, down from the P19.7-billion acquisition cost.
Consolidated revenues dropped 1 percent in 2015 to P162.93 billion from P164.94 billion in 2014.
Pangilinan said the company’s profitability had to be “reset” to a baseline in 2016 to P28 billion after the company implemented changes in organizational structure. The profit guidance for 2015 was P35 billion. PLDT’s 2016 profit guidance was the lowest since 2004.
“For the company to be able turnaround and face this digital challenge, we have to take some pain. I think we’ve come to the realization that we really have to reset the dials of the company as you move from legacy to digital. This will not happen without any pain,” Pangilinan said.
PLDT announced its biggest management shake-up in December, assigning new roles for at least 10 senior executives.
Pangilinan said other factors behind the significant decline in profit guidance last year were the changes in revenue mix, intense competition, the entry of a third player in the market, the accelerated capital expenditures that would result in higher depreciation and financing costs.
He said despite the fourth-quarter loss, he remained optimistic about the prospects for the company due to increasing revenues from data business.
PLDT’s broadband revenues increased 16 percent to P48.49 billion in 2015 from P41.90 billion in 2014. The group’s combined broadband subscriber base reached about 5.2 million as of end-December, over 3.9 million of whom used wireless broadband.
He said the critical challenge for PLDT was the prepaid wireless of Smart, which lost 5 million subscribers to rival Globe Telecom Inc.
The PLDT Group had 65 million cellular subscribers as of end-December. Smart had 24.1 million subscribers while value brand TNT ended with 28.1 million subscribers. Unit Sun Cellular had 12.8 million subscribers.
The company allocated P43 billion in capital expenditures this year.