Philippine Long Distance Telephone Co. said on Tuesday net profit fell 34 percent in the first quarter of the year, dragged down by its investment in a German Internet company and higher cost of handset subsidies amounting to nearly P3 billion.
PLDT, partly owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT group, reported a net income of P6.22 billion in the January-to-March period from P9.48 billion year-on-year.
The company blamed the decline in net income during the period to the higher product subsidies and financing costs, and increased impairment charges related to the investment in Rocket Internet.
PLDT said handset subsidies amounted to P1.2 billion, while impairment loss from its investment in Rocket Internet reached P1.6 billion. The value of its investment in Rocket Internet was P13 billion, down from the P19.7-billion acquisition cost.
“Our results for the first quarter confirm our view that the digital pivot will be a difficult and complicated process,” PLDT chairman and chief executive Manuel Pangilinan said.
He added the company was maintaining its core profit guidance for the year to P28 billion due to “intense” competition and continued shift to lower-margin revenues.
Core profit, which excludes foreign exchange gains or losses and other non-recurring income, dropped 22 percent to P7.21 billion in the first quarter from P9.28 billion last year.
Consolidated revenues amounted to P42.78 billion in the January-to-March period from P42.55 billion in the same period last year.
“PLDT has posted strong gains in data, broadband and digital services, compensating in large part for the continued declines in long distance and SMS revenues,” Pangilinan said.
PLDT’s wireless business posted revenues of P26.7 billion, down 4 percent year-on-year. Revenues of mobile data, broadband and digital services rose 23 percent to P6.2 billion.
Earnings from its traditional business such as text and calls declined 8 percent to P18.2 billion, while cellular voice international fell 23 percent to P2.3 billion.
Data, broadband and digital services now account for 23 percent of wireless revenues, up from 18 percent a year earlier.
Pangilinan expects data and broadband revenues contribution to the total revenues to increase between 40 percent and 45 percent in 2018.
Pangilinan said the company lost 400,000 cellular and broadband subscribers during the period, of which 160,000 were non-active subscribers.
PLDT Group’s mobile phone subscribers stood at 64.4 million at end-March.
The company has allotted P43 billion in capital expenditure this year, including P14.6 billion to further increase the coverage, speed, capacity and reliability of PLDT’s fiber and DSL and Smart’s mobile networks.
Pangilinan said “the company should be able to shift from legacy to data in an orderly and as quick a way as we can” to recover its share prices
PLDT rose to P1,721 per share from Monday’s closing of P1,690.
