PLDT trims revenue forecast as mobile growth slows
Reuters | 11/03/2009 6:19 PM
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MANILA - Philippine Long Distance Telephone Co (PLDT), the country's most valuable firm, trimmed its full-year revenue guidance, reckoning strong typhoons that have battered parts of the country may dent consumer spending.
While PLDT cut the revenue forecast by 1% to P146 billion ($3.06 billion), it kept its core earnings guidance, which strips out currency and derivatives gains, at P41 billion, up 8% from 2008.
Analysts also expect PLDT to post 2009 net profit of around 41 billion pesos, up 18.2 percent, based on Thomson Reuters, as spending ahead of May 2010 presidential polls boosts earnings.
PLDT, owned by Hong Kong's First Pacific Co Ltd, Japan's NTT Communications and NTT DoCoMo, said July-September net income jumped 49% to P10.3 billion, as its foray into power distribution helped mask slower growth in its main mobile phone business. Analysts had forecast profit of P9.9 billion.
"While we anticipate the usual boost in the fourth quarter from holiday spending, we expect this may be somewhat dampened as the recent typhoons caused extensive damage all around," Chairman Manuel Pangilinan said in a statement.
Aggressive pricing promotions by rivals have forced PLDT to come up with cheaper mobile offerings, and a recent regulation to extend the life of phone cards has made it tougher for PLDT to grow its revenue.
"The macroeconomy is still weak, but there is also an element of increasing competition," said Jody Santiago, head of research at UBS Securities Philippines Inc.
The company added a net 580,000 mobile subscribers in July-September, the lowest tally in 11 quarters.
"For me, the third quarter marks an inflection point showing that the growth period may be finished and that there is a risk of a decline in operations," Santiago said.
He said PLDT's Meralco earnings could compensate for weaknesses in its traditional operations.
PLDT hopes recent investments in a local broadcaster and in Manila Electric Co (Meralco), the country's largest power retailer, will fortify its dominance of the domestic telecoms market.
Pangilinan said the company recognised earnings of P361 million from its investment in Meralco since July.
"If Meralco achieves its full-year targets, then we should be able to record a significant contribution for the group starting this year," he said.
Weighing options
PLDT is in the middle of a battle for control of Meralco with local conglomerate San Miguel Corp, a new entrant in the local telecoms business.
Pangilinan said PLDT was weighing its options after a group headed by the son of mall tycoon Henry Sy, and allied with San Miguel, made a surprise offer on Friday to buy a 13.4% stake in Meralco owned by the Lopez family and worth around $940 million.
Days earlier, the PLDT group had said it was near a deal with the Lopez family.
"At the moment, we're studying our options very carefully and very seriously. What we heard is there's an offer of P300 per share," he said. "We do have certain rights, principally the right to match and the right to tag along."
The tag-along rights allow PLDT to sell its Meralco shares under the same terms and conditions applying to the Lopez stake.
"It came as a surprise to us, but I guess it's entirely within his (Henry Sy Jr) prerogative to make an offer," Pangilinan said.
The Lopez family's First Philippine Holdings Corp on Tuesday confirmed that Triratna Holdings Corp, headed by Sy Jr, had offered P300 per share for Meralco, a 41% premium on the day's closing price.
PLDT said its mobile service revenue, accounting for nearly two-thirds of the group total, was flat in the third quarter, while earnings before interest, tax and depreciation fell 3%. Core earnings climbed 11% to P10.1 billion.
PLDT shares closed down 0.8% after the results in a flat broader market.
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