PLDT expects recovery to continue in 2018

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By Krista A.M. Montealegre,
National Correspondent

PLDT, Inc. expects to sustain its recovery next year, as the telco giant mulls raising capital expenditures above regular levels without incurring additional debt to address mounting criticism on slow Internet speed.

In a briefing in Makati City on Thursday, PLDT Chairman Manuel V. Pangilinan said the fixed-line business coupled with cost-containment measures will drive growth next year, as the wireless individual business — while stabilizing — still requires more effort towards operational improvements and efficiencies.

“It will be a better year next year. If it will be a significantly better year, I doubt it. PLDT will continue to show signs of recovery,” Mr. Pangilinan said.

For its capital expenditures next year, PLDT may stick to the “normative level” of P46 billion to P48 billion — enough to be funded by its cash flow — or ramp up spending without taking on fresh debt.

That means PLDT would have to dispose assets to finance any incremental spending since its cash flow can only support the regular spending level, Mr. Pangilinan said.

PLDT has two key assets: the remaining receivables worth P15 billion from Metro Pacific Investments Corp. in respect to shares of Beacon Electric Asset Holdings, Inc. and a 6.1% stake in German startup Rocket Internet SE valued at P12 billion.

“We want to have an affirmative response to the criticism being levelled to the industry that service is lousy, that we are not building enough of this, we are not building enough of that. I think we may have to at least consider that,” Mr. Pangilinan.

For this year, PLDT kept its capital expenditure budget at P38 billion, but committed to spend another P15 billion for projects that will be finished in 2018.

Mr. Pangilinan announced PLDT upgraded its recurring core profit guidance to P22 billion from the original P21.5 billion, after the nine-month tally rose 5% year on year to P17.36 billion from P16.55 billion.

Recurring core income excludes extraordinary items such as asset sales and expenses related to its manpower reduction program.

Including gains from the sale of shares in Beacon and SPi Technologies, Inc., consolidated core income climbed 7% to P23.2 billion from a year ago.

Driving PLDT’s growth was the home and enterprise business units, posting double-digit growth rates in the first nine months of 2017. Combined, they now account for 47% of revenues, surpassing the 41% contribution of the wireless business.

Net of interconnection expenses, home revenues grew 12% to P24.3 billion, while enterprise revenues increased 11% to P25.3 billion. Quarter on quarter, the combined revenues of home and enterprise segments went up 5% and 2%, respectively.

The wireless individual business posted P44.2 billion in service revenues — 14% lower than the first three quarters of 2016. Third-quarter revenues dipped 2% to P14.6 from the previous quarter due to seasonality.

As a result, consolidated service revenues fell 4% to P107.3 billion, but third-quarter service revenues were stable at P36.1 billion, which is 1% higher versus the previous quarter.

Shares in PLDT rose 0.41% to close at P1,715 each on Thursday.