PLDT shares rise after release of Konektado IRR

PLDT INC. stocks rose last week after the release of Konektadong Pinoy Act’s implementing rules and regulations (IRR) and third quarter earnings.

The Pangilinan-led telecommunications giant was the tenth most actively traded stock last week. A total of 957,435 shares worth P1.17 billion changed hands from Nov. 10 to 14 on the local bourse.

PLDT shares closed at P1,260 per share, up 11.5% from the previous Friday’s P1,130 close, better than the services sector’s 1.5% growth and the Philippine Stock Exchange index’s (PSEi) 3% contraction.

Year to date, the stock dropped by 2.7%, underperforming the 12% growth in its sector and the PSEi’s 14.5% decline.

Jasper Timoteo A. Ondap, equity analyst at Regina Capital Development Corp., attributed the increase to the release of the IRR of the Konektadong Pinoy Act.

Mr. Ondap added that after the Konektadong Pinoy Act lapsed into law in August, major telecommunications companies experienced a significant downturn and entered a consolidation phase, which lasted until the issuance of a clear IRR to assess its impact on their operations.

“Recently when its IRR was signed and disclosed, it gave more color on the possible effects and opportunities it would bring to the company,” said Mr. Ondap in an e-mail.

The Konektadong Pinoy Act, or the Open Access in Data Transmission Act, lapsed into law on Aug. 24, while the IRR was signed on Nov. 5.

The law streamlines the licensing process for new entrants, boosting competition in data transmission.

Department of Information and Communications Technology (DICT) Secretary Henry Rhoel R. Aguda said the IRR addresses the concerns of the telecommunications companies, particularly on the issue of cybersecurity and a level playing field.

The IRR provides transparency in pricing and the timely regular publication of updated pricing information to ensure fair trading within and between each data transmission.

Data transmission industry participants (DTIPs) will be allowed to construct, install, establish, maintain, lease or own, networks or facilities without the need of a legislative franchise, while also promoting asset sharing between current and new players.

The DICT, through its ICT Industry Development Bureau, will develop and issue guidelines outlining minimum cybersecurity standards and requirements, aligned with the DTIP’s risk profile for each data transmission segment.

Aniceto K. Pangan, trader at Diversified Securities, said in a Viber message that “[the stock] started to move up in price last Nov. 11 after the release of its earnings on that day.”

Mr. Ondap said that the quarterly report was welcomed by the market.

PLDT released its quarterly report last week on Wednesday.

In the third quarter, PLDT’s attributable net income reached P6.93 billion, down 28.3% from P9.66 billion a year earlier, as higher expenses offset revenue growth.

Mr. Ondap added that the decline in reported net income was primarily driven by a one-time accelerated depreciation expense, such as “accelerated depreciation of P2.6 [billion] related to network modernization and retirement of legacy assets.”

For the July-to-September period, PLDT reported revenues of P53.71 billion, slightly up from P53.36 billion a year ago, while expenses rose to P42.36 billion from P39.62 billion.

For the nine-month period ending September, total revenues climbed 1.45% to P163.28 billion from P160.94 billion, while expenses increased 3.61% to P123.39 billion from P119.09 billion.

PLDT’s nine-month attributable net income declined 10.7% to P25.07 billion from P28.07 billion, while telco core income — which excludes asset sales and Maya-related gains or losses — fell 5% to P25.26 billion from P26.58 billion.

Capital expenditures (capex) for the nine-month period totaled P43 billion, down from P52.3 billion a year earlier, reflecting continued discipline in spending.

“Mainly, it has achieved a positive free cash flow and [is] confident to be able to maintain a free cash flow going forward even with less capex requirements for the years forward,” said Mr. Pangan.

He added that the company aims to reduce its net debt-to-EBITDA ratio to 2.0x from the current 2.61x as of the end of third quarter.

Mr. Pangan expects fourth quarter net income of about P7.1 billion and a full year net income of above P32 billion.

For technical levels, Mr. Ondap placed PLDT’s support and resistance levels at P1,100 and P1,300.

Mr. Pangan pegged immediate support at P1,240 and immediate resistance at P1,290.

“Major resistance at P1,320, while major support at P1,200,” he added.

Hastings Holdings Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings Inc., holds a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Heather Caitlin P. Mañago