PHILIPPINE Long Distance Telephone Co. (PLDT) will have to struggle for about two to three years more before it could see a significant increase in its bottom line, its chairman admitted.
In an interview, businessman Manuel V. Pangilinan said the telecommunications sector is currently transitioning from being driven by legacy services to data.
“Any transition will involve some pain, and that’s exacerbated by competition. We have twin issues that we have to confront in 2015,” he said.
The tycoon said “to change over the revenue mix will involve some dislocations.”
This led to his conclusion that PLDT, the parent company of Smart Communications Inc. and Digitel Mobile Philippines Inc. (Sun Cellular), will have to struggle to increase its profits.
“Increasing profitability will be a challenge on the next two to three years. It’s like a medical condition: Would you want the pain to be quick and intense, or slower and less intense? I think our preference, given the phase of growth in the data side, would be quick and intense. The job is to manage the transition in the least painful way,” Pangilinan said.
Data, he said, would be a major contributor in the company’s revenues. PLDT targets to increase its data business to contribute about 50 percent of its gross revenues.
“It will contribute more than 50 percent. I just hope that it will be much shorter than seven or eight years. It has started already, with 16 percent of Smart revenues being data-driven,” Pangilinan said.
“We’ve touched first base; we have 34 percent to go,” he added.
The company is currently firing up several LTE sites around the Philippines to cover 50 percent of the country’s population. It also aims to cap the year with 100-percent coverage in terms of 3G network.
PLDT will spend some P36 billion in its capital expenditures in 2015 to further modernize its network. It has programmed a P32-billion investment plan for this year.
The Pangilinan-led company reported a core net profit of P28.6 billion, 1 percent lower than the P28.8 billion recorded in the same period in 2013, owing mainly to the rise in cash operating expenses—particularly rent and maintenance costs—an increase in product subsidies and a higher provision for income tax.
In the same comparative periods, net income declined by 3 percent to P28 billion from P29 billion, owing to the dip in core net income and the absence of the contribution from discontinued operations recorded in the said period.
Shares of PLDT ended Friday’s trading at P2,982 apiece.
Image credits: Nonie Reyes