PHILIPPINE Long Distance Telephone Co. (PLDT) Chairman Manuel V. Pangilinan admitted that his company has “fallen off the saddle”—at least in the profitability standpoint—as overall competition with Globe Telecom Inc. continues to heat up.
But the war is not over yet, he quickly added, as his company is currently undertaking radical actions to keep up with the growth trajectory of the competition.
The two largest telecommunications companies in the country posted mixed results in the first half of the year, with net profits of Globe rising by 27 percent, while that of PLDT receding by 6 percent.
In absolute terms, the largest Filipino telco booked a net income of P18.7 billion, while its rival wrote off P8.7 billion on its records. The 3-percent rise of expenses to P64.16 billion and the flat revenues to P85.19 billion weighed down on PLDT’s bottomline, add to that the adjustments in foreign- currency exchange. Globe closed the first half with P53.8 billion in revenues, a 13-percent rise from the year prior. Operating expenses and subsidy increased by a slower 9 percent to P31.18 billion from P28.62 billion.
The telecommunications unit of Ayala Corp. thanked the robust revenue gains on mobile data and broadband for the “record-breaking” print.
“We have, indeed, fallen off the saddle, and it is fully our intention to climb back to that saddle and rise. It will take a while. I don’t think this will happen overnight or maybe next year. So, we anticipate that the perceptible changes can be seen in the course of next year. But it will be a tough year for 2015 from a profit stand point. It will be tough as we transition more rapidly from the legacy to digital,” Pangilinan said.
On Tuesday shares of PLDT went down by 1.66 percent to end at P2,850 apiece, while that of Globe rose by 1.37 percent to P2,670 per share.
Despite the glaring difference in growth rates, Pangilinan said his group is “not alarmed” with the progress that Globe has been experiencing over the past few quarters.
“We are not alarmed but we are concerned with the inroads made by the competition,” he said. “It is a cause of concern, I don’t think we should be alarmed, as we are still a much larger company than competition.”
The businessman admitted that his company was quite slower versus the competition in terms of migrating to the digital space, as reflected by Globe’s performance in the mobile data arena.
“I think they have adopted to change more quickly to the digital space, but we are catching up. We are pushing the digital experience on various platforms,” he said.
Indeed, the company is pushing to develop its digital platform, forming partnerships with multinational content providers and acquiring Internet enablers to keep up with the competition. PLDT has set aside P43 billion in capital expenditures this year, inflated versus the P39-billion requirements earlier announced, to accommodate the needed investments in the digital space.