PLDT scales down target, moves to delist Digitel

But the telco expects to enjoy an additional revenue stream with the acquisition of Digital Telecommunications Philippines, Inc. (Digitel), which is slated for delisting from the local bourse early next year. “Core net income [is now expected at] P39 billion, lower than our P40.5-billion early guidance,” PLDT Chairman Manuel V. Pangilinan said at a briefing on the firm’s third-quarter results. If so, PLDT will be recording a 3% decline from last year’s P40.2-billion core net income. This comes as service revenues are expected to be “lower by 4% in 2011 versus 2010,” Mr. Pangilinan said. So far, PLDT’s reported net income declined 10% to P9.32 billion in the third quarter from P10.31 billion in the same period last year. Core net income, on the other hand, slipped 6% to P9.58 billion from P10.19 billion last year. “The third quarter was impacted by heightened competition in the wireless business and strengthening of the peso,” PLDT President Napoleon L. Nazareno, said during the same briefing. “Had the peso remained stable, core net income would have been higher by P700 million,” he said, noting that roughly a fifth of the firm’s service revenues are linked to the dollar. Third-quarter revenues dipped 2% to P34.24 billion while expenses inched up by 1% to P21.81 billion, Mr. Nazareno said. Nine-month tally The third-quarter performance resulted in a 4% decline in January-to-September profits which stood at P30.62 billion versus the P31.99 billion recorded in the same period last year. Core earnings for the nine-month period, on the other hand, decreased 3% to P30.6 billion, Mr. Nazareno said. New revenue streams from areas such as wireless broadband and corporate data services were not able to offset the decline in revenues from traditional voice and text products. Mr. Nazareno noted a 13% rise in wireless broadband and mobile internet revenues, a 13% growth in DSL revenues, a 4% increase in corporate data revenues, and a 3% growth in the group’s information and communications technology businesses. But combined cellular and fixed voice revenues went down by 7% and cellular data and text revenues declined by 4%. Mr. Pangilinan noted, however, that contributions from Digitel -- a rival telco in which PLDT purchased a 51.55% stake on Oct. 26 after securing regulatory approvals -- will be seen next year. Delisting In line with the takeover, Digitel will be delisted from the Philippines Stock Exchange “early next year,” Anabelle L. Chua, PLDT treasurer and senior vice-president, said during the same briefing. “We’ll do the tender offer first,” Ms. Chua said, referring to the process by which PLDT must offer to buy the remaining Digitel shares. Stiff competition from other networks as well as the strengthening of the peso against the dollar will continue to affect PLDT’s revenues and core net income well into 2012, PLDT spokesman Ramon R. Isberto said in a telephone interview. “[And] it’s still subject to discussion what services Digitel will offer. We will still sit down to discuss how we will be expanding and enhancing these services,” Mr. Isberto said. “We will keep Digitel and [PLDT’s wireless arm] Smart Communications, Inc. as separate entities. The synergy will be realized through joint operation and planning… [which will be] undertaken within the next few months,” Mr. Nazareno added. Mr. Pangilinan went on to note that PLDT will call for a special stockholders meeting to gain approval for a plan to create additional voting preferred shares. The meeting will be called after the firm buys back existing preferred shares. The plan is meant to cue PLDT’s violation of foreign equity limits. Shares of PLDT closed 1.35% lower at P2,332 per share yesterday.