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PLDT expects turnaround after Q1 revenue growth

Philippine telecom earmarks $1bn record capex to upgrade network

A woman uses a pay phone outside a Philippine Long Distance Telephone Company office in Manila.   © Reuters

MANILA -- Philippine telecom leader PLDT, which is facing intense competitive pressure, is on course for a turnaround after recording positive growth in the first quarter on Thursday.

Under a new accounting standard, service revenue that does not include interconnection costs grew by 1% at 36.7 billion pesos ($706.8 million) in the January-March quarter from a year ago. The expansion was faster at 3% using last year's accounting standard.

The revenue improvement during the period marked a change from a trend of decline since 2016 and sets the stage for future growth, said Chief Revenue Officer Ernesto Alberto. 

"We are confident that it is sustainable," he told reporters. "It is a new base from which we could spring growth on."

The international long distance business continued to come under pressure, as is the case industry-wide, posting a revenue drop of 17% to 3.5 billion pesos in the quarter compared with a year ago. But revenues in all other segments improved.

Revenue in its enterprise segment, which is formed of mainly corporate accounts, rose 7% to 9.2 billion pesos in the quarter. In its consumer business, revenue from the "home" or residential segment increased 14% to 8.9 billion pesos over the same period, while individual account revenue rose 2% to 14.8 billion pesos.

PLDT Chairman and CEO Manuel Pangilinan said his team "did a great job." But when asked if he was happy with the result, he said: "No. I think we can do better."

PLDT, which counts Indonesia's Salim Group and Japan's NTT Group as among its key shareholders, has lost market share to rival Globe Telecom, a joint venture of Philippines' Ayala Corp. and Singapore Telecommunications.

The smaller rival was able to exploit the shift of customer demand to data-related services from traditional services such as calls and texts. Globe's service revenue in the first quarter rose 8% to 33.6 billion pesos from a year ago while net profit expanded 18% to 4.5 billion pesos.

To compete, PLDT said it would step up network upgrade, allocating a record 58 billion pesos ($1.1 billion) to capital expenditure this year.

PLDT's net income surged 39% year-on-year to 6.9 billion pesos in the quarter, partly due to gains from the higher share price of German e-commerce group Rocket Internet. PLDT now holds a 2% stake in Rocket, cut from 6.1% this month.

PLDT expects to make 23 billion to 24 billion pesos in recurring core income for the whole of 2018.

"It's a good start for the year, but there are rough spots still," Pangilinan said. "I can say that we will continue to see more improvement in our performance."

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