UPDATE 1-Philippines' PLDT Q3 net down 10 pct, sees weak revenues
Philippine Long Distance Telephone Co (PLDT) , one of the country's most valuable listed firms, said on Thursday its third-quarter net income fell 10 percent on weaker revenues from its mobile phone business and the impact of a strong peso.
The company expects further pressure on group revenues as it spends on its data and broadband platform and upgrades networks after acquiring rival Digital Telecommunications Philippines Inc (Digitel) in a $1.6 billion deal completed last week.
Analysts have estimated the deal gives PLDT, partly owned by Hong Kong's First Pacific Co Ltd , Japan's NTT DoCoMo and NTT Communications , a 70 percent share of the local mobile phone market.
"We are therefore faced with the sobering prospect that revenues are likely to continue declining for the foreseeable future, and costs rising in the near term -- as we need to follow through with improving and upgrading our networks, including Digitel's," group chairman Manuel Pangilinan said.
Analysts have said the takeover could end the bruising price war Digitel had sparked off, but it would take time before PLDT fully integrates Digitel and benefits from the deal.
Pangilinan said in a statement it would take some time before fast-rising revenues from data and broadband services match those from the group's core mobile phone business.
PLDT said net income in the September quarter was 9.3 billion Philippine pesos ($217 million), down from 10.3 billion pesos a year earlier.
Analysts had expected net profit of 9.7 billion pesos for PLDT in the third quarter and 39.8 billion pesos for 2011, down 1 percent from 2010, according to Thomson Reuters I/B/E/S.
STRONG PESO
Core net profit, which excludes currency and derivatives-related items, fell 6 percent in the third quarter to 9.6 billion pesos.
PLDT said it had cut its core profit guidance to 39 billion pesos from 40.5 billion pesos set early this year.
Net income and core net income in the first nine months both reached 30.6 billion pesos, 4 percent and 3 percent lower from a year earlier.
The company said if the peso had remained stable, core net income in the first nine months would have been slightly higher at 31.3 billion pesos. The peso has gained more than two percent so far this year, and hit a three-year high against the dollar in August.
PLDT has lost more than 7 percent this year, underperforming the main stock index which was mostly flat.
Service revenue fell 3 percent to 33.6 billion pesos in the third quarter. The company said the strong peso cut its January to September service revenue by 1.4 billion to 103 billion pesos, down 3 percent from a year ago.
Mobile phone service revenue, accounting for nearly two-thirds of the group's service revenue, fell 5 percent to 67.3 billion pesos in the first nine months.
PLDT said its mobile phone subscriber base was 47.7 million at end September, slightly lower from 47.8 million at end June.
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