S&P sees double-digit growth for PLDT this year
By Mary Ann Ll. Reyes
The Philippine Star 02/24/2006
Leading telecommunication company Philippine Long Distance Telephone Co. (PLDT) is expected to post double-digit revenue growth this year following a seven percent estimate increased in 2005, due to double-digit growth in its wireless and information services businesses, according to a report from Standard and Poor’s furnished The STAR.
S&P said in its Feb.18 stock report on PLDT that the higher growth estimate for 2006 is supported by the higher mix of wireless revenues, which it estimates to be 66 percent of total revenues in 2006 compared to 56 percent in 2004.
PLDT chairman Manuel V. Pangilinan earlier told The STAR that the company’s consolidated profit for 2005 may even exceed P32 billion. The company is announcing its 2005 financial and operational highlights on Monday.
"We are positive on the company’s efforts to expand its prepaid wireless business, and we expect prepaid to be the majority of its new net subscriber additions. In our opinion, the only fixed line services that may show more than a 10-percent growth are data and other network services," S&P said.
It expects PLDT’s EBITDA (earnings before interests, taxes, depreciation, and amortization) margins to remain in the 58-to 60-percent range in 2005 and 2006, with the potential for wider margins should the company realize higher wireless sales growth, improved cost controls, and increased operating efficiency from bundling wireless with fixed line services.
"Another cost improvement opportunity may be PLDT’s continued success in reducing selling and promotion expenses such as discount to dealers," S&P noted.
Despite recent earnings pressures from higher labor costs, S&P made a buy recommendation on PLDT. "Reflecting double digit revenue growth and stronger earnings growth than most peers forecasted for 2006, we believe that PLDT shares are attractively valued. We see management executing to drive higher market penetration of wireless services, as it experiences a revenue decline in its fixed line business. PLDT has also invested to expand its broadband and data networking business," it said.
S&P has likewise placed PLDT’s investability quotient percentile at 52 percent, which means that the company scored higher than 52 percent of all companies for which an S&P report is available. PLDT’s $34 stock price was deemed a fair value, while its stock’s volatility was ranked average. A $10,000 investment in PLDT shares made five years ago now has a value of $19, 414.
In an earlier report, S&P said the recent acquisition by NTT DoCoMo, Japan’s largest wireless carrier, of seven percent of PLDT’s common shares will lead to synergy and cooperation opportunities.
PLDT and NTT DoCoMo have both agreed to collaborate in the rollout and development of 3G or third generation mobile communications services. PLDT wireless subsidiary Smart Communications has said it will introduce DoCoMo’s mobile Internet service i-Mode exclusively for Smart subscribers.
In its Feb. 18 report, S&P also noted that large integrated telecommunications service (wireline) providers, including PLDT, will generate adequate cash flow in the near term, even after making large acquisitions and battling newer competitors.
It expects that this year, total access lines and revenues for the wireline companies will continue be restricted by competition from cable companies and wireless substitution. "DSL (digital subscriber line) customer growth recovered in the second half of 2005, due in part to pricing cuts. In our view, growth in the wireless units was relatively strong in 2005 and should continue to be into 2006," it said.
S&P anticipates that telecom providers will further roll out their fiber-based broadband and video services to their customers this year in an effort to combat cable competition.
By Mary Ann Ll. Reyes
The Philippine Star 02/24/2006
Leading telecommunication company Philippine Long Distance Telephone Co. (PLDT) is expected to post double-digit revenue growth this year following a seven percent estimate increased in 2005, due to double-digit growth in its wireless and information services businesses, according to a report from Standard and Poor’s furnished The STAR.
S&P said in its Feb.18 stock report on PLDT that the higher growth estimate for 2006 is supported by the higher mix of wireless revenues, which it estimates to be 66 percent of total revenues in 2006 compared to 56 percent in 2004.
PLDT chairman Manuel V. Pangilinan earlier told The STAR that the company’s consolidated profit for 2005 may even exceed P32 billion. The company is announcing its 2005 financial and operational highlights on Monday.
"We are positive on the company’s efforts to expand its prepaid wireless business, and we expect prepaid to be the majority of its new net subscriber additions. In our opinion, the only fixed line services that may show more than a 10-percent growth are data and other network services," S&P said.
It expects PLDT’s EBITDA (earnings before interests, taxes, depreciation, and amortization) margins to remain in the 58-to 60-percent range in 2005 and 2006, with the potential for wider margins should the company realize higher wireless sales growth, improved cost controls, and increased operating efficiency from bundling wireless with fixed line services.
"Another cost improvement opportunity may be PLDT’s continued success in reducing selling and promotion expenses such as discount to dealers," S&P noted.
Despite recent earnings pressures from higher labor costs, S&P made a buy recommendation on PLDT. "Reflecting double digit revenue growth and stronger earnings growth than most peers forecasted for 2006, we believe that PLDT shares are attractively valued. We see management executing to drive higher market penetration of wireless services, as it experiences a revenue decline in its fixed line business. PLDT has also invested to expand its broadband and data networking business," it said.
S&P has likewise placed PLDT’s investability quotient percentile at 52 percent, which means that the company scored higher than 52 percent of all companies for which an S&P report is available. PLDT’s $34 stock price was deemed a fair value, while its stock’s volatility was ranked average. A $10,000 investment in PLDT shares made five years ago now has a value of $19, 414.
In an earlier report, S&P said the recent acquisition by NTT DoCoMo, Japan’s largest wireless carrier, of seven percent of PLDT’s common shares will lead to synergy and cooperation opportunities.
PLDT and NTT DoCoMo have both agreed to collaborate in the rollout and development of 3G or third generation mobile communications services. PLDT wireless subsidiary Smart Communications has said it will introduce DoCoMo’s mobile Internet service i-Mode exclusively for Smart subscribers.
In its Feb. 18 report, S&P also noted that large integrated telecommunications service (wireline) providers, including PLDT, will generate adequate cash flow in the near term, even after making large acquisitions and battling newer competitors.
It expects that this year, total access lines and revenues for the wireline companies will continue be restricted by competition from cable companies and wireless substitution. "DSL (digital subscriber line) customer growth recovered in the second half of 2005, due in part to pricing cuts. In our view, growth in the wireless units was relatively strong in 2005 and should continue to be into 2006," it said.
S&P anticipates that telecom providers will further roll out their fiber-based broadband and video services to their customers this year in an effort to combat cable competition.
No comments:
Post a Comment