PLDT net profit down 6% in Q1; Globe’s up 1%
MANILA, Philippines—Industry leader Philippine Long Distance Telephone Co. expects 2011 profits to decline as earnings from its new businesses fail to offset the steady drop in its traditional revenue streams.
Competition on all fronts—from fellow telecom players and “over the top” Internet services such as Skype.com—forced the company to keep prices low, leading to thinner margins.
“While management has done a good job of controlling expenses in order to protect margins, there is only so much that can be done without affecting operations,” PLDT chairman Manuel V. Pangilinan said in a statement.
The company reported Tuesday that its average revenue per user, or ARPU, had dropped 13 percent year on year, leading to net profit slipping 6 percent to P10.7 billion in the first quarter.
This marked the second consecutive quarter of lower profits for PLDT, the country’s biggest listed firm. The company said this was in line with the company’s full-year guidance of a slight dip in net income.
In a separate statement, Globe Telecom Inc. said its net profit rose 1 percent in the January-to-March period—the first increase in quarterly profit since the start of last year.
Net income after tax of P3 billion in the first quarter was also a 30-percent improvement from the fourth quarter of 2010. Excluding foreign exchange and mark-to-market gains and losses as well as nonrecurring items, core net income was 6 percent higher than last year and 52 percent better than the previous quarter.
“Our earlier programs are already translating to improvements in our financial results,” Globe president and CEO Ernest Cu said. “This will provide us the momentum to take on greater challenges ahead, with the market consolidating and Globe now up against an even larger competitor,” he said.
Net of foreign exchange and derivative gains or losses, PLDT’s core net income improved 1 percent to P10.6 billion, although officials said this was mainly due to lower expenses during the period.
Last year, the company implemented job cuts that removed about 800 redundant posts by offering employees early-retirement packages. This helped keep growth in expenses in check.
But the company reported a 4-percent decline in consolidated service revenues, led by PLDT unit Smart Communication’s text messaging business, which was down 2 percent year on year. Mobile voice call revenues also fell 5 percent.
The company said its long-distance voice call business posted a 10-percent drop in the three-month period due to the depreciation of the dollar as well as competition from Skype and other similar service providers that allowed people to make calls over the Internet for free.
Competition on all fronts—from fellow telecom players and “over the top” Internet services such as Skype.com—forced the company to keep prices low, leading to thinner margins.
“While management has done a good job of controlling expenses in order to protect margins, there is only so much that can be done without affecting operations,” PLDT chairman Manuel V. Pangilinan said in a statement.
The company reported Tuesday that its average revenue per user, or ARPU, had dropped 13 percent year on year, leading to net profit slipping 6 percent to P10.7 billion in the first quarter.
This marked the second consecutive quarter of lower profits for PLDT, the country’s biggest listed firm. The company said this was in line with the company’s full-year guidance of a slight dip in net income.
In a separate statement, Globe Telecom Inc. said its net profit rose 1 percent in the January-to-March period—the first increase in quarterly profit since the start of last year.
Net income after tax of P3 billion in the first quarter was also a 30-percent improvement from the fourth quarter of 2010. Excluding foreign exchange and mark-to-market gains and losses as well as nonrecurring items, core net income was 6 percent higher than last year and 52 percent better than the previous quarter.
“Our earlier programs are already translating to improvements in our financial results,” Globe president and CEO Ernest Cu said. “This will provide us the momentum to take on greater challenges ahead, with the market consolidating and Globe now up against an even larger competitor,” he said.
Net of foreign exchange and derivative gains or losses, PLDT’s core net income improved 1 percent to P10.6 billion, although officials said this was mainly due to lower expenses during the period.
Last year, the company implemented job cuts that removed about 800 redundant posts by offering employees early-retirement packages. This helped keep growth in expenses in check.
But the company reported a 4-percent decline in consolidated service revenues, led by PLDT unit Smart Communication’s text messaging business, which was down 2 percent year on year. Mobile voice call revenues also fell 5 percent.
The company said its long-distance voice call business posted a 10-percent drop in the three-month period due to the depreciation of the dollar as well as competition from Skype and other similar service providers that allowed people to make calls over the Internet for free.
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