MANILA, Philippines – While it posted lower core net income for the first quarter of the year versus the same period last year, PLDT Inc. is on track of its core guidance for 2016, as it gets aggressive on digital expansion investments.
“The difficult task ahead is to be able to converge the strengths of our networks… to be able to put PLDT as a truly digital telecom of everything and not just a digital mobile service provider,” its chairman and CEO Manuel “Manny” V. Pangilinan said in the first quarter financial report of the company on Tuesday, May 3.
PLDT’s consolidate core net income for the first quarter of 2016 dropped to P7.2 billion ($153.24 million), a 23% decrease on the same period last year. Still, its revenues were up by 1% at P42.8 billion ($910.93 million), largely driven by data revenues led by the fixed line business.
“The inflection period of the fixed line business occurred between 2011 and 2012, where data made up 40% of its revenues. We see this happening to Smart by 2018, as it is on track at 22% today,” Pangilinan said.
PLDT posted a “record high” capital expenditure for the first quarter at P14.6 billion ($310.71 million), largely due to continued expansion of 3G and 4G networks,coupled with the deployment and improvement of fiber-to-home service for its broadband customers.
Such efforts seem to pay off, as PLDT saw lower subscriber losses at 400,000 for the first quarter, compared to last year’s numbers which reached more than a million for the same period.
“Out of the 400,000, 40% of that is part of ‘clean-up’ of our Sun postpaid subscribers and the rest are to the competition… It’s not that significant compared to last year.” Pangilinan added.
All-around digital company
As revenues of the legacy business continuously fall out (dropped by P2.5 billion [$53.17 million] in the first quarter), the company’s other business units show gains.
The enterprise group posted a 10% increase to P7.6 billion ($161.65 million) with improved data and cloud solutions, coupled with its robust efforts to reach micro, small, and medium enterprises through its products and projects.
As part of the company’s “digital pivot,” it has also been heavily investing in diverse digital products with Voyager Innovations, showing promising potential in the last year albeit its limited revenue contribution of P100 million ($2.13 million) as compared to other business units.
PLDT Chief Financial Officer Annabel Chua said the business unit is “not really expected to make profits at this point as it is in buildup mode.”
“The expectation at the moment is not to build profit, but to generate new forms of revenues in the future with these digital platforms and mobile solutions,” Chua said.
PayMaya Philippines emerged as the top downloaded financial app in Google Play Store with 79% growth in users this quarter alone, while Smart Padala raked in P86 million ($1.83 million) worth of remittances in 2015.
Meanwhile, FINTQ has collaborated with various nationwide and rural banks for its digital services, which includes Landbank Mobile Loansaver, an electronic salary loan service for government officers; and Lendr, an end-to-end consumer loans marketplace with China Bank Savings as its first partner offering automotive loans.
“Unlike other startups in developed countries, we’re not disruptors but more so, enables digital enablers for banks,” Voyager Innovations President Orlando Vea said.
The company earlier reported in April that it is looking on moving its headquarters from Makati City to “somewhere south of Manila.”
“We’re looking at a property probably 10 to 28 hectares, while we haven’t decided where it is, it has to be decided this year, definitely,” Pangilinan told reporters.
He added the design would be similar to Facebook’s office in Silicon Valley as it emulates an open-space environment. The new office will likely be finished in two to three years.
Elyssa Christine Lopez is entrepreneur.com.ph's editorial assistant/writer. Follow her on Twitter @elyssalopz.