Tale of the tape

Telecommunications industry leader Philippine Long Distance Telephone Co. (PLDT) is off to a great start.

In the first quarter of 2022 alone, the company reported new fiber installations and migration of 213,000 while new fiber ports stood at 480,000, for a total of 6.25 million as of end-March.

Mobile data usage likewise went up 17 percent, with average monthly mobile data usage at 8.5 gigabytes (GB) compared to 7.3 GB last year while the average number of devices latched to 5G daily increased by 337 percent, or from 1.3 million to 300,000 a year ago.

Data, meanwhile, contributed P36.6 billion or 79 percent of total revenues as against 76 percent or P33.9 billion last year.

Core income was at P8.2 billion, or a nine percent hike compared to the P7.5 billion recorded a year ago, while net service revenues stood at P46.4 billion – an all-time high  –  and three percent more than the P44.8 billion generated as of the same period in 2021. Adjusted earnings before interests, taxes, depreciation, and amortization or EBITDA was at P25.5 billion as against P23.3 billion in the first quarter of last year, or a 10 percent increase. Reported net income also jumped 56 percent to P9.1 billion.

For the company’s individual group, service revenues went down by eight percent to P20.4 billion, while the home sector’s revenues grew by 25 percent to P13.6 billion. For the enterprise group, service revenues were at P11.6 billion, seven percent more than last year. As a result, service revenues for the consumer and enterprise group increased four percent to P45.5 billion. Meanwhile, international and carrier business suffered a three percent loss in revenues at P800 million.

Consolidated service revenues reached an all-time high of P46.4 billion during the first quarter of 2022, which company officials emphasized reflects the fourth quarter of sequential improvement from the first quarter of 2021.

For the home business, PLDT registered continued record-high fiber connections. Fiber-only connections posted revenues of P11.1 billion, which is 74 percent more than that of the first quarter of last year. Fiber also accounted for 82 percent of total home revenues.

Home average revenue per user increased by four percent, from P1,246 to P1,295.

PLDT officials revealed that drivers of growth for the home business include potential from underpenetrated markets, the fact that home broadband is still essential to consumer lifestyle under the next normal or post-COVID period, improved installation capability, and unparalleled network quality.

Meanwhile, the individual business experienced headwinds from competition and rising inflation, with service revenues down eight percent. Monthly top-ups in the first quarter were higher month-on-month but still below pre-pandemic levels.

Active data users for the individual business increased by four percent to 41.6 million, while average monthly mobile data usage per subscriber went up 17 percent to 8.5 GB. Mobile data traffic likewise increased by 30 percent to 1,010 PB compared to 777 PB in the first quarter of last year and by 21 percent as against last year’s average per quarter of 834 PB.

But officials expect growth in the coming months due to return of mobility and economic activity, new offers to increase data usage, and increased 5G adoption.

Officials also revealed that the enterprise business posted a consistent solid performance, with service revenues increasing by seven percent. Corporate broadband connections went up eight percent to 140,000 while cloud licenses enabled grew 36 percent to 550,000. Future growth is expected to come from return of business activities, digital transformation of enterprises, and the hyperscaler/data center business.

It was not a happy story however for the international/carrier business whose service revenues dropped 21 percent. However, PLDT officials expect the business to benefit from the opening up of the economy, including international inbound and outbound travel.

Data/broadband accounted for 79 percent of consolidated service revenues, with 84 percent coming from the home business, 83 percent from individual, and 72 percent from enterprise. The rest of consolidated service revenues came from voice (16 percent), SMS (three percent), and ILD (two percent).

Meanwhile, PLDT’s mobile subscriber base went down slightly by one percent to 70.28 million, from 71.2 million last year. Cellular subscribers stood at 69 million, two percent lower than last year, with prepaid subscribers accounting for 67.1 million and postpaid subscribers at 1.94 million. Mobile broadband subscribers (dongles) stood at 1.2 million, a 22 percent increase from the same quarter last year.

Broadband subscribers reached 4.08 million, a three percent increase while fixed line subscribers were at 3.76 million, higher by four percent.

PLDT’s consolidated capital expenditure over the last 10 years was at P518.5 billion, with 2022 capex at P85 billion. This year’s capex, officials revealed, will support the growth in demand for home broadband and data center businesses, and additional upgrades of the towers/passive infrastructure assets subject of the tower sale and leaseback transaction.

Specifically, this year’s capex include investment in capacity to support the home broadband business and rise in network traffic. Around 1.7 million fiber ports will be deployed this year, with 29 percent already rolled out in the first quarter. Funds are also earmarked for construction of the 11th data center targeting hyperscaler customers as well as the expansion of the 5G network.

For this year, officials expect a mid-single digit growth in service revenues, with home broadband leading the growth and the enterprise business expected to register stronger performance underpinned by information and communications technology.

Core income is projected to reach P33 billion as against P30 billion last year, with an expected robust increase in EBITDA driven by top line growth and cost management as well as an increase in depreciation and amortization and interest expenses following an elevated capex.

PLDT chairman Manuel V. Pangilinan said that he is encouraged by the company’s strong start, but emphasized that they need to stay the course in order to generate greater free cash flow from higher revenues, cost optimization, and the sale of their towers. All of these, he added, should enable PLDT to de-leverage, reduce its net debt to EBITDA back to 2.0X, enable payment of special dividends, and fortify the balance sheet.

For his part, PLDT and Smart Communications president and CEO Al Panlilio noted that rapidly shifting market conditions and aggressive competitive activity require the company to continuously evolve, so that PLDT cannot afford business-as-usual.

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