Philippines-based telecoms operator PLDT reported a sharp decline in profit in 2017 as transformation initiatives raised costs, but service revenue and mobile subscriber numbers stabilised in Q4.

The operator’s 2017 net income dropped 33 per cent from the previous year to PHP13.4 billion ($257 million), which it said was mainly due to non-core capex-related expenses of PHP16.7 billion in connection with its transformation initiatives. Consolidated service revenue fell 3 per cent year-on-year to PHP143.5 billion.

Manuel Pangilinan, chairman and CEO of PLDT (pictured, second from left), said: “Over the past year we have made significant progress in solidifying our lead in the home and enterprise businesses while stabilising the individual consumer business. This is largely enabled by our heavy investments in our fixed and mobile networks, which in turn allows us to strengthen our data and digital businesses, laying the ground for future growth. Though the trends are encouraging, much remains to be done to place PLDT on a sustained growth path.”

In Q4, mobile service revenue fell 7.2 per cent year-on-year to PHP20.5 billion, with a 4.8 per cent increase in mobile data revenue to PHP6.6 billion helping offset declines in mobile voice (down 9.6 per cent to PHP7.2 billion) and SMS (down nearly 16 per cent to PHP6.3 billion). Fixed-line service revenue increased 11 per cent to PHP16.7 billion.

Mobile data accounted for 42 per cent of total revenue in Q4, up from 35 per cent in Q4 2016. Service revenue in the quarter was flat at PHP36.2 billion.

Its mobile subscriber base fell 7.2 per cent year-on-year to 57.9 million at end-December. Prepaid ARPU rose 5.8 per cent to PHP110 at end-2017 and post paid ARPU slipped nearly 1 per cent to PHP961.

Capex boost
Capex in 2017 dipped to PHP40 billion from PHP42 billion in 2016, with 67 per cent going to its wireless network. The capex to service revenue ratio was 26 per cent in 2017 and is forecast to jump to above 30 per cent in 2018 as its capex budget increases to PHP58 billion.

In the 2019 to 2020 period, capex is expected to remain at the same levels as 2018.

During 2017, PLDT’s mobile unit Smart more than doubled the number of LTE base stations to 8,700 and increased the number of cell sites equipped with LTE base stations by roughly 60 per cent to more than 4,300. Base stations refer to the cellular radio equipment which run on specific frequencies, while cell sites are the towers or structures which house several of these base stations.

Smart plans to more than double the number of LTE base stations to about 17,700 in 2018 and raise the number of cell sites to more than 6,800. At end-2017, more than 2,000 base stations used the frequencies acquired from San Miguel Corp in May 2016. The figure is expected to jump to nearly 9,000 base stations by end-2018 or early 2019.

“We are continuing our aggressive network rollout, we are developing more compelling digital services and solutions for both consumer and enterprise customers, and we are overhauling our operations so that we can serve our customers in a more personalised way, and, do this quickly and efficiently,” Pangilinan said.

He expects recurring core income to rise by between PHP1 and PHP2 billion to around PHP23 to PHP24 billion on the back of an anticipated 4 per cent increase in service revenues in 2018.