MANILA -- Philippine telecom giant PLDT said Friday its net income in the first three months of 2017 dropped 20% on the year to 4.97 billion pesos ($99.9 million) as wireless revenue kept shrinking and impairment losses from Rocket Internet continued to hamper the bottom line.
The impairment losses from PLDT's investment in the German e-commerce company reached 500 million pesos in the period, while higher expenses also hindered the telecom's net profit.
PLDT's share price dipped by as much as 4% at the time of the earnings release, but the stock recovered quickly as Chairman and CEO Manuel Pangilinan gave a positive outlook on the company's prospects. The shares closed at 1,755 pesos, up 1.9% from Thursday.
"In the medium term, as far as we could see, the growth of the industry will come from the [fixed-line business], and the wireless would grow at low single-digit numbers," Pangilinan said Friday.
PLDT's net income plunged by as much as 49% in the third quarter of 2016, but an internal reorganization and a shift in focus to the fixed-line business has ameliorated the slump.
Service revenue continued to decline, falling 7% on the year to 35.6 billion pesos. PLDT's wireless segment dropped 16% to 20.8 billion pesos, but the fixed-line business grew 10% to 16.9 billion pesos. On a quarter-to-quarter basis, service revenue dropped 1%.
"For now, we are in this sort of golden age of fixed [line]," the CEO said.
Household and business subscribers, excluding international, now comprise 52% of the company's revenue base, a proportion forecast to reach 56% by 2019.
PLDT shifted focus to fixed line following the exodus of over 5 million customers in 2015 to key rival Globe Telecom, which leads in offering expanded data services. PLDT controls around 70% of the fixed-line market.
Pangilinan said the first-quarter performance puts the company on track to meet its core profit target of 21.5 billion pesos for the year, up slightly from last year's 20.2 billion pesos. Barring "unusual circumstances," PLDT is poised to earn more than 5 billion pesos for each succeeding quarter of 2017, he said.
MIKHAIL FLORES, Nikkei staff writer http://asia.nikkei.com
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