PLDT hikes capex to P34.5B

MANILA, Philippines – Telco giant Philippine Long Distance and Telephone Company (PLDT) is raising its capital expenditures to P34.5 billion ($766.837 million)* this year as it revises its revenue mix, moving away from its legacy business which has run less profitable for years.

This year’s CAPEX is P5.5 billion ($122.249 million)* higher compared to what it spent in 2013, based on its 3rd quarter financial briefing on Tuesday, November 4. 

“We expect a higher CAPEX for 2014 and 2015 as appetite for data services increase,” PLDT chair Manuel Pangilinan told reporters.

PLDT’s spending in the coming quarters will focus on expanding the company’s network capacity as data appetite among its subscribers expand.

Pangilinan said the company will heavily invest in expanding its fiber footprint, LTE expansion, and network operational efficiency.

In Tuesday’s briefing, PLDT said there is an ongoing construction of a new 25,000-kilometer undersea cable network, which aims to boost the telco giant’s capacity to 100Gbps – with target completion by 2016.

Doing so – including enhancement of PLDT’s LTE coverage to at least 2,600 base stations in the country in the first quarter of 2015 – would require more capital spending. But the amount has yet to be discussed by the company’s board of directors, said Pangilinan. 

“I don’t think we can disclose anything in respect [to the budget] as those numbers are not yet presented to the board,” said Pangilinan.

The PLDT group, which is the parent company of 3 mobile networks, booked a combined core earnings of P28.6 billion ($635.7 million)* in the first 9 months of 2014.

However, the amount is a negative growth at –1% or P200 million ($4.445 million)* less compared to the same period in 2013.

Napoleon Nazareno, PLDT president and CEO, said the downtrend is attributed to an ongoing structural change in its revenue mix, intensification of competition, and the recently launched free data promos for its prepaid subscriber base.

Out of the combined earnings of its subsidiaries, only 15% of the figure come from the declining legacy international voice and national long distance dialing. Over 50% of its earnings come from its data and broadband services.

Catching up with competition, the telco company took a risk when it rolled out its free Internet promo on September 26 to further stimulate data usage. It was a bid to rake more than 50% of PLDT mobile subscribers who are non-data users, and over 30% new subscribers, said Nazareno.

“If we make it affordable on a daily basis, we feel that this would be a smooth migration from free to [paid] service” said Nazareno.

PLDT also reported a drop of its combined subscribers base from 72.4 million in the first 9 months of 2013, down to 69 million in the same period this year, which translates to a loss of 3.4 million subscribers.

But Nazareno explained the decrease of its combined subscribers base from its 3 mobile network brands – Smart, Talk ‘N Text, and Sun Cellular – is due to a cleanup on non-active prepaid subscribers.

“This does not have anything to do with the negative profit growth,” he told Rappler at the sidelines of the briefing.

PLDT has booked an uptick in broadband earnings, growing by P3.9 billion ($86.685 million)* or 20% year-on-year to P23.4 billion ($520.115 million)* or 19% of total service revenues from 16% in the first 9 months in 2013. – Rappler.com

(*$1=P44.94)