Expenses take toll on profit for year at PLDT
The cost of marketing and upgrading telecommunications infrastructure and facilities last year contributed to Philippine Long Distance Telephone's (PLDT) 64 per cent annualised fall in net profit.
The dominant Philippines' carrier, controlled by Hong Kong-based First Pacific, said net profit fell to 1.1 billion pesos (about HK$117 million) for the year to December 31, compared with three billion pesos a year earlier.
'The last year was one in which the strategic foundations for future growth and profitability were put in place,' said PLDT chief executive Manuel Pangilinan.
PLDT's revenues rose 12.9 per cent, to 62.9 billion pesos, on the back of strong growth in both its traditional fixed-line business and its cellular telephone arm, Smart.
But a 19 per cent increase in expenditures throttled earnings.
In particular, Smart reported a net loss of 1.9 billion pesos in the first half of the year largely on increased marketing activities to entice new subscribers.
This was only partially offset by its 1.5 billion pesos net profit in the second half.
But due to intense marketing efforts during the first half of the year, and upgrades to its cellular infrastructure which has been criticised in the past as being insufficient, Smart and fellow PLDT cellular telephone-subsidiary Pilipino Telephone signed up 2.5 million new GSM customers.
This gave the company about 3.5 million subscribers.
Mr Pangilinan said that as a result of the measures taken in the first half of last year, PLDT's net profit of 600 million pesos in the fourth quarter was the best quarter in the company's history.
'PLDT's consolidated net income for the year eased when compared to 1999, but the annual figure disguises the scale of the turnaround achieved in the second half,' Mr Pangilinan said.
'Our bold strategy of foregoing earnings growth in the first half of the year in return for winning a significant market share of the rapidly growing GSM cellular market is now being rewarded.
'As a consequence, PLDT has entered 2001 with a broader range of revenue sources and is well-positioned to take advantage of the recovery of the national economy after a year of turmoil.'
