By Ashley Erika O. Jose, Reporter
LISTED telecommunications (telcos) and information and communication technology (ICT) companies are projected to deliver mixed second-quarter (Q2) results amid rising operational costs and heightened competition, analysts said.
“Telecommunications companies are likely to face a mixed profitability landscape by the second quarter despite increased demand for digital connectivity,” Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a Viber message.
Mr. Arce noted that the increasing demand for digital connectivity will drive remote work and digital transformation across industries, thereby boosting companies’ revenue streams.
“Philippine telecom and ICT firms [are expected] to deliver modestly higher aggregate profits in the second quarter, though the improvement will be uneven across players,” said Jayniel Carl S. Manuel, equity trader at Seedbox Securities, Inc.
Andrei Jorge G. Soriano, research associate at China Bank Securities Corp., said mobile and data revenues may remain pressured as discretionary spending continues to face challenges amid economic uncertainties.
Globe Telecom, Inc. posted a 2.65% rise in first-quarter attributable net income to P6.98 billion, driven by one-off gains, despite a 3.42% decline in combined revenues to P43.76 billion from P45.31 billion a year ago.
Service revenues, which comprise most of Globe’s topline, fell by 3.16% to P39.85 billion from P41.15 billion, while non-service revenues dropped 6.25% to P3.9 billion from P4.16 billion.
Home broadband service revenues remain key growth drivers for telecommunications and ICT firms, Mr. Soriano said.
“With respect to costs, we expect to see elevated depreciation and financing expenses to sustain amid telcos’ respective expansion pipelines,” he added.
PLDT Inc.’s attributable net income fell 8.04% to P9.03 billion in the first quarter, as rising expenses outpaced modest revenue growth.
Total revenues increased 1.95% to P55.28 billion from P54.22 billion in the same period last year.
Service revenues grew 2.34% to P53.42 billion from P52.2 billion, while non-service revenues declined 8.38% to P1.86 billion from P2.03 billion.
Fiber internet service provider Converge ICT Solutions, Inc. recorded an 18.43% increase in first-quarter attributable net income to P3.02 billion, mainly supported by growth in its residential business.
Converge’s total revenues for the period rose 13.21% to P10.8 billion from P9.54 billion a year earlier.
“Demand for data and enterprise connectivity remains structural, with mobile data traffic still growing in the mid-20% range and fiber subscriptions continuing to climb,” Mr. Manuel said.
He noted this would help offset slower service-revenue growth as consumers become more value conscious.
DITO CME Holdings Corp., operator of DITO Telecommunity Corp., reduced its first-quarter attributable net loss to P1.66 billion from P4.11 billion a year ago.
“I would characterise the second quarter as a ‘steady-to-slightly-better’ quarter for Philippine telcos. Core connectivity remains a cash-generating utility, and the BSP (Bangko Sentral ng Pilipinas) rate cut throws them a lifeline on financing costs,” Mr. Manuel said.
Mr. Arce added that telecom and ICT companies are well-positioned to benefit from emerging technologies and artificial intelligence solutions.
“Those with robust digital infrastructure and strong consumer bases could potentially outperform their peers. But sustained profitability growth across the sector hinges on their ability to navigate economic challenges and maintain competitive differentiation,” he said.