Business tycoon Manny V. Pangilinan warned that the Philippines’ telecommunications sector may soon face industry consolidation, noting that the domestic market can no longer sustain four major operators amid weakening financial returns.
Speaking at a press briefing on Thursday, November 12, the PLDT Inc. chairman described the current sector climate as an unsustainable “race towards the bottom.”
”This is untenable for each of us, we have to consolidate. Or one of us, two of us, we have to give up at some point for the sake of the industry,” Pangilinan said.
He explained that while operators are mandated by the government to heavily invest in network infrastructure, local demand and tightening consumer spending have failed to keep pace.
”We have been thinking all along that we want more competition, more competitors, in an otherwise small market. It’s not working,” Pangilinan noted.
”And we have to find a solution because we can’t be spending on capex without adequate returns. You continue to sink a lot of money, and yet you’re not getting the returns you’re getting. So at some point, there will be fewer than four of us in the long run,” he added.
Slumping Profits Across the Sector
The warning follows financial disclosures revealing profit drops across major players from January to September:
- PLDT Inc.: Net income slipped 8 percent to ₱21.67 billion from ₱23.65 billion year-on-year.
- Globe Telecom Inc.: Net income declined 7 percent to ₱16.48 billion.
- Converge ICT Solutions Inc.: Net income fell 9 percent to ₱8.09 billion.
- Dito Telecommunity Corp.: Has not yet released its nine-month financial report.
PLDT Chief Financial Advisor Stanley Yang acknowledged that despite a 2 percent revenue growth to ₱166.21 billion, expenses outpaced gains due to inflation and high operating costs.
”Despite some of the positives that we saw from the revenue side, we’ve seen from inflation and the impact on interest rates [that] it’s still a difficult environment,” Yang said.
Strategic Shifts and Capital Expenditure
To navigate the challenging macroeconomic climate, PLDT is banking on its digital bank, Maya, and data center unit VITRO REIT Inc. as growth catalysts.
VITRO REIT helped lift enterprise revenues by 4 percent to ₱37.2 billion, while Maya’s contribution rose to ₱838 million, backed by ₱85 billion in deposits and ₱44 billion in loans.
Meanwhile, PLDT reduced its capital expenditures by 15 percent to ₱36.6 billion as of September to safeguard its free cash flow, while keeping sights on a potential fourth-quarter recovery driven by core services.