PLDT seen remaining at forefront of telco sector

MANILA, Philippines — Telco giant PLDT Inc. is expected to remain at the forefront of the country’s telecommunications industry in terms of revenue market share and profitability.

In a report, Moody’s Investors Service said PLDT and Ayala-led Globe Telecom would remain the leading telecom operators in the country while Dito plays catchup.

“While competition can chip away at market share, we expect PLDT to maintain its stronghold with over 50 percent revenue market share through 2024,” Moody’s said.

Moody’s said PLDT’s subscriber market share at the end of 2022 was around 43 percent, as compared with Globe’s 57 percent.

However, it said PLDT has consistently retained revenue market share of over 50 percent since the second quarter of 2019.

Moody’s also expects PLDT’s profitability to remain substantially stronger than that of Globe.

It said PLDT’s consolidated adjusted EBITDA margin of 50 percent remains strong in 2022 compared with Globe’s 46.3 percent and other Baa-rated global telecom companies, which typically have margins in the 35 to 40 percent range.

With growing service revenue and tight management of costs, Moody’s expects PLDT to maintain stable margins of about 50 percent for 2023 to 2024.

“PLDT’s profit margins are supported by its stronger ARPUs (average revenue per user) and takeup for home broadband services, which have higher margins,” Moody’s said.

“In recent quarters, Globe has narrowed the gap with PLDT, but the latter’s prepaid monthly ARPU remains higher at P109, compared with Globe’s monthly ARPU of P98 for Q4 2022,” it said.

Further, Moody’s said that high capital spending would keep leverage at the higher end of its tolerance for PLDT.

“We expect PLDT’s leverage to remain at the higher end of our tolerance at about 3.0x through December 2023. This reflects the excess capital spending that will likely be debt-funded, although the impact will be partially mitigated by the cash proceeds from tower sales,” it said.

Globe’s leverage, on the other hand, is expected to remain relatively stable at around four times over the same period, according to Moody’s.

Moody’s, however, noted that recent regulatory changes involving the regulation for tower sharing, mobile number portability, and SIM card registration could facilitate a more level playing field for Philippine telecom companies.

This could work to the advantage of Dito over time, it said.

“Given the Philippines’ mobile market is predominantly prepaid, making it easy to switch among operators, these regulations can further intensify competition in 2023,” Moody’s said.