A YEAR ago, the Philippine Long Distance Telephone Co. was among the country’s highest-ranked stocks. Now, it’s the least-loved of the benchmark index’s 30 members, as the company struggles to hold its place in a market of 112 million mobile-phone subscribers.
PLDT, as the Makati City-based company is known, has faltered as users have shifted toward social networking from phone calls and texts, a trend more swiftly exploited by its biggest rival, Globe Telecom Inc. While profit at PLDT, owned by First Pacific Co. and NTT Docomo Inc., fell 12 percent in the second quarter, Globe’s jumped 16 percent.
“When there are companies growing at double digits in earnings and yours isn’t growing, that raises a lot of issues with investors,” said Sam Young, head of equities at Security Bank Corp. in Makati City, which has P42 billion ($909 million) in bonds and shares under management.
PLDT’s “decline will continue until they find a solution to falling market share and lackluster earnings,” he said.
Shares of PLDT, led by Chairman Manuel Pangilinan, dropped 6.7 percent this year through Friday as the decline in earnings prompted a cut in dividends, reducing its market value to $12.7 billion and losing its spot as the nation’s biggest company to SM Investments Corp. Globe’s, meanwhile, have rallied 52 percent, the most on the Philippines Stock Exchange Index, propelling its value to $7.6 billion.
Based on 23 analyst ratings compiled by Bloomberg, PLDT scored 2.3 points out of a maximum 5 as of Monday. That’s down from 3.9 points a year ago. Globe scored 2.9.
Globe, a venture of Singapore Telecommunications Ltd. and Ayala Corp. and headed by Ernest Cu, boosted mobile-phone subscribers by 13 percent to 48.4 million as of June 30 from a year earlier, while PLDT subscribers fell less than 0.1 percent to 68.86 million.
Calls to offices of both PLDT President Napoleon Nazareno and Globe President Cu weren’t answered.
PLDT dropped 0.4 percent at 12:01 p.m. in Manila, while Globe added 0.1 percent.
PLDT has suffered for its response to Globe’s moves to increase market share. When Globe packaged traditional phone services with free Facebook Inc. access in October 2013, PLDT took more than a year to counter with free mobile Internet access.
PLDT has one buy rating among the 23 analyst recommendations compiled by Bloomberg, with 11 neutral and 11 sell calls. Global has five buys, nine neutral and seven sells.
“We don’t see a reversal anytime soon” in PLDT’s shares, said Thomas Earll Huang, a Makati-based analyst at BPI Securities Corp. who has an underweight rating on the stock. “Other companies are growing faster, while PLDT’s earnings are shrinking.”
source: Business Mirror
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