UPDATE 2-Inflation stalks Philippine telecoms, shares drop
(Writes through after Globe results, analyst briefing)
MANILA, May 6 (Reuters) - Soaring inflation overshadowed first-quarter earnings from the Philippines' top two telecoms companies on Tuesday, sending shares in PLDT (TEL.PS) and smaller rival Globe (GLO.PS) sharply into the red.
PLDT, the country's largest listed firm, posted a better-than-expected 11 percent increase in core net profit but signalled that growth could flag as inflation bites.
"Our sustained growth in the first quarter indicates that the teeth of inflation and rising prices have yet to bite deeply into our business," Manuel Pangilinan, chairman of PLDT, said in a statement.
"Nonetheless, we realise that a global slowdown will undoubtedly take its toll on all businesses eventually."
Globe Telecom saw its core net profit drop 4 percent in the first quarter as rising food and fuel prices gobbled up consumer spending power, leaving service revenues flat from a year ago.
Shares in Globe dropped 2.26 percent while PLDT's stock fell 1.92 percent ,helping to drag the general index .PSI down 1.37 percent after data earlier on Tuesday showed annual inflation hitting a near 3-year peak of 8.3 percent in April. (Click on [ID:nMAN226800] for a story on the latest inflation data)
PLDT said it would postpone the listing of its outsourcing unit and call centre business, SPi Global Solutions, till possibly the second half of next year from this year due to weak market conditions and pending a turnaround in its loss-making medical transcription business.
In the meantime, rising inflation spells bad news for consumer purchasing power this year and could trigger a possible interest rate hike next month.
REST OF THE YEAR?
Analysts said PLDT's first-quarter growth was unsustainable.
"I think that the first-quarter results might be a bit misleading in the sense that PLDT probably won't grow as well for the rest of the year," said Prince Yeung, an analyst with AB Capital Securities in Manila.
"In the first two months of the year, inflation was not as bad as in March and April and we are expecting inflation to peak around August."
PLDT reiterated on Tuesday that core net profit will rise by 5 percent this year, more than halving from last year's 11 percent expansion as weaker economic growth hits sales.
Core net profit in the first quarter of 9.3 billion pesos was bolstered by a 6 percent increase in service revenues and strong growth in mobile phone subscribers, which continue to defy expectations of a slowdown. Continued...
