PLDT’s big push: Thinking big & setting new benchmarks amid growth constraints

By: Miguel R. Camus

May 9, 2024

2:22PM PHT

Telecommunications giant PLDT Inc. appears to be adopting the adage that to grow big one must think big.

This was emphasized by the tycoon Manuel V. Pangilinan, the company’s chair and CEO, as he underscored the growth constraints facing the country’s biggest integrated telecommunications and internet provider

Manuel V. Pangilinan

PLDT Chair and CEO

"While we recognize the realities of market saturation and higher capital expenditures as factors in slowing growth, we do not accept them as excuses for PLDT and Smart to stop delivering value to our stakeholders,” Pangilinan said as the company disclosed its financial results for the first quarter of 2024.

“Only an obsession with growth will get us to escape velocity,” he added.

To become more profitable, PLDT is beefing up its growth drivers while cutting costs. This also involves making money spent on the business work harder than before.

During the first quarter of the year, PLDT said capital spending amounted to 30 percent of its revenues—down from 39 percent of revenues.

Targeting “lofty” tech returns

Pangilinan aims to capture greater value by adopting the growth mindset of the world’s best tech companies.

“When we see the 7 percent average total shareholder return (TSR) for telcos, our goal shouldn’t be to exceed it—our goal should be to set a new benchmark, one that challenges the lofty returns of the best tech companies," Pangilinan said.

Past efforts were not always successful, including its acquisition and eventual exit from Germany’s Rocket Internet, which went private in 2020 as the value of its shares fell.

Banking play

PLDT is embracing a group wide digitalization plan via its DigiCo super app. This will integrate payments and rewards with affiliates such as Manila Electric Co. and Metro Pacific Investment, which operates toll roads and water services.

PLDT also owns roughly 37 percent of Maya Innovations Holdings Pte. Ltd., formerly Voyager Innovations Holdings.

Maya Bank claimed to be the country’s No. 1 digital bank with 3.4 million depositors and P29 billion in deposits as of the first quarter of the year.

It also reported disbursing P34 billion in loans to about 1 million borrowers, or an average of P34,000 per borrower.

Breaking past growth constraints

PLDT ended the first quarter of 2024 with telco core earnings growth of 8 percent to P9.3 billion, while overall service revenues grew 5 percent to P52.2 billion.

“We continue to squeeze growth out of an industry that seems bound by gravity. That said, our first quarter results are encouraging. We are determined to break past this gravitational hold,” Pangilinan said.

For the full year, PLDT is targeting to grow core earnings by a modest 2 percent to P35 billion.

Analyst view

PLDT is among the 2024 stock picks of COL Financial Group, the country’s biggest stock brokerage house.

COL Financial chief equity strategist April Lynn Tan earlier rated the firm as a buy because of its high dividends, which could act as a defensive play in case a US recession materializes.

COL Financial has set PLDT’s target price at P1,720 per share. Shares of the telco giant slumped 0.95 percent to P1,355 each on Thursday.

About the author

Miguel R. Camus

Miguel R. Camus has been a reporter covering various domestic business topics since 2009.