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Philippine Telephone Profit Growth Slows; Globe Falls

Aug. 3 (Bloomberg) -- Philippine Long Distance Telephone Co. reported its slowest profit growth in five quarters as competition led it to offer cheaper calling packages. Profit fell at its smaller rival Globe Telecom Inc.

The nation’s biggest company by market value, which is known as PLDT, had a 1 percent increase in second-quarter profit to 10.3 billion pesos ($228 million), the Manila-based company said today. Profit was in line with an estimate from CLSA Ltd.

Revenue fell for a third consecutive quarter as PLDT offered unlimited call and text packages for as low as 30 pesos a day to compete in a market where four out of five people already own a mobile phone. PLDT said the rising popularity of social-networking websites such as Facebook Inc.’s is also undermining demand for text-messaging services.

“The market is close to saturation so companies can’t grow any more by just adding mobile-phone subscribers,” said Richard Laneda, an analyst at Manila-based CitisecOnline.com Inc. “Players have to cut prices and offer unlimited plans to protect their market share.”

Sales fell about 1 percent to 36.7 billion pesos, PLDT said. PLDT added 4 million new mobile subscribers in the first half boosting quarterly core profit, which strips out one-time gains or charges, by 1 percent to 10.7 billion pesos.

Falling Revenue

Revenue from text messaging fell 14 percent to 20.9 billion pesos even as volume increased 27 percent. The average monthly phone bill for its customers declined 16 percent to 164 pesos in the first half, PLDT President Napoleon Nazareno said.

More than 80 percent of the population own at least one mobile phone, he said.

PLDT, partly owned by Nippon Telegraph & Telephone Corp., rose 0.4 percent to 2,440 pesos at the noon close of trading in Manila. Its nearest competitor, Globe Telecom, which reported after the market closed, fell 0.3 percent to 879 pesos.

Globe, a venture of Singapore Telecommunications Ltd. and Ayala Corp., said first-half net income fell to 5.1 billion pesos, from 7.2 billion pesos a year earlier, after service revenue fell and operating expenses rose.

Profit in the second quarter was 2.11 billion pesos, the company said, without providing a comparative figure. It reported a profit of 3.25 billion pesos in the April-June period last year.

“Our first half results are reflective of the challenges facing the industry - traffic is growing, but revenues are declining with the market’s increasing preference for unlimited services,” Globe President Ernest Cu said in a statement. “Competition is becoming more intense, and will likely further intensify as the market slows.”

Globe’s mobile-phone subscribers fell 2 percent to 24.6 million at the end of June from a year earlier.

To contact the reporter on this story: Cecilia Yap in Manila at cyap19@bloomberg.net; Clarissa Batino at cbatino@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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