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PLDT to Cut Jobs as Profit Growth Slows, Globe Falls

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Nov. 4 (Bloomberg) -- Philippine Long Distance Telephone Co., the nation’s largest company by market value, plans to cut more than 1,100 jobs after intensifying competition led the phone operator to its slowest earnings growth in six quarters. Profit at rival Globe Telecom Inc. fell.

As many as 1,200 jobs may be eliminated, PLDT Chairman Manuel Pangilinan said at a briefing in Manila today. PLDT, which employs 13,000 workers, will book a charge of 2 billion pesos ($47 million) because of the cuts, he said.

Sales fell for a fourth straight quarter as phone companies in the Southeast Asian nation offer cheaper packages to compete in a saturating market where four out of five people already own a mobile phone. The growing popularity of Facebook Inc. and Twitter Inc. has also trimmed revenue phone companies derive from text-messaging.

“The industry is slowing down because of competition,” said Erwin Balita, research head at Manila-based SB Equities Inc. “Competition in technology is now catching up on pricing and has reached a point where margins are not as abnormal as five years ago.”

The reduction was announced after PLDT reported 10.3 billion pesos in third-quarter net income, little changed from a year earlier and lower than the 11 billion pesos JPMorgan Chase & Co. analyst Vishesh Gupta had estimated. Sales decreased 2 percent to 35.1 billion pesos while expenses fell 3 percent to 21.6 billion pesos, PLDT said.

The smaller workforce may save the company as much as 1 billion pesos annually, President Napoleon Nazareno told reporters today. New hires will limit the reduction in the workforce to about 850 positions, Pangilinan said.

‘Increasingly Price Competitive’

“The operating environment is becoming increasingly price competitive and market-share sensitive,” Pangilinan said. “We expect to reduce headcount by a significant number by year-end.”

PLDT fell 1 percent to close at a one-month low of 2,652 pesos in Manila before the company reported earnings.

Globe, a venture of Singapore Telecommunications Ltd. and Ayala Corp., said nine-month net income fell 24 percent to 7.4 billion pesos on lower revenue and higher operating expenses.

Third-quarter profit was 2.39 billion pesos, the company said in a statement without providing a comparative figure. Globe last year reported net income of 2.6 billion pesos for the comparable three-month period.

“It is still a challenging market, but the growth momentum is there,” President Ernest Cu said. Mobile-phone subscribers rose 10 percent to 25.4 million at the end of September, while broadband clients almost doubled to 1 million, the company said.

Globe gained 0.1 percent to 905 pesos today.

To contact the reporter on this story: Cecilia Yap in Manila at cyap19@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net

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