Philippine Telephone to Eliminate 1,100 Jobs to Revive Growth in Earnings
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 profit growth in six quarters.
As many as 1,200 jobs may be eliminated, 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.
The smaller workforce may yearly save the company as much as 1 billion pesos annually, President Napoleon Nazareno told reporters today.
Sales decreased 2 percent to 35.1 billion pesos while expenses fell 3 percent to 21.6 billion pesos, PLDT said.
“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.”
New hires will limit the reduction in the workforce to about 850 positions, he said.
PLDT fell 1 percent to close at a one-month low of 2,652 pesos in Manila before the company reported earnings. The stock has risen 3.7 percent this year, the fourth worst performer among the 31 components of the benchmark Philippine Stock Exchange Index.
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