Philippine Telephone Net Drops 33% on Rocket Internet Loss

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  • Dividend payout target cut to 60% of core income from 75%
  • PLDT shares plunge 8.2%, biggest drop since February 29

Philippine Long Distance Telephone Co. profit fell 33 percent in the second quarter as the nation’s largest phone carrier booked charges for its investment in Germany-based Rocket Internet SE. The shares plunged the most in five months.

Net income was 6.25 billion pesos ($133 million) in the three months ended June, compared with 9.34 billion pesos a year ago, the company said Tuesday in a statement. An impairment charge of 5.4 billion pesos was incurred in the first half for the company’s Rocket Internet investment, Chief Financial Officer Anabelle Chua said in a press briefing.

PLDT cut its dividend payout to 60 percent of core income from 75 percent as it raised capital spending to 48 billion pesos to build more cellular sites using frequencies the carrier agreed to buy from San Miguel Corp. in May. The company had previously targeted spending of this year from 43 billion peso.

PLDT shares fell 8.2 percent as of the close in Manila trading, the biggest drop since Feb. 29.

PLDT and rival Globe Telecom Inc. acquired the telecommunications business of San Miguel Corp. for about 70 billion pesos, including debt, giving them equal access to the 700 megahertz spectrum. The bandwidth is crucial to enhance wireless internet speed and quality. The nation’s competition commission has said it will pursue a comprehensive review of the transaction.

Revenue was little changed at 42.5 billion pesos in the quarter, according to the PLDT statement Tuesday. Sales from data, broadband and digital platforms accounted for 36 percent of total, up from 29 percent a year ago, while the share of voice and text messaging declined to 53 percent.

PLDT set a target of 30 billion pesos for this year’s core profit, which excludes one-off items, a 15 percent drop from 32.5 billion pesos in 2015.