Filipinos' reliance on mobile phones and a weaker peso will ensure Philippine Long Distance Telephone Co (PLDT) will meet its profit goal this year despite soaring inflation and slowing economic growth, a company official said.
"The balance for the year is sort of testy for us but we are still maintaining our guidance," Ray Espinosa, the President of ePLDT, the company's technology arm, told Reuters in an interview on June 12.
Espinosa said core net profit, which strips out currency swings and derivative gains, had risen by almost 8 percent in the first five months of the year as service revenues increased 9-10 percent.
For the full-year, PLDT, the Philippines' biggest telecoms group, has forecast core net profit would rise by 5 percent to 37 billion pesos ($832 million), braking from last year's 11 percent growth as accelerating inflation squeezes consumer spending in the second half. Philippine inflation rose to a 9-year high of 9.6 percent in May.
"The growth in group service revenues is very strong. We had been looking for 5.4 percent growth for the full-year," said Jody Santiago, an analyst at UBS, which has a "Buy" recommendation on PLDT.
"This definitely gives them some buffer to hit their full-year target as I think we will see the effect of the slowdown in consumer spending towards the end of the year.
Espinosa said Filipinos, who send an average of 1 billion text messages daily, are now so reliant on their mobile phones that they would continue to set aside cash for calls and messaging and cut back spending in other areas.
"Communication has become so ingrained in the daily lives of the people," he said. "It has become a very social and basic requirement."
Espinosa said ePLDT's outsourcing and call centre businesses had good growth prospects this year as US-based clients look to squeeze costs amid a slowdown in the world's largest economy.