lightbulb-05.svg

The Gist

bank.svg

Bonds

line-chart-up-01.svg

Analysis

layout-alt-02.svg

News

Equities4 MIN READ

Telcos say ‘hello again’ to further profit growth

The outlook for the telecommunications sector remains positive
November 20, 2024 by Ginny Pecaña, German de la Paz III, Ariz Marcelino, Charles Randy Lumhod
Share this article:
Featured Article Image

The outlook for the telecommunications sector remains positive.

Publicly held telecommunications companies said hello again to further growth. That signals still-resilient earnings and a positive outlook for the sector.

They sustained outperformance in the quarter, with sector earnings clocking in an aggregate core profit growth of 17% year-on-year. For the January to September period, that was a good 14%.

Converge Information and Communications Technology Solutions, Inc. (CNVRG)

  • ●
    Converge led earnings growth on the back of superior net adds on fixed broadband, which continued to wrestle market share from its two key rivalsIts shift toward lower-priced prepaid broadband has reaped rewards
  • ●
    Profit grew 40% year-on-year in the third quarter, and 29% in the January-September period
  • ●
    Revenue was also up by double digits; +17% in the third quarter and +14% in the nine-month period

Globe Telecom, Inc. (GLO)

  • ●
    Globe’s earnings also came in strong, propelled by controlled operating expense growth and the impressive showing by its financial technology arm, Mynt
  • ●
    Mynt more than doubled its equity earnings to PHP 3.5 billion for the January to September period. It contributed 14% to Globe’s pre-tax income for the period, higher than the 6% in the same period in 2023
  • ●
    Profit was up 32% year-on-year in the third quarter, and +22% in the January to September period
  • ●
    Despite robust earnings, Globe’s share price was weighed by senior-management changes

PLDT Inc. (TEL)

  • ●
    PLDT lagged its peers, as its core income grew a modest 3% in the third quarter and 5% in the January to September period
  • ●
    Its digital banking unit, Maya, has yet to reach profitability
  • ●
    Despite muted earnings results, PLDT has a relatively higher dividend yield of 7.2%. That should support its share price

What now?

The sector’s outlook remains positive. The pecking order is CNVRG, followed by GLO, and then TEL.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)

GINNY PECAÑA is the Head of Investment Services Division at Metrobank’s Trust Banking Group, overseeing markets and equities research, investment analysis, fund selection, portfolio analytics, and trade execution. Ginny has garnered multiple awards for fund management with her decades of banking experience. She holds a Bachelor’s degree in Business Management from the Ateneo de Manila University as well as various finance certifications. On weekends, Ginny plays Mom to two teenage boys and a corgi named Hobie.

GERMAN DE LA PAZ III, CFA serves as an Equity Research Lead at Metrobank’s Trust Banking Group. His coverage includes gaming, telcos, conglomerates, and utilities, as well as select offshore markets. German holds a Bachelor’s degree in Humanities and a master’s degree in Industrial Economics from the University of Asia and the Pacific. Recently, he obtained his CFA charter and is currently pursuing additional industry certifications. In his free time, German enjoys playing sports, particularly basketball, and has a penchant for reading fiction books.

ARIZ MARCELINO is an Equity Research Analyst at Metrobank’s Trust Banking Group. Locally, he covers the banking, consumer, and property sectors. He also tracks offshore markets and global investment themes to support asset allocation strategies. Ariz graduated from New Era University with a degree in Banking and Finance and has passed the CFA Level 1 exam. Outside of work, he unwinds by watching popular sitcoms and anime series while enjoying a cup of hot matcha latte.

CHARLES RANDY LUMHOD is a Management Trainee in the Financial Markets Sector Training Program (FMSTP), currently assigned to the Equities Research Team in the Investment Services Division of Metrobank’s Trust Banking Group. He provides analytical support across a broad range of sectors and themes. Charles holds a Bachelor’s degree in Business Administration, majoring in Financial Management, from the University of Santo Tomas, where he graduated cum laude. In his leisure time, Charles enjoys staying active by going to the gym and often unwinds at coffee shops to socialize.