Stock overview of

Philippine Long Distance Telephone

Company (TEL)

Ron Jason Aborita

2015 April

CONTENTS
I.
II.
III.
IV.

Company Profile
Relevant Data
Relevant News
Recommendations

COMPANY PROFILE

Ron Jason Aborita 2015

COMPANY PROFILE
PLDT is the leading telecommunications service provider
in the Philippines.
PLDT is listed on the Philippine Stock Exchange (PSE:TEL and
its American Depositary Shares are listed on the
New York Stock Exchange (NYSE:PHI .
PLDT has one of the largest market capitalizations among
Philippine-listed companies.

Ron Jason Aborita 2015

THE BIRTH OF PLDT

A typhoon ravaged the country on November 28, 1928
The ability to communicate amongst loved ones and
across the country became crucial. It was under this scenario that
the law was signed giving birth to PLDT.

What the new law hoped to achieve was to interconnect

"intercom" systems into a seamless nationwide network that would
facilitate communication and delivery of services to the people
Trivia: Americans were the first owners of PLDT.

Credit Rating
The Credit Rating and Investors Services
Philippines, Inc (CRISP assigns:
Credit Rating: AAA
Debt rated 'AAA' reflects strongest capacity to repay debt obligations.

Outlook: Stable
*As of January 06, 2014

Ron Jason Aborita 2015

DOMINANT MARKET LEADERSHIP

Based on available information, PLDT enjoys :

67% share in the Wireless Market Segment

with 72 Million wireless subscribers out of the countrys
109 million subscribers
69% share of subscribers in the Fixed Line Market
with 2 million out of 3 million fixed line subscribers
64% share of subscribers in the Broadband Market Segment
with 3.3 million subscribers out of the 5.2 million

Ron Jason Aborita 2015

DOMINANT MARKET LEADERSHIP

PLDT leads the wireless race
PLDT operates the premier satellite company Cignal
PLDT dominates the landline domain
Prepaid market comprises 82% of PLDT's mobile revenues

Ron Jason Aborita 2015

STRONG HISTORICAL FINANCIAL PERFORMANCE

Current: EBIDTA 55% & Income Margin 24%
PLDTs consolidated financial performance remained
healthy over the last five years.
For the next 5 years, EBITDA is expected to continue
to grow with EBITDA margins averaging at about 48%
for the next 5 years.

Ron Jason Aborita 2015

STRONG RISK MANAGEMENT

PLDT Boards creation of its
Group Enterprise Risk Management
Department
will address existing and emerging risks to its business
crucial in maintaining an organizations competitive position

RELEVANT DATA

Ron Jason Aborita 2015

STOCK QUOTES
As of April 13, 2015:

Market Capitalization: 642,117,763,300.00

Issue Type: Common
Outstanding Shares: 216,055,775
Last Traded
Price

2,940.00 Open

2,972.00

Change(%
Change)

down
High
( 1.08%)

2,972.00

664,651,560.00 Low

2,938.00

Value
Volume

225,980 Average Price

2,942.26

52-Week High

3,486.00 52-Week Low

2,744.00

1 year Traded Price Graph

(April 2014 April 2015)

There is a suggested seasonal growth pattern.

Recommendation: Buy stock on June, Sell at start of September

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at December 31, 2014 and 2013 (in million pesos)

2014
TOTAL ASSETS

436,295

TOTAL EQUITY

134,668

TOTAL LIABILITIES

301,627

TOTAL EQUITY AND LIABILITIES

436,295

*summarized data

INCOME
As at December 31, 2014 and 2013 (in million pesos)

Ron Jason Aborita 2015

We can characterize TEL to be steadily growing over the long-term:

CONSOLIDATED SERVICE REVENUES OF P165.1 BILLION, 1% HIGHER OVER 2013
CONSOLIDATED DATA AND BROADBAND REVENUES RISE 20% TO P31.9 BILLION
PLDT GROUP SUBSCRIBER BASE NOW OVER 76.0 MILLION
CELLULAR SUBSCRIBER BASE AT 70.0 MILLION
POSTPAID CELLULAR SUBSCRIBER BASE RISES 16% FROM YE2013 TO 2.8 MILLION
TOTAL BROADBAND SUBSCRIBERS AT OVER 4.0 MILLION, UP 19% FROM YE2013
DIVIDEND PAYOUT OF P156 PER SHARE, REPRESENTING 90% OF 2014 CORE EARNINGS
-PLDT has very high dividend payouts compared to other companies. It should be noted
That we should consider TELs dividend payouts when comparing profits.

TEL HAS CONSISTENT

HIGHEST DIVIDEND YIELD

RELEVANT NEWS

INTERNET AND
BROADBAND

Ron Jason Aborita 2015

THE RAPID GROWTH OF INTERNET

PLDT executive vice president ,Ariel Fermin, predicts the
total number of devices, including personal computers (PCs),
internet access devices (IADs), and tablets in the country
will reach more than 45 million by 2016.
Households with broadband access in the country is
expected to register an annual compound growth rate
(ACGR) of 7.3 percent over the next five years, with the
number of homes with broadband connection reaching 2.4
million by 2016. (According to IDCs WW New Media Market Model, 1H12:
Worldwide and US Data report published in September last year.)

Ron Jason Aborita 2015

THE TREND OF BROADBAND

In the meantime the most encouraging news has been the
increased interest in broadband services, with the major
players in the local telecom market starting to invest heavily
in the expansion of broadband access.
Around 80% of all internet connections were already
broadband.
Low broadband penetration (only 7% of the population)

Ron Jason Aborita 2015

THE TREND OF BROADBAND

The PLDT Group cornered almost 60 percent of total
broadband subscribers in the country.
We are pleased to see that the PLDT Group remains the
preferred broadband provider in the country - (PLDT)
President and CEO Napoleon L. Nazareno
ALSO, PLDTs BROADBAND SUBSCRIBERS ARE
CONTINUALLY INCREASING SO
BROADBAND WILL SIGNIFICANTLY CONTRIBUTE TO
REVENUES

Ron Jason Aborita 2015

STAGNANT FIXED LINE

The countrys fixed-line subscriber penetration has remained
essentially stagnant .

fixed-line teledensity stood at just over 3% in 2014

The fixed-line market had effectively lost direction, with no
growth expected in the short to long term.

PLDTs highest market share is on FIXED LINE with 69% share of the market.
Expect revenues to lag over the long term due to stagnation.

COMPETITIONS

Ron Jason Aborita 2015

LOSING BATTLE IN POSTPAID

Globe dominates postpaid market with doubledigit growth in revenues. As of end-March 2014,
postpaid revenues have reached P7.0 billion, up
18% from P6.0 billion in the previous year.

Postpaid segment corners 38% of total Globe

mobile revenues In the same period, postpaid
subscribers totaled 2.09 million, up 12% from
previous year's

PLAN TO INCREASE
CAPITAL

Ron Jason Aborita 2015

CAPITAL EXPENDITURES
PLDT spent over P34.8 billion in capital expenditures in 2014,
as it expanded its fiber network to nearly 100,000 kilometers,
making it the most extensive, robust and resilient network in
the country.
In anticipation of greater data usage, PLDT is planning to
spend another P39 billion in capital investments this year.

I see this as growth for PLDT that would be felt significantly on the
Long term but not on the short term.

Ron Jason Aborita 2015

DATA CENTER CONSTRUCTION

PLDT, through its wholly-owned ICT subsidiary ePLDT, is
expanding its data center footprint with the construction of a
P1-billion state-of-the-art facility located in Makatis central
business district.
It is set to be completed by fourth quarter of this year.
It will largely cater to the colocation and other data center
service requirements of large corporations

This would indirectly influence stock growth of TEL in the 4th quarter of 2015. But
may be felt on 2016 instead

RECOMMENDATIONS

TEL IS OVERBOUGHT

TEL & EMP are overbought.

SELL TEL FOR NOW, THEN WAIT FOR RECOVERY

DIVIDEND YIELD
Dividend yields tend to be erratic and seasonal in the short term but has an increasing
linear trend over 3 years

1 YEAR

3 YEARS

SEASONAL TREND
(Exponential Moving Average 3-Year)
If we factor seasonal component, TEL stocks tend to rise from April-September (Q2-Q3)
Then starts to dip October to January (Q4-Q1).

SEASONAL TREND
This seasonal component is supported by the momentum graphs

2014-2015

2011-2015

RECOMMENDED STRATEGY
TEL goes sideways but with upward bias. It is good to just hold onto it and depend
on dividends for the earnings.
Hold first up to October 2014, then buy this year around Oct-December if it starts
downtrend starting September. (because it may remain inexpensive in Q4)
TEL is poised to grow in 2016, hold on the stock on 2016 then sell on September or
Before Q4.

PROS AND CONS

PROS:
-Long-term investment
-High dividend yields offset downturns in price
-Robust growth in market share
-Robust against oil & other energy volatility
-Invests heavily in capital (LTE networks & Fiber optics)

CONS:
-Chance to get dragged in stagnation. (always in balanced up and downs)
-Sideways
-Cant appreciate short-term growth
-Overbought

RESOURCES
http://www.bloomberg.com/research/stocks/charts/charts.asp?tick
er=TEL:PM
http://www.pinoymoneytalk.com/top-10-stocks-with-highdividend-yield/
http://www.businessmirror.com.ph/pldt-expanded-market-shareto-60-last-year/
http://www.philstar.com/business/2013/01/14/896530/pldt-takeadvantage-rapid-growth-internet-access
http://pldt.com/docs/default-source/press-releases-2014/readmore.pdf?sfvrsn=0
http://www.pldt.com/about-us/company-timeline
http://www.pldt.com/docs/default-source/press-releases--financial-results/pse_sec_press-release_03-03-15.pdf?sfvrsn=0