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Can Philippine’s Second-Largest Telco Company PLDT Regain Its Lost Market Share?


  • Broadband expansion unlocks growth, but is competitive
  • Superior network quality helps to defend market share
  • Ancillary businesses are important in the long-term

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PLDT’s revenue breakdown 2020

Price and volume remain bullish

  • In 2H21, PLDT saw a massive 50%+ share price increase
    • The increase is mainly attributable to positive news about its latest fintech investments PayMaya and soon-to-launch digital bank Maya
  • Price signal remains strong as 50DMA is well above the 200DMA
  • Volume RSI has been strong recently; hence, still providing good support

Broadband expansion unlocks growth, but is competitive

  • While the mobile market in the Philippines is already quite mature, PLDT sees good growth prospects for home broadband
    • The pandemic triggered increased demand for fast internet connectivity at home
  • Hence, PLDT engaged in an extensive fiber optics rollout which currently passes 13m homes, providing strong growth opportunities

Its closest competitor accelerated its rollout as well

  • PLDT has started much earlier with its fiber optics rollout than its main competitor Globe
  • However, during the past 3 years, Globe saw an exponential growth attributable to its high CAPEX allocated to broadband
    • In 21E, Globe might surpass PLDT for the first time in terms of total broadband subscribers

Superior network quality helps to defend market share

  • In March 2021, the China-backed company Dito started its commercial operations and challenges the duopoly
    • Throughout the past year, it already acquired 5.3m subscribers
    • Annual CAPEX of more than PHP50bn to expand network coverage fast
  • For 2022, Dito targets to double its subscriber base to 12m, which means it could steal subscribers from PLDT

PLDT offers the fastest internet connectivity in the Philippines

  • PLDT continues to defend its dominant position in terms of network quality
    • The download speed is almost 2 times faster than both of its competitors
  • Maintaining a superior quality is necessary to avoid losing customers in a mature market
    • Hence, I believe that PLDT can withstand price pressures from Dito in the near-term future

Ancillary businesses are important in the long-term

  • Through its investment in Voyager, PLDT offers the mobile payment solution and e-wallet “PayMaya”
    • With 41m registrations, it is the second-largest e-wallet in the Philippines (Globe’s GCash has 51m users)
  • The e-wallet business still produces annual losses of PHP2bn+, providing a drag on profits in the short run
    • However, the investment could pay off big in the future

Driving growth by bundling services

  • PLDT also tries to grow its data segment by investing in value-added content services  such as Pay TV
    • The most prominent one is Cignal TV, part of PLDT’s investment in MediaQuest
    • Cignal TV has 3.7m subscribers as of 3Q21
  • It allows PLDT to create attractive bundle offers of mobile, fixed-line and TV packages
    • I believe that complimentary services like this are going to be important to realize growth in a mature market

FVMR Scorecard – PLDT

  • A stock’s attractiveness relative to stocks in that country or region
  • Attractiveness is based on four elements
    • Fundamentals, Valuation, Momentum, and Risk (FVMR)
  • Scale from 1 (Best) to 10 (Worst)

Consensus don’t see further upside

  • The majority analysts has a BUY recommendation, but upside is already captured by recent price rally
  • Consensus expects solid single-digit revenue growth for the future
    • Also, margins are expected to stay stable

Get financial statements and assumptions in the full report


  • Its investment in the e-wallet PayMaya is still not profitable yet but could start deliver profits in 22E
    • Over time, it could evolve to a serious profit contributor

Balance sheet – PLDT

  • Heavy CAPEX required to expand broadband and 5G coverage to defend market share
  • Issuance of long-term debt necessary to fund expansion
    • Operating cash flows are not sufficient to fund growth internally yet

Ratios – PLDT

  • Dividend payout is high which means it could continue to deliver a solid dividend yield of 4%+
  • Leverage slightly increased over time
    • However, I don’t expect it to grow much further

Long-term share price performance potential

Free cash flow – PLDT

  • Negative FCFF in 2019 likely to be an exemption
    • I expect stable and growing FCFF from 21E onward

Value estimate – PLDT

  • Similar to consensus, I expect stable revenue growth over the next few years
    • I am a bit more optimistic on margins as I expect the third competitor Dito will not be able to scale fast enough and achieve similar network quality
  • Over the long run, I assume PLDT to grow in line with population growth, which is around 2%

World Class Benchmarking Scorecard – PLDT

  • Identifies a company’s competitive position relative to global peers
  • Combined, composite rank of profitability and growth, called “Profitable Growth”
  • Scale from 1 (Best) to 10 (Worst)

Key risk is intensified price competition

  • Less-than-expected return on CAPEX in a capital-intensive industry
  • Overestimation of profit contribution from Fintech investments
  • Failure to keep up with technological changes


  • Maintaining a superior network quality is critical success factor
  • FinTech investments and value-added services could drive stable growth in a rather mature market
  • High ROE and dividend yield make it an attractive play

Download the full report as a PDF

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