Elevated inflation seen to affect telco, ICT companies’ earnings
2 min read
THE PROFITABILITY of telecommunications and information and technology (ICT) companies could take a hit from the impact of elevated inflation on consumers’ purchasing power and increased competition, analysts said.
Listed telco companies PLDT Inc. and Globe Telecom, Inc. recorded lower results for 2022, while Converge ICT Solutions, Inc. posted a small gain amid a 32% drop in the fourth quarter of 2022.
Other listed ICT companies — DITO CME Holdings Corp. and Philippine Telegraph and Telephone Corp. — have yet to disclose their full year 2022 results.
Analysts expect these firms to be challenged by elevated prices, subscriber identity module (SIM) registration and saturated markets, resulting in a moderate growth outlook for the sector.
“Earnings-wise, the ICT was above expectations at 58%, while the three telcos — Globe, PLDT, and Converge — averaged flat. Onwards, with the telco industry maturing and with elevated domestic inflation, telcos face tougher competition to gain market share and thus earnings outlook is challenged,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.
“ICT will be resilient and remain on the growth path earnings-wise, despite global recession risks given its strategically located businesses worldwide and expansion thrust,” Ms. Ulang added.
China Bank Securities Corp. Research Analyst Stephen Gabriel Y. Oliveros likewise said in an e-mail that he expects the telco sector’s performance to be “challenged” as high inflation dents consumers’ purchasing power.
“For the broadband business, we may see some moderation in growth as sustained data demand from enterprises are met with expectations that the residential postpaid broadband market is nearing saturation,” Mr. Oliveros said.
“Meanwhile, we are keeping an eye on the launch of prepaid fiber as this may buoy growth prospects of the residential fixed broadband space,” he added.
In March, Converge announced the launch…
BusinessWorld
2023-04-09 12:08:20
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