PLDT shares decline as market awaits Konektadong Pinoy IRR

PLDT INC.’S shares fell last week as investors awaited regulatory clarity on the Konektadong Pinoy Act.

The telecommunications giant ranked seventh among the week’s most actively traded stocks. A total of 869,470 shares worth P980.95 million changed hands from Sept. 1 to 5 on the local bourse.

PLDT closed at P1,125 per share, down 2.9% from the previous Friday’s P1,159 close, worse than the service sector’s 0.4% growth and the Philippine Stock Exchange index’s (PSEi) 0.1% contraction.

Year to date, the stock has dropped 13.1%, underperforming the sector’s 5.9% growth and the PSEi’s 5.8% decline.

The Konektadong Pinoy bill lapsed into law on Aug. 24, seeking to expand internet access through deregulation and increased competition in the telecommunications industry.

Department of Information and Communications Technology (DICT) Secretary Henry Rhoel R. Aguda earlier said the agency had invited PLDT, Globe, Converge, and DITO to help finalize the law’s implementing rules and regulations (IRR).

Mr. Aguda said the final IRR is expected to be released within 60 days.

Jeff Radley C. See, head trader at Mercantile Securities Corp., said in a Viber message that the market “is still waiting for the IRR finalization… to have a clearer picture.”

“The stock might move sideways with a bearish bias due to the Konektadong Pinoy Act, which poses negative sentiment,” Mr. See said.

Jasper Timoteo A. Ondap, equity analyst at Regina Capital Development Corp., compared the regulatory pressure to recent challenges faced by the gaming industry.

“Just like what happened to the gaming industry which faced regulatory challenges, Konektadong Pinoy Act puts the same pressure on telcos,” Mr. Ondap said in an e-mail.

Mr. Ondap added that Globe hit six- to seven-year lows while PLDT touched one-year lows following news of the law.

However, Peter Louise D. Garnace, equity research analyst at Unicapital Securities, Inc., said in a separate e-mail that the law “is not necessarily a pure headwind.”

“It represents a structural shift that may challenge the old-economy legacy business models, while creating opportunities through wholesale and digital inclusion plays.”

Mr. Garnace added that PLDT faces moderate risk as data liberalization will erode its market leadership and pricing power as value-sensitive users switch to lower-cost alternatives.

Despite headwinds, PLDT continues to expand through strategic technology deployments and investments. The company said in a media release last Monday that it plans to deploy Google Taara laser communication technology to reach remote areas without traditional fiber costs.

“Since a big chunk of PLDT’s service revenues comes from mobile and fiber broadband, any meaningful contribution depends on roll-out speed, pricing, and monetization capacity,” Mr. Garnace said.

Mr. Ondap described the technology deployment as “a good development and strategy” that could propel revenue growth.

“But [it’s] too early to tell in the upcoming two to three years. The telco’s performance lately just reflects how sticky the Konektadong Pinoy Act is.”

PLDT also executed a subscription agreement for additional shares in Kayana Solutions, a data-powered digital experience company.

“PLDT’s increased stake in Kayana Solutions is a strategic move to strengthen its position in the digital transformation space,” Mr. Garnace said.

“Earnings impact may likely be modest in the near term, while risk to execution and scaling may play a huge role in the bigger picture of the investment,” Mr. Ondap said regarding the subscription agreement.

PLDT reported consolidated revenues of P54.30 billion for the second quarter, up 1.8% from P53.36 billion a year earlier. Net income attributable to equity holders increased 6.1% to P9.11 billion from P8.59 billion.

First-half consolidated revenues grew 1.9% to P109.57 billion from P107.58 billion, while net income slipped 1.5% to P18.14 billion from P18.41 billion.

Analysts identified the IRR release as a key catalyst for the company’s performance.

“At least right now, investors should really be on the lookout for developments in Konektadong Pinoy,” Mr. Ondap said.

For technical levels, Mr. See and Mr. Garnace placed PLDT’s support at P1,100 and resistance at P1,200.

Mr. Ondap pegged support at P1,090-P1,130 and resistance at P1,165-P1,225.

“Short-term price targets to look out for include P1,125 and P1,325 levels,” he added. — Pierce Oel A. Montalvo