PLDT’s Growth and High Yield Propel Buy Rating Amidst Mobile Revenue Reacceleration

PLDT (PHI – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Brooksley Kang from Bank of America Securities reiterated a Buy rating on the stock and has a PHP1,750.00 price target.

Brooksley Kang has given his Buy rating due to a combination of factors including PLDT’s sustained growth in mobile revenue and a positive adjustment in the company’s price objective. Kang notes the reacceleration in mobile revenues, which are expected to grow by 5% year-over-year, and a projected increase in average revenue per user (ARPU) as key indicators of PLDT’s ongoing recovery and growth potential. Although there has been a slight tempering in margin expansion due to higher interconnection and maintenance costs, these are somewhat mitigated by reductions in depreciation following significant asset write-offs. Kang maintains that the structural drivers of PLDT’s business—increased data usage and expanding margins—remain strong, with the additional benefit of a high yield compared to industry peers.

The report further details an expected further reacceleration of mobile revenues into 2024, driven by an expanding subscriber base and an 11% growth in ARPU. This optimism is bolstered by PLDT’s recent subscriber growth, which reflects a recovery from late SIM reactivations and a direct translation into revenue. Kang finds the company’s handling of these reactivations and the immediate positive impact on their financials particularly encouraging. Despite a more conservative outlook on margin growth, the reduced depreciation expenses are expected to provide a partial offset, supporting the overall positive financial outlook for PLDT, and justifying the Buy rating.

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PLDT (PHI) Company Description:

PLDT, Inc. engages in the provision of telecommunication services. It operates through the following segments: Wireless, Fixed Line, and Others. The Wireless segment consists of cellular through text messaging and wireless broadband. The Fixed Line segment offers fixed line telecommunications services throughout the country, servicing retail, corporate and small medium enterprise, or SME clients. The Other segments includes process solutions though subsidiaries. The company was founded on November 28, 1928 and is headquartered in Makati City, Philippines.