Earnings call transcript: PLDT Q2 2025 misses EPS forecast, stock dips

PLDT Inc. reported Q2 2025 EPS of $0.7036, missing forecasts by 7.81%, despite a modest year-on-year revenue increase to PHP 97.1 billion and 3% EBITDA growth. A significant positive was its digital banking arm, Maya, achieving its first profitable semester, materially contributing to core income. Operationally, PLDT continues 5G and fiber expansion, reduced full-year CapEx to PHP 63 billion due to favorable pricing, and is pursuing asset monetization and AI infrastructure development, including the new VITRO Santa Rosa data center. While the stock initially declined 1.92% post-earnings, it has shown modest recovery, with analysts seeing potential upside, though regulatory challenges like the Connecta Pinoy Bill present ongoing concerns.

Analysis

PLDT Inc.'s second-quarter 2025 results present a mixed financial picture, defined by an earnings miss counterbalanced by strategic growth in its digital and infrastructure segments. The company reported an EPS of $0.7036, a negative surprise of 7.81% against forecasts, alongside a modest year-on-year revenue increase to PHP 97.1 billion. While Telco core income declined 4% due to higher depreciation and financing costs, consolidated core income rose 1% to PHP 17.6 billion, critically bolstered by the first-ever profitable semester from its digital banking arm, Maya, which contributed PHP 4.6 billion. Operationally, PLDT demonstrates strength in key growth areas, with its Home segment revenue growing 4% driven by fiber, and 5G traffic surging 84%. Management is exercising capital discipline by lowering full-year CapEx guidance to PHP 63 billion, citing favorable vendor pricing rather than reduced investment, and is actively pursuing asset monetization. However, the stock's 1.92% post-earnings decline reflects investor caution, compounded by a significant regulatory overhang from the pending 'Connecta Pinoy Bill,' which the company views as a threat to its investment incentives and plans to challenge legally if passed.

Key Decisions for Investors

• Investors should weigh the stock's potential undervaluation, suggested by an analyst price target of $31.10, against the near-term pressures from the Q2 EPS miss and weakness in legacy mobile and enterprise segments.
• Monitor the performance of the fintech arm, Maya, as its newfound profitability represents a significant growth catalyst and a material contributor to consolidated core income, while also tracking its net interest margin and a slight uptick in NPLs to 5.2%.
• The primary risk is regulatory; the outcome of the 'Connecta Pinoy Bill' could materially impact PLDT's business model, making it a critical factor to watch for any portfolio allocation decisions.
• Consider the company's disciplined capital management, reflected in its reduced CapEx guidance and asset monetization strategy, as positive drivers for its goals of achieving positive free cash flow by 2026 and reducing its net debt to EBITDA ratio to 2.0x.