Strategy Analysis of Pldt

6657 Words Apr 24th, 2011 27 Pages
Executive Summary

Being the largest company in the Philippines, The Philippine Long Distance Telephone Company (PLDT) provides a wide range of telecommunication services, including fixed line, cellular and broadband services. For the past few years, a revolution has taken place in the telecommunications industry and the PLDT dominance in the industry has been threatened. Competing in a maturing industry, Revenue growth for PLDT has been stagnant for a few years and revenues decline for the first time in 2009. The future outlook is not prospective for PLDT either, as competition will be intensified by a change in government attitude in promoting market liberalization in the telecommunications industry. The current situation and the dimmed
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The company has classified its business operations through three reportable segments, namely: Wireless, Fixed line and Information and Communication Technology (ICT) businesses. It is the ultimate parent company of Smart Communications Inc, Bonifacio Communications Corporation, PDLT Philcom Inc, Smart-NTT Multimedia Inc, PLDT Global Corporation, Maratel, Telesat Inc, Mabuhay Philippines Satellite Corporation, ePLDT Inc, ACeS Philippines Cellular Satellite Corp, PLDT Clark Telecom Inc and PDLT Subic Telecom Inc.

The Problem

In year 2010, PLDT met with an unprecedented problem. Growth has stagnated for the past years and the company recorded its first revenue decline in 5 years of 4% from PHP 147 billion in 2009[1]. Free cash flow to firm has also dropped from PHP 44.4 billion to PHP 43.7 billion in 2010[2]. As growth slows, there has been increasing dissatisfaction among PLDT’s shareholders who are demanding more return from their investment in PLDT. Some of them have sought exit by selling off their shares in PLDT and this has led to a fall to PLDT’s stock price from P$75.30 in beginning 2008 to P$55.54 beginning 2011[3]. The maturing industry coupled with increasing competition due to the Philippines government promoting market liberalization has been pointed out as the root causes of this problem.

A corporation without growth will only die out eventually. This calls for immediate concern and action from the management of PLDT. The key question

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