Reflections on PLDT, Globe, and REIT Investing in the Philippines

Kuya Jon September 24, 2025

Stock investing is an interesting place.

As value investors, we typically go against the crowd - we’re greedy when people are fearful, and fearful when people are greedy. It’s a contrarian mindset.

But in my opinion, most of the time, the crowd or the market is actually correct. They are only wrong once in a while. And as contrarians, we have to be very sensitive about when to apply that mindset. Because sometimes, when everyone is fearful, the market is right - and it really is time to be fearful.

Recently, PLDT and Globe both got hit with massive share price declines. Partly because of flat 2025 financial results, and partly because of the Konektadong Pinoy law, which the market fears could bring in new competition, cutting growth potential for the incumbent telcos - or worse, eating into their market share.

Some arguments I’ve seen in favor of PLDT and Globe:

• High dividend yields – At current prices, the dividend yield looks very attractive. But if share prices continue to go down, dividend income could be offset, or worse, future dividend payouts could shrink if competition hurts earnings.

• Infrastructure advantage – Some say new players will benefit PLDT and Globe because they can rent their towers. But as I understand it, both have already sold most of their towers, which lowers the barriers for new entrants.

• Economy of scale – These telcos are big and can weather competition. I agree they will survive. But survival isn’t the issue - the issue is buying at current prices. If revenues fall because of new competition, share prices will likely fall too.

There are so many arguments for and against PLDT and Globe. But personally, I stand with what Warren Buffett always says:

"If it’s too hard, just pass."

The reality is, it’s very hard to predict the competitive landscape of the telco industry. We could speculate, but accurately predicting the outcome is nearly impossible. And unpredictability is the enemy of investors. We want businesses with a long, clear runway of healthy financial growth.

In the case of PLDT and Globe, I tend to agree with the “humility” of the market. Current pricing basically reflects uncertainty - and that’s reason enough to stay cautious. Unless you have a deeper insight into how this will play out, then yes, you can be a true contrarian. Otherwise, humility is the better approach.

On the same note, I also connect this to REITs. Telcos are under pressure from new laws like Konektadong Pinoy, and REITs also face uncertainty from potential U.S. policies pushing for more onshore jobs (like call centers returning to the U.S.). That casts doubt on REITs with heavy office space exposure.

That said, I still see a tailwind for REITs overall, because BSP has hinted at lowering rates. Lower rates generally push REIT prices higher in the months ahead. But my preference is to lean toward REITs with more exposure to non-office assets.

At the end of the day, it’s all about choosing battles. When the landscape looks too cloudy, sometimes the smartest move is to step aside and wait for clarity.

Yes, the contrarian mindset is powerful - but we also need to be careful when to apply it. In the current Philippine stock market, there are so many opportunities. We don’t need to constrain ourselves or limit our horizon to just a few names.