PLDT sees P18-B profit this year

Telecommunications leader Philippine Long Distance Telephone Co. (PLDT) expects to make P18 billion in profits this year, 60 percent more than the P11.2 billion net income last year, still driven by highly profitable Smart Communications Inc., a wholly owned subsidiary, although expectations are high that the the numbers will surpass the P20-billion mark, The STAR learned.

PLDT chairman Manuel V. Pangilinan said that other income drivers will be the company’s landline business which is expected to start generating profits this year. Subsidiary Pilipino Telephone Inc. (Piltel) is projected to earn about P400 million in 2004, compared to a P3.3-billion loss last year.

PLDT ended 2003 with a reported consolidated net income of P11.2 billion, more than triple compared to the result in 2002, largely due to the strong performance of Smart which recorded a net income of P16.1 billion in 2003 making it the most profitable company in the Philippines. These profit numbers were complemented by a significant reduction in debts by $252 million as part of the company’s thrust to increase cash flows and deleverage.

The company’s share price has also been surging in the last few weeks in anticipation of strong first quarter results set to be announced sometime next week.

According to Pangilinan, PLDT expects to receive close to P11 billion from Smart this year representing 70 percent of the latter’s income in 2003.

Analysts, however, expect PLDT’s consolidated net income to be significantly higher than the P18 billion projected by management considering that no major write-offs are expected starting this year. Some project PLDT’s net income to exceed the P20-billion mark.

Meanwhile, company officials said Smart has no intention of using Piltel, a publicly listed entity, as a backdoor listing vehicle to comply with a requirement under Smart’s franchise to offer part of its shares to the public (at least 30 percent).

Speculations of a backdoor listing using Piltel were aroused after Smart announced that it was buying Piltel’s debts, and assuming that it gets at least 70 percent of total, it will also purchase PLDT’s shares in Piltel. Smart has given Piltel creditors until end of this month to make an offer (the debts will be paid by Smart using either cash, Smart debts, or sovereign-backed bonds which Smart is still in the process of securing).

PLDT president and CEO Napoleon Nazareno, concurrently Smart president, said the latter will benefit from the earnings that Piltel will bring in as well as the substantial tax savings.

PLDT officials, however, stressed that Smart would definitely not go public by August this year which is the deadline set in its franchise (five years from start of commercial operations) and instead said they are looking at going into an initial public offering in 2006 or 2007.

Meanwhile, the PLDT Group recently bagged six major awards from two leading international finance magazines for its achievements in overall management, corporate governance, financial administration and investor relations.

PLDT/Smart was chosen as the Best Managed Company and the Best in Investor Relations in the Philippines by FinanceAsia in its 2004 Asia’s Best Companies Poll where 424 fund managers, portfolio managers, equity investors and research analysts ranked companies in Asia. PLDT/Smart also placed second for Best in Corporate Governance in the country.

Euromoney, which conducted a survey of market analysts at major banks and research institutes in Asia wherein 136 responded, awarded PLDT with certificates for ranking fourth in the fixed line telecommunications sector, 12th for most improved company and 14th for most transparent company in Asia.

"It is no secret that our goal is to make PLDT one of the best telecommunication companies in the region," Nazareno said. "These awards provide concrete proof that we are clearly headed in that direction."

He added: "We intend to build on the tremendous gains we experienced in 2003 as we chart the path towards more robust growth in 2004. We are encouraged by the tremendous faith and confidence the investing public, both foreign and local has put on PLDT and its management team. We are determined to do everything we can to live up to the recognition of being the ‘best managed company in the Philippines."

Early this year, PLDT was also chosen by investors worldwide as the best-managed company in the Philippines in a recent survey by Asiamoney, one of Asia’s most influential financial magazines. PLDT also ranked best in corporate strategy, best in financial management, best focus on shareholder value, best operational efficiency, and best investor relations in the same survey.