Piltel sustains earnings streak, nets P2.2B in Q1

Wireless phone operator Pilipino Telephone Inc. (Piltel) continued its profit streak as it posted a net income of P2.2 billion in the first quarter of 2006, compared to P2.18 billion in the same period last year.

Core earnings, as adjusted for foreign exchange revaluation, stood at P1.9 billion, up 33 percent from P1.4 billion while reported net income increased three percent to P2.2 billion.

Service revenues went up 4.5 percent year-on-year to P2.7 billion while earnings before interests, taxes, depreciation and amortization (EBITDA) reached P2.4 billion, higher by 17 percent.

Company officials said the positive performance was the result of the continued growth in revenue contribution from the Talk ‘N Text subscriber base.

Piltel is the Philippines’ third largest cellular operator with approximately 5.4 million subscribers on Talk ’N Text, the company’s prepaid service. Talk ’N Text recorded net additions of about 374,000 in the first three months of 2006.

Net service revenues increased six percent to P2.5 billion in the first quarter of 2006 from P2.4 billion in the same period in 2005. Wireless revenues now make up 94 percent of Piltel‚s net revenues with fixed line revenues accounting for the balance of six percent.

Meanwhile, Piltel’s total expenses decreased by 67 percent, from P385 million during the first quarter of 2005 to P129 million in the first three months of 2006. The cost of handsets and SIM packs sold declined significantly by 57 percent as a result of the shift in sales mix to SIM sales in 2006 from phonekit sales for the same period in 2005. Selling and promotions likewise decreased, by 28 percent, due to a refocusing of efforts to on-the-ground activities vis-à-vis the more traditional television and radio advertising.

As of March 31, 2006, Piltel’s total long-term debt stood at P17.3 billion, 78 percent of which were foreign-denominated.

Piltel returned to a positive stockholders’ equity at the end of 2005, after three years in a negative position. Its stockholders’ equity stood at P6.7 billion as of March 31 while its capital deficit continued to decline to P30.1 billion, from P32.3 billion and P45.8 billion at the end of 2005 and 2004, respectively.

Last May 4, Piltel submitted notices of its intent to make a partial voluntary prepayment of its principal debt using excess cash flows from operations. The total prepayment amount of $177 million, or 43 percent of Piltel’s total outstanding debt, will be applied proportionally to the various debt facilities, as set out in the terms of the inter-creditor agreement dated June 4, 2001.

Of the aggregate amount, $56 million will be paid to third party creditors while sister company Smart, Piltel’s largest creditor, will receive the balance of $121 million. Piltel’s debt balance will be reduced to approximately $236 million in principal.

Piltel president and chief executive officer Napoleon Nazareno noted that as the company has begun generating considerable cash flows, it can now embark on a deleveraging program.