PLDT sees P34-B net income this year

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) expects to register a core net income of at least P34 billion for the whole of 2007, with wireless subsidiaries Smart Communications Inc. and Pilipino Telephone Inc. projected to hit a combined subscriber base of 29 to 30 million by yearend.

In an interview, PLDT chairman Manuel V. Pangilinan said that core income this year will definitely be in excess of last year. “But it would be difficult to project our reported net income because of the exceptionals such as foreign exchange gain,” he pointed out.

PLDT earlier registered a consolidated reported net income of P17 billion during the first six months of 2007, up 11 percent compared to P15.3 billion in the same period in 2006, on account of foreign exchange translation and derivative gains, lower depreciation charges, and higher provision for income tax.

Group core profits, before exceptionals, rose 13 percent to P17.2 billion during the January to June 2007 period from P13.2 billion during the first half of last year.  Income before tax increased 40 percent to P26 billion while provision for income tax went up by 192 percent to P5.7 billion as effective rate went up to 34 percent.

Pangilinan also revealed that PLDT’s broadband business has been growing exceptionally and much higher than anticipated. “Even our expenditures on wireless GSM have been higher than anticipated because there is a more robust cellular subscriber take-up. We originally designed our budget with a forecast of around 26 million by end of 2007 from about 24 million as of end of 2006. Now, I believe we should be between 29 to 30 million,” he said.

Also yesterday, he disclosed that PLDT’s debt balance will go down to $1 billion by next year. With the company’s huge cash balance, Pangilinan said PLDT now has to plow this back either in terms of increased shareholder return or additional investments.

PLDT’s consolidated earnings before interests, taxes, depreciation and amortization (EBITDA) during the first six months of 2007 went up to P41.81 billion, four percent higher than last year’s P40.1 billion while EBITDA margin was at 62 percent of service revenues.

Service revenues increased by 11 percent to P67 billion despite a nine percent appreciation of the peso which negatively impacted revenue growth by almost four percent, as 38 percent of PLDT’s consolidated revenues were linked to the US dollar.  Officials emphasized that had the peso-dollar exchange rate been stable, service revenues would have grown by over 14 percent or a further P2.3 billion.

Consolidated free cash flow was at P24.4 billion after incurring capital expenditure of P10 billion. Company officials said capex is expected to increase to P27 billion this year due to higher than expected take up of cellular and wireless broadband subscribers and the continued rollout of the next generation network (NGN).

An interim dividend of P60 per share and a special dividend of P40 per share were declared, bringing total dividend payout of 2006 net earnings to 85 percent.