Piltel first quarter profit up 32% to P3.2 billion

MANILA, Philippines - PLDT wireless subsidiary Pilipino Telephone Corp. (Piltel) posted a 32-percent increase in its reported net income to P3.2 billion during the first quarter of 2009 from P2.5 billion in the same period last year.

Company officials reported that earnings before interests, taxes, depreciation and amortization (EBITDA) increased nine percent to P3.8 billion for the first quarter of 2009.

They also noted that with a subscriber base of 15.6 million at the end of the first quarter, Piltel’s mobile phone service brand Talk ‘N Text is now the second largest cellular brand in the country. Talk ‘N Text continued to report robust subscriber growth with around 1.25 million net subscriber additions in the first three months of this year.

Service revenues grew 10 percent to P4.2 billion in the first three months of 2009 from P3.9 billion in 2008 with the implementation of the change in the revenue sharing arrangement between Piltel and Smart Communications.

Data revenues increased seven percent, from P2.6 billion in the first quarter of 2008 to P2.8 billion this year, as bucket-priced text messaging revenues grew 11 percent, partly offset by the three-percent decrease in standard text messaging revenues. Data revenues make up 65 percent of GSM service revenues.

Voice revenues were up as well by 15 percent, from P1.3 billion to P1.5 billion as a result of higher revenues on both local and international calls.

Piltel president and CEO Napoleon Nazareno emphasized that they are pleased with the performance of Piltel for the first quarter of 2009, despite the economic uncertainties.

“Looking ahead, I remain optimistic Piltel will continue performing well. But as you know by now, Piltel will soon be moving into a new direction with its acquisition of Meralco shares. As we await the conclusion of this transaction and complete another transformation of Piltel, we see no reason to diminish our efforts in enhancing Talk ‘N Text’s position as the second leading cellular brand in the country,” he added.

Earlier, PLDT announced that it is consolidating its cellular business under Smart, in a bid to maximize revenue streams and eliminate any lingering regulatory issues relating to having two cellular wireless subsidiaries.

As part of the consolidation bid, Piltel is selling its GSM cellular mobile fixed assets to parent Smart at net book value.

Piltel will also license the use by Smart of the Talk ‘N Text brand for which Smart will pay Piltel a lump sum royalty fee based on a percentage of projected net service revenues.

Piltel will also transfer its existing Talk ‘N Text subscriber base to Smart in consideration of a one-time payment equivalent to the subscriber acquisition cost which Smart would have incurred for the acquisition of its own subscribers.

At the same time, Smart also expressed its intention to undertake a tender offer for shares of the common stock of Piltel held by minority shareholders.

It is expected that the proposed tender offer of Smart will provide an exit opportunity for Piltel’s minority shareholders, given the change in Piltel’s business direction.   

The three transactions are expected to be completed within the third quarter of  2009.