PLDT income rises 15% to P30 billion in 9 months

MANILA, Philippines - Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) reported a 15-percent increase in its net income to P30 billion in the first nine months of the year, from P26.2 billion in the same period last year, company officials said yesterday.

Core net income, which excludes exceptional items, meanwhile, rose 11 percent to P31 billion during the same period.

PLDT president and CEO Napoleon Nazareno said this year’s results reflect the higher recurring net income, lower net losses from the foreign exchange revaluation of their financial assets and liabilities and derivatives, and the lower statutory tax rate.

He added that the income figures now factor in the 20-percent equity share of subsidiary Pilipino Telephone Inc. (Piltel) in the earnings of power utility Manila Electric Co. (Meralco).

PLDT Group chairman Manuel Pangilinan indicated they are now taking a cautious stance and slightly revising downwards their revenue and earnings before interests, taxes, depreciation and amortization (EBITDA) targets to P146 billion and P88 to P88.5 billion, respectively.

He, however, said their core profit guidance remains at P41 billion for the whole of 2009, or eight percent more than in 2008. “Based on the nine-month results, and barring unforeseen circumstances, reported net income for the year is likely to exceed last year’s number of P34 billion,” he said, adding that fourth quarter 2009 core income will likely reach P10 billion.

He pointed out that the third quarter performance was adversely affected by the lagged effect of the global recession on the economy, compounded by the delay in school openings as a result of the swine flu outbreak. The slowdown in economic and business activity was further exacerbated by successive natural calamities, weakening what is already the slowest quarter of the year historically.

“While we anticipate the usual boost in the fourth quarter from holiday spending, we expect that this may be somewhat dampened  as the recent typhoons caused extensive damage all around. Even with OFW remittances holding up, we may see consumers adjusting their budgets and rethinking their spending priorities,” Pangilinan explained.

He added that if Meralco achieves its full year targets, then it should be able to further significantly contribute to the group.

The group’s capital expenditure stood at P18.1 billion during the period, of which about P10.6 billion was spent for the wireless business, with capex for the year estimated to reach P27 billion.

Nazareno also reported that the group’s total debt stood at $2.1 billion as of end- September, with net debt at $1.5 billion.

PLDT’s total cellular subscriber base grew to 39.1 million subscribers, with main unit Smart Communications adding 3.9 million subscribers in the first nine months. Smart recorded net additions of over 1.6 million to end the period with 22.5 million subscribers while Talk ‘N Text added 2.2 million subscribers to end  the period with 16.6 million subscribers.

“The growing popularity of unlimited voice packages indicates a shift in consumer preferences and we have taken note of that in our recent service offerings. Moreover, the competitive landscape is heating up as operators intensify their efforts to offer the best value to consumers at a time when tough economic conditions and regulatory changes are changing subscriber behaviour. We need to adapt as have in the past,” Nazareno said.

 He explained that the country’s cellular SIM penetration rate is now at 80 percent, inclusive of multiple SIMs. “This means that new subscribers will come from the lower market segments with lower average revenue per user (ARPU).”

Nazareno also reported that fixed line service revenues increased four percent to P38.2 billion in the first nine months from P36.7 billion in the same period last year.

“The fixed line business has produced three straight quarters of revenue growth, no mean feat in this age when communications is accessible through numerous channels. We are encouraged by this progress and look to remain focused and sustain this transformation and improvement,” he added.

The company also reported that teams have already been formed by both PLDT and Meralco to determine how to implement the identified synergies between the two.

Last Oct. 29, Meralco, in cooperation with Smart, announced the imminent launch of Meralco Mobile Services. The project will have a pilot run in selected areas and will be made available to customers in the entire franchise area of Meralco in 2010.

Services to be made available for the pilot run are broadcast of predetermined power interruption schedules, emergency interruptions, typhoon-related safety tips, business center locations and a customer feedback facility. Once fully operational, other services to be offered include meter reading notification, billing details, bill due date reminders, power outage restoration feedback, among others.

Nazareno said the services are made possible through a Meralco Mobile Services SIM card which will be sold starting Nov. 16. Existing Smart subscribers will be able to download the services menu to their current SIMs.

Meanwhile, PLDT’s total broadband subscriber base was at 1.37 million, with aggregate revenue contribution from broadband and Internet services at P10 billion for the first nine months, 26 percent higher than last year. Smart Bro wireless broadband subscribers for the period was at 802,000 while those for wired broadband (DSL) was at 548,000.

“We are determined to propagate broadband usage by facilitating the availability and wide adoption of access devices and riding the social networking wave. We recognize that social networking has changed the rules of the communications game and we are adapting our service to take advantage of that,” Smart chief wireless adviser Orlando Vea pointed out.