Piltel income soars 57% to P17.9 billion in 2009

MANILA, Philippines - Pilipino Telephone Corp. (Piltel), a unit of Philippine Long Distance Telephone Co. (PLDT), announced yesterday a 57 percent rise in its reported net income to P17.9 billion for 2009, as against P11.3 billion in the previous year, largely due to the gain on the sale of its telecommunications business to its parent Smart Communications.

Its core net income, however, dropped 23 percent to P8.7 billion compared with P11.1 billion in 2008. Piltel officials said this is attributable to its cellular business having been sold in August 2009 and resulting in only 7.5 months of operations as against the full-year takeup in 2008.

Piltel has ceased to be a telecommunications company after transferring the telco business to Smart. It is now a holding company for shares in Manila Electric Co. (Meralco).

Asked about PLDT’s plans for Piltel, PLDT president and CEO Manuel V. Pangilinan said that while they realize that Piltel has become a holding company and 99.5 percent of it is now owned by Smart, it might no longer make any sense for it to be publicly listed.

Although bulk of Piltel’s 20 percent stake in Meralco has already been transferred to a new company called Beacon Electric, Pangilinan said that six percent still remains with Piltel .

Piltel announced the execution of an omnibus agreement with Metro Pacific Investments Corp. (MPIC) and Rightlight Holdings Inc. (RHI), a newly organized special purpose company with the sole purpose of holding Piltel and MPIC’s shares in Meralco, and which will be renamed Beacon Electric Asset Holdings Inc. In line with this, Piltel have agreed to restructure their current shareholdings in Meralco.

Pangilinan admitted yesterday that this was resorted to due to the tender offer rule whereby a single entity or a group of entities that acquires at least 35 percent of another company has to make a general offer. “We must be sensitive about this so we made sure that Beacon will not own 35 percent or more of Meralco within a 12-month period,” Pangilinan revealed.

While MPIC injected its entire 14.5 percent stake in Meralco into Beacon, Piltel transferred only a portion, resulting in Beacon holding a 28.2 percent stake in Meralco.

Pangilinan said this leaves some headroom for Beacon on the 6.6 percent stake of the Lopez Group in Meralco which is the subject of a call option. Beacon (MPIC-Piltel) are given the option to acquire these shares from March 15 to May 15 this year. “So that even if Beacon avails of the option, its aggregate stake in Meralco will only be 34.8 percent and will not breach 35 percent,” he added.

The 6.6 percent Lopez stake in Meralco is worth around P22.4 billion, of which P11.2 billion has already been paid. The remainder will be financed out of debts that will be secured by MPIC.

He also revealed that after the 12-month period, the option regarding Piltel’s possible delisting from the local bourse can be reviewed. “Smart anyway owns 99.5 percent of Piltel, there is no point in it remaining public. It’s just a matter of timing,” he said.

Piltel gained P7.6 billion from the sale of its GSM business, which includes the transfer of its cellular subscribers and network to Smart. It also generated a mark-to-market gain of P1.2 billion recognized on the derivative asset linked to the exchangeable note related to Piltel’s acquisition of a 20 percent stake in Meralco.

Meanwhile, the Piltel board declared a cash dividend of 85 centavos per share to common shareholders of record as of March 15, 2010. Payment date is set on March 30, 2010.

Piltel president and CEO Napoleon Nazareno said they have committed to strengthen their ownership in Meralco by joining hands with MPIC in consolidating their Meralco holdings in Beacon. “The combined holdings will make Beacon one of Meralco’s largest shareholders and ensure that we will have a stronger voice in the strategic and operational decisions of Meralco.”