PLDT ends 2005 on a high note, retains leadership in market cap

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PLDT ends 2005 on a high note, retains leadership in market cap
By Mary Ann Ll. ReyesThe Philippine Star 01/01/2006

Telecommunications leader Philippine Long Distance Telephone Co. (PLDT) ended the year on a high note as it registered a market capitalization of P331.58 billion, still the largest among the country’s publicly-listed companies.

PLDT chairman Manuel V. Pangilinan told The STAR that the company’s share price in New York closed the year at $33.54 per share, translating to a market capitalization of $6.1 billion based on the New York closing price.

Based on the Philippine Stock Exchange (PSE) closing price of P1,835 per share last Thursday, PLDT’s market capitalization for the year stood at P331.58 billion or $6.246 billion at the closing exchange rate of P53.09 to a dollar.

With this, PLDT retains the largest market capitalization in the PSE and is considered the country’s most valuable company. At second place is San Miguel Corp. (SMC) with a closing market capitalization of P232.475 billion.

The PLDT group is expected to register between P31 to P32 billion net income for the entire year and core earnings of P30 billion. During the first three quarters of 2005, the group reported a consolidated net income of P25 billion, 13 percent higher than the P22.2 billion generated in the same period the previous year.

"Assuming that there are no adverse movements in foreign exchange levels and that the Sept. levels will be maintained until Dec., we can expect the reported net income to be closer to P32 billion," Pangilinan said.

He expects leverage ratio (total debt/EBITDA) to be below 1.5 times by 2006 compared to 1.6x as of end-Sept.

Consolidated profits for the third quarter of 2005 reached P8.5 billion compared to P9.75 a year ago while core earnings improved to P8.2 billion from P6.8 billion. Group service revenues went up four percent year-on-year to P89.7 billion, mainly driven by an eight percent increase in wireless service revenues. Fourth quarter revenues are expected to be higher than the third quarter and equal to the second quarter performance.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) hit P57 billion during the first nine months of the year from P53.8 billion last year while margins improved to 64 percent. Consolidated free cash flow grew by 51 percent to P41.6 billion as capital expenditure spending declined by 41 percent to P9.6 billion. By yearend, free cash flow is expected to reach P50 billion or around $900 million, of which $700 million is for debt reduction and around $200 million for dividend payments for the year.

The group reduced debts by $552 million during the first nine months of the year, with total debt reduction for the whole year expected to hit $700 million compared to an earlier target of $600 million.

Total cellular subscribers of wireless subsidiaries Smart Communications and Pilipino Telephone Inc. (Piltel) remained at 20.8 million as of end-Sept. for a combined market share of 59 percent. Wireless service revenues increased to P55 billion during the first nine months or eight percent higher. Service revenues for the third quarter were, however, lower by one percent to P18.5 billion compared to the second quarter due to a more difficult macro-economic situation and various promotional activities, but were four percent higher than the first quarter revenues.

"We are constantly finetuning our service offerings to meet market demand in our effort to continue growing our revenues. Top line growth becomes even more challenging in light of the added pressure on disposable income on the part of consumers and on profits on the part of corporations due to rising oil prices and other basic commodities. But we are confident we will grow revenues in the fourth quarter," PLDT president Napoleon Nazareno said.

He said cellular penetration rates will likely go down by one to two percent industry-wide but remains optimistic that there will still be room for growth, with an addressable market of 25 million that remains to be tapped.

PLDT’s fixed line core income grew 11 percent year on year to P2.8 billion due to improved EBITDA and lower interest cost. EBITDA in the first nine months of 2005 increased four percent to P20.3 billion while margin improved to 55 percent as against 54 percent in the same period last year. EBITDA in the third quarter of 2005 was stable at P6.7 billion despite manpower rightsizing charges of P226 million booked during the period.

Retail DSL (digital subscriber line) continue to grow as broadband subscribers reached 76,000. This number is expected to reach 100,000 by yearend as network coverage expands and new bundling schemes are introduced, the PLDT officials said.

Fixed line free cash flow remained healthy at P31.6 billion, enabling PLDT to reduce its debts by $472 million during the first nine months of the year. Its debts are now down to $1.5 billion as of end September. By end of 2005, fixed line debts is expected to be further reduced to $1.4 billion.