Phone giant posts all-time-high profit of P34.1B

Business Mirror
Mar 1, 2006

Phone giant posts all-time-high profit of P34.1B By Lenie Lectura Reporter IT WAS another outstanding year for Philippine Long Distance Telephone Co. (PLDT) after the country's dominant telephone firm posted an all-time-high profit of P34.1 billion last year brought about by foreign exchange gains and benefits from the recognition of certain deferred tax assets. The 22-percent increase in profit prompted the PLDT group to declare an additional cash dividend of P28 per share to its common shareholders of record as of March 20. Payment is set for April 20. PLDT's total dividends for the year will be P70 per share, representing a payout of slightly over 40 percent of last year's core earnings which stood at P31.3 billion, an increase of 9 percent from the previous year PLDT chairman Manuel Pangilinan said payout ratio this year could be raised to at least 50 percent of earnings. The strong performance of Smart Communications Inc. and Pilipino Telephone Corp. and the resilience of the fixed-lines business resulted in a combined subscriber base of 22.5 million as of end-2005. Smart and Piltel recorded 20.4 million cellular subscribers, a 59-percent market share. During the year, the cellular units of PLDT added 1.2 million subscribers. Though there were 370,000 net disconnections in the last quarter of 2005 as a result of the termination of SIM-swapping activities that ended in May last year, cellular service revenues went up by 8 percent to P74.7 billion brought about by the unlimited texting services of Smart and Piltel, as well as other value-added services offered last year. During the period, Smart and Piltel posted a combined net income of P31.1 billion, an increase of 23 percent from a year ago. Smart paid PLDT P25 billion in cash dividends last year. For this year, PLDT and Smart president Napoloen Nazareno said Smart will pay its parent company at least P20 billion, representing 70-percent earnings of Smart for this year. When computed, Smart is expected to record a net profit of at least P26 billion this year. Piltel, Smart's listed unit, also posted a hefty profit of P13.5 billion from P9.8 billion in 2004 as a result of reduced cost and tax credits. Now touted as the country's third-largest mobile phone company, Piltel's expenses fell to P1.3 billion mainly on account of lowered handset costs and SIM packs sold after the SIM-swapping activities. This significant reduction helped offset a decline in its revenues to P12.36 billion from P15.69 billion. Piltel also realized P2.43 billion worth of tax benefits. Further, it also recorded financing gains of P1.2 billion as against an expense of P1.9 billion in 2004. At end-2005, Piltel's long-term debts stood at P17.7 billion, 79 percent of which are denominated in foreign currencies. Of the P121 billion consolidated revenues, P49.7 billion came from fixed-line business. The company is banking on its broadband data services to help boost fixed-line business. DSL and wireless broadband clients more than doubled to 114,000 last year. Pangilinan said PLDT would also focus on reducing debts, particularly of the fixed-line business. Last year, PLDT paid $574 million, bringing its fixed-line debts to $1.4 billion.