050807: Piltel's 1Q net income down to P1.99B

By Lenie Lectura

Reporter

PILIPINO Telephone Corp. (Piltel), a unit of Philippine Long Distance Telephone Co. (PLDT), reported Monday a lower net income of P1.99 billion in the first quarter of the year from P2.25 billion year earlier. Napoleon Nazareno, who is president of both companies,  said that Piltel’s financial results were mainly due to lower exceptional gains. In previous years nonrecurring items such as deferred tax assets (DTAs) and foreign exchange (forex)  gains/losses have had a significant impact on the company’s net income. Piltel’s debt prepayment and resulting nominal debt balance have closed the gap between reported and core net income figures, Nazareno explained. “There are no more foreign exchange gains,” Nazareno  added. Excluding certain DTAs and the effects of forex valuation, Piltel’s core earnings stood at P1.98 billion during the first three months of the year, up 33 percent from the P1.49 billion recorded for the same period in 2006. “Our  revenues and core income went up brought about by SMS [short messaging service] and voice applications. The first quarter was a good quarter for Piltel. I guess it’s a sign of the election-related revenue,” Nazareno said. The company added 421,000 new subscribers in the first three months of the year, ending the first quarter with about 7.4 million subscribers on Talk ’N Text, the company’s prepaid GSM (global system for mobile communications) service. Nazareno said the poll-related activities done through mobile phones will stir the company’s performance in the second quarter. “We expect more towards nearing  election time,” Nazareno said. During the period, wireless net service revenues increased by 24 percent to P3.13 billion from P2.52 billion in the same comparable period. GSM service revenues make up 95 percent of Piltel’s net service revenues with fixed line service revenues accounting for the balance of 5-percent amounting to P156 million. SMS continues to be the main driver of the company’s revenues as data revenues increased by 27 percent to P1.98 billion from P1.56 billion. Data revenues make up 63 percent of GSM revenues. Moving forward, Nazareno is hopeful that the company will sustain its first quarter results throughout the remaining months of the year. “Hopefully, our quarter bottom line would be sustained. Our performance will now normalize because there will be no forex gain as we have prepaid our debts already,” Nazareno said. Piltel embarked on an aggressive debt prepayment program, which culminated in the complete payment of its restructured debt in December 2006. At end-March, Piltel redeemed all of its outstanding unrestructured bonds amounting to $690,000. Piltel also  sought and received approval from the Securities and Exchange Commission (SEC) for its capital quasi-reorganization. The completion of Piltel’s equity restructuring now puts it in a position to pay dividends to its shareholders. Dividends will be paid to common shareholders once the company has paid cumulative dividends to preferred shareholders, which totaled P2.64 billion as of the end of March 2007. “We can now look at paying dividends to our shareholders and we will begin by paying off the accrued cumulative dividends due to our preferred shareholders which have  remained unpaid to date. Once that is completed and our retained earnings have reached an appropriate level, we should be able to pay cash dividends out of our 2007 income to our common shareholders sometime in early 2008,” Nazareno said. With the full prepayment of restructured debts in December 2006 and the full payment of convertible bonds in March 2007, Piltel no longer has any significant foreign currency denominated liabilities subject to revaluation.

 

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