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| STRONGER PESO AND TAXES WEIGHED AGAINST ITS REVENUES |
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| By Lenie Lectura |
| Reporter |
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| LISTED Philippine Long Distance Telephone Co. (PLDT) recorded a net income of P35.1 billion last year, up three percent from P34.1 billion a year earlier, the company said at a briefing Tuesday. The country’s largest company by market value said that a stronger peso weighed against its dollar-linked revenues. PLDT chairman Manuel Pangilinan said a number of factors will impact against the PLDT group’s financial performance this year. These would include sourcing of new areas of growth, continuing implementation of cost controls, volatility in the peso exchange rate against the US dollar and higher depreciation costs and income tax provisions. “As depreciation and provision for income taxes normalize in 2007, it is expected that the gap between the PLDT group’s reported and core net income will significantly narrow,” Pangilinan said. The group’s core income rose to P31.5 billion in 2006, nine percent over the core net income of P29 billion in 2005. This excludes currency and other derivative gains. “Considering, however, that our net foreign exchange liabilities have been considerably reduced owing to the significant reduction in debt we have achieved over the past few years, the effect of foreign exchange movements on our reported profit has been significantly mitigated—whether positively or negatively,” Pangilinan said. “In the absence of exceptional gains unrelated to foreign exchange which may arise in the course of 2007, we will see the group’s core and reported net incomes beginning to converge starting this year,” he added. This year, the group estimates core income to rise in the range of P32-33 billion. About 40 percent of group revenues are dollar-linked. The company said its fixed line service revenues decreased one percent to P49.1 billion in 2006 from P49.7 billion in 2005, as improvements in data revenues were offset by smaller earnings from the local exchange and international long distance services. “Our dollar-linked revenues arising from the local exchange and international long distance businesses were adversely impacted by the 6.8 percent appreciation of the peso from an average of P55.08 in 2005 to P51.32 in 2006,” Pangilinan said. Fixed line revenues would have improved two percent year-on-year if foreign exchange rates were stable. Still, consolidated service revenues increased by three percent to P125.1 billion. Consolidated earnings before interest, taxes, depreciation, and amortization also improved by three percent to P79.6 billion. Given the strong results, PLDT declared a final dividend of P50 per share. Total dividends for the year will amount to P100 per share, representing a payout of 60 percent of 2006 core earnings. Pangilinan said the company targets to increase the regular dividend payout to 70 percent of core earnings this year. “We are extremely pleased to announce the declaration of a final dividend for 2006 of P50 per share, bringing total dividends to P100 per share for the year,” Pangilinan said. “Our strengthening financial position, anchored on another record profit level, allows us to take advantage of new growth opportunities while, at the same time, increasing returns to our shareholders,” the PLDT chairman added. Total dividend payments for 2006 increased by 53 percent to P18.8 billion, from P12.3 billion in 2005. PLDT president Napoloen Nazareno said the group has identified new revenue sources for this year. Aside from the traditional cellular revenues, PLDT is banking on broadband, data, information and communications technology, business process outsourcing and mobile television to boost its income. “Market potential for broadband is expanding rapidly. Our increased focus to develop our data business as well as diversify our revenue base is starting to bear fruit, Nazareno said. “In 2006, we started to implement various programs to transform our networks to enable next generation communication.” Wholly-owned subsidiary MEDIAQUEST Holdings, Inc., a wholly-owned subsidiary of the PLDT Beneficial Trust Fund, is earmarking $50 million for the next three years to fund its mobile TV service which will be commercially launched middle of this year. MediaQuest’s Nation Broadcasting Corp. will provide the broadcast service while Smart Communications Inc. will take care of the marketing and infrastructure support of its mobile phone service. This will initially be available in Metro Manila, Cebu and “Our traditional businesses continue to mature,” Pangilinan said. “But we have reported net additions of 900,000 new mobile phone subscribers in the first two months of the year, and that is a good start for 2007.” This February the group’s cellular subscriber base reached the more than 25 million mark. Smart and Piltel added 900,000 new subscribers in the first two months of the year. Nazareno said business arising from the national and local elections in May should help boost revenue this year. “The effects of election spending will come towards May,” Nazareno said. “Right now we are not seeing the effect yet.” Text messages sent through the PLDT network reached 650 million a day in 2006 from 300 million in 2005. |
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