PLDT net earnings up 3% in 2006

7 Mar 2007

The Philippine’s dominant telecoms operator Philippine Long Distance Telephone (PLDT) reported a 3% rise in net earnings in 2006 to PHP35.1 billion (USD721.2 million), up from PHP34.1 billion in 2005, as the country’s maturing market showed signs of slowing growth. Chairman Manuel Pangilinan said the results were also impacted by a PHP3.5 billion provisioning for its ACeS satellite subsidiary. PLDT’s core net income climbed 9% from PHP29 billion in 2005 to PHP31.5 billion, with the company forecasting core net income in the range of PHP32-PHP33 billion in 2007. Consolidated 2006 service revenues rose 3% to PHP125.1 billion, despite the 6.8% appreciation of the peso which negatively affected more than a third of the Group’s dollar-related revenues. Group EBITDA was also up 3% to PHP79.6 billion while the EBITDA margin was unchanged. PLDT’s consolidated balance sheet improved, with debt balances down to USD1.76 billion and net debt at the year end at USD1.2 billion.

Commenting on the results, PLDT President and CEO Napoleon Nazareno reiterated the company’s shift towards the provision of data-based services. ‘Our main business now is data,’ he said, ‘If we [had] not changed our tack from voice to non-voice in the past three years, we could have lost PHP20 billion.’ Nonetheless, wireless service revenues continued to perform strongly, rising 5% in 2006 to PHP74.7 billion as Smart Communications and Pilipino Telephone Co (Piltel) continued to sign up new subscribers. PLDT’s total cellular subscriber base grew by 3.8 million to 24.2 million in 2006. Smart Communications reported net additions of 1.78 million subscribers while Piltel added about two million subscribers, as the units ended the year with 17.2 million and seven million subscribers respectively. Smart also reported 122,000 users of its Smart Bro wireless broadband service at the end of 2006, adding 29,000 new subscribers in the fourth quarter alone. The unit now has almost 2,500 high speed wireless broadband-enabled base stations providing internet access to about 500 cities and municipalities all over the Philippines.

PLDT invested PHP21.1 billion in capital expenditure projects in 2006, up 41% year-on-year, with the bulk of the monies spent on the rollout of a 3G network, the deployment of 150,000 next generation network (NGN) lines, the installation of 2,300 wireless broadband-capable base stations and the expansion of the company’s nationwide Digital Fibre-Optic Network.

Revenues from fixed line operations slipped one percentage point to PHP49.1 billion, from PHP49.7 billion previously, although declining sales of local exchange and international voice call services were offset by improvements in data revenues and DSL sales. PLDT ended the year with 133,000 retail DSL subscribers and 300,000 Vibe dial-up users. Broadband and narrowband operations contributed PHP3.5 billion in revenues in 2006, up 32% year-on-year, and making up 69% of the Group’s broadband and internet revenues. Elsewhere, ePLDT, PLDT’s information and communications technology arm, posted service revenues of PHP6.5 billion, up from PHP3 billion in 2005.