PLDT profits flat-line in Q1, although core earnings up

9 May 2007

Philippine Long Distance Telephone Company (PLDT) reported core income of PHP8.396 billion (USD177.7 million) in the three months to 31 March 2007 (excluding FOREX translation and derivative gains), an 11% rise on the figure of PHP7.566 billion recorded in Q12006. However, consolidated net income flat-lined at PHP8.575 billion (Q12006, PHP8.581 billion), despite a 10% rise in revenues from PHP29.98 billion to PHP33.01 billion. The company’s president and chief executive Napoleon Nazareno attributed the flat net income to lower revenues from fixed line voice business, reduced FOREX gains and higher tax payments. EBITDA improved by 3% to PHP20.4 billion while the EBITDA margin was 62%.

Turnover from PLDT’s wireless operations rose by 10% to PHP20.8 billion as its mobile units Smart Communications and Pilipino Telephone Corporation (Piltel) added a net 1.3 million users to boost PLDT’s total to 25.5 million. Smart recorded 887,000 net additions, while Talk ‘N Text added about 421,000 subscribers to end March 2007 with 18.1 million and 7.4 million subscribers respectively. Last month the pair passed the 26 million mark, thanks to the combined net addition of 500,000 new users. Wireless EBITDA rose by 9% to PHP13.5 billion from PHP12.3 billion a year ago, while the EBITDA margin was stable at 65%.

PLDT reported strong growth too from its broadband business. SmartBro, the group’s wireless broadband service, had 164,000 subscribers by the end of March 2007, up 42,000 on the previous quarter. The unit now has 2,600 broadband-enabled base stations in operation, providing coverage to more than 500 cities and municipalities in the Philippines. Sales from wireless broadband climbed a massive 245% from PHP120 million in Q12006 to PHP414 million in the period under review, although the gains were offset by returns from traditional voice and data activities which continue to struggle. The group’s fixed line unit posted a 3% fall in revenues to PHP11.8 billion and EBITDA dropped to PHP6.5 billion; the EBITDA margin was also down at 55%. On a more positive note, PLDT’s retail DSL base grew to 152,000 at end-March, while a further 300,000 people were using the company’s dial-up service, Vibe. Together, DSL and Vibe contributed PHP956 million in revenues for the first three months of 2007, up 14% from P838 million for the same period in 2006.