DESPITE the economic slowdown, Philippine Long Distance Telephone Co. (PLDT) on Tuesday reported a sharp increase in its profit for the third quarter mostly because of lower corporate taxes and its investment in the country’s power distributor.
In a briefing, Napoleon Nazareno, PLDT president and chief executive said its profit jumped 49 percent to P10.29 billion in the three-month period ended September compared with P6.90 billion in the same period last year.

In the first nine months of the year, the company’s net income was up by 15 percent to P30.02 billion from last year’s P26.18 billion.

Nazareno attributed the strong financial performance to the higher recurring net income, lower net losses from the foreign exchange revaluation of its financial assets and liabilities and derivatives and the lower statutory tax rate.

He said the equity share of PLDT unit Pilipino Telephone Corp. (Piltel) in the earnings of the Manila Electric Co. (Meralco) reached P361 million, which was on top of the P1.2 billion derivative gain arising from the P2 billion exchangeable note issued by First Philippine Utilities Corp. as part of Piltel’s acquisition.

Piltel earlier bought the Lopez group’s 20-percent stake in Meralco at P90 per share for a total of P20.7 billion.

Excluding foreign exchange gains or losses and other non-recurring income, PLDT’s core profit rose by 11 percent to P30.95 billion in the first nine months from last year’s P27.79 billion. In the third quarter alone, the telco’s core profit amounted to P10.11 billion, up from P9.08 billion last year.

Partly owned by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT group, PLDT said consolidated service revenues for the third quarter was up by only 1 percent to P35.64 billion from P35.24 billion in the same period last year.

In the first nine months, consolidated service revenues amounted to P108.28 billion from last year’s P105.59 billion.

“As we had previously indicated, our third quarter performance was adversely impacted by the lagged effect of the global recession on our economy, compounded by the delay in school openings as a result of the ‘swine flu’ outbreak in the Philippines,” Manuel Pangilinan, PLDT chairman said.

He said the slowdown in economic and business activity was exacerbated by a string of natural calamities, weakening what was already the slowest quarter of the year on record.

While the company anticipated “strong” revenues in the fourth quarter due to holiday spending, Pangilinan said he expects this to be somewhat dampened as the recent typhoons caused extensive damage.

The company reported between P300 million and P400 million in damages to its network facilities from typhoons.

Even with overseas Filipino workers (OFWs) remittances holding up, “we may see consumers adjusting their budgets and rethinking their spending priorities,” Pangilinan said.

In the third quarter, the company’s subscriber base net additions stood at 600,000 to end the period with 39.1 million.

Of the total, Smart accounted for 22.5 million, and Talk ‘N Text, 16.6 million subscribers.
Because of this, Pangilinan said, “we are taking a cautious stance and revising our revenue guidance from P148 billion to P146 billion.”

“Our core profit guidance, however, remains at P41 billion for the full year,” he added.

Darwin G. Amojelar