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By Darwin G. Amojelar, Reporter
THE Philippines’ largest telecom company on
Tuesday said it managed to post gains in the first half, but warned
of a more difficult operating environment in the second semester
amid rising inflation and weak consumer spending.
Philippine Long
Distance Telephone Co. (PLDT), partly owned by Hong Kong’s First
Pacific Co. Ltd. and Japan’s NTT group, said its second-quarter
profit inched up by 4 percent to P8.8 billion from P 8.47 billion in
the same period last year.
This brought the telco’s first-half net income
to P19.3 billion, or 13 percent higher than the P17.1 billion in the
same six-month period last year.
Its core profit, which excludes foreign exchange
gains or losses and other non-recurring income, reached P18.7
billion, an increase of 9 percent from the P17.2 billion recorded in
the same period last year.
The telco said this year’s results benefited
from net mark-to-market foreign exchange and derivative gains plus a
one-time gain of about P700 million arising from the de-designation
as non-hedges of certain derivatives related to the company’s
2009, 2012 and 2017 bonds which had previously been designated as
hedges.
“While our performance in the first half has
been solid and sustained despite difficult economic circumstances,
we anticipate stronger head wind in the second half as inflation
accelerates and takes it toll on the consumer and on expenses,”
Manuel Pangilinan, PLDT chairman said.
Pangilinan said the company already sees parts
of its cash operating expenses rising and third-quarter demand
softening slightly even though this period is a seasonally low.
He said the company has taken steps to manage
costs more tightly starting this second semester without sacrificing
the investments necessary to grow the business.
“We have, in fact, raised our capital
expenditure forecast by P3.1 billion, in order to accelerate our
investments in wireless broadband and in our broader cellular
infrastructure,” he said.
Maintain core profit forecast
Despite the difficult economic environment, PLDT
is maintaining its core profit guidance of P37 billion and plowing
back P28.5 billion in capital investments, Pangilinan said.
“We are fully aware of the tough economic
situation of our subscribers and we are striving to alleviate this
financial pressure by providing affordable products and services
that suit their means and needs,” he said.
“Having put into place measures that are
intended to mitigate these adverse developments, we remain cautious
and vigilant, yet confident still, that we will achieve our targets
for 2008,” he added.
PLDT said consolidated service revenues were up
5 percent year-on-year to P70.3 billion.
Wireless service revenues increased 7 percent to
P45.8 billion, while fixed revenues were up 4 percent to P24.6
billion. Unit ePLDT’s service revenues grew 3 percent to P5
billion.
The PLDT group’s total cellular subscriber
base for the first half continued to grow as unit Smart
Communications Inc. recorded net additions of about 412,000
subscribers while the Talk ‘N Text brand of unit Pilipino
Telephone Corp. (Piltel) added about 2.78 million subscribers to end
the period with 20.7 million and 12.5 million subscribers,
respectively. The combined Smart and Piltel subscribers stood at
33.2 million at end-June.
Penetration rates rise on promos
Napeleon Nazareno, PLDT president said the
mobile phone penetration rates continue to rise with the headline
rate at 68 percent, as the company has been offering affordable
“bucket” load packages.
He said that Smart and Piltel continue to
address their subscribers’ needs through cheaper call and text
service offerings.
Napoleon said the promos have increased by more
than half the group’s service revenues from SMS (short messaging
service).
Pangilinan said the disposable income of its
subscribers have been declining as the company finds promo packages
suit for their budget, adding that 80 percent of its subscribers
have avail the buckets promos.
“Bearing in mind that our prepaid subscribers
are the segment most affected by prices increase and in support of
government effort to alleviate this burden, we continue to offer
relevant and affordable products and services,” Nazareno said.
Although subscriber take up is expected to slow
in the third quarter, this is seen to pick up in the fourth quarter
on account of the holiday season, the PLDT executive said.
Fresh borrowing planned for capex
The PLDT group has increased its capital
expenditure to about P28.5 billion from an earlier guidance of P25.4
billion. This amount would be spent to build infrastructure to meet
the growth in the wireless segment, which has enjoyed higher than
expected wireless and broadband subscription growth.
Nazareno said that of that total P28.5 billion ,
P18 billion or 64 percent was allocated for the wireless segment
because of the expected growth in usage and subscriber take up . The
32 percent was for the fixed line business and the remaining for the
ICT business.
The company plans to borrow $50 million from
local banks to partly finance its capex this year.
PLDT’s board of directors approved an interim
dividend of P70 per share to common shareholders of record as of
August 22, 2008. Dividend payment date is set on September 22 this
year.
The board also approved the extension of the
share buyback program to cover an additional two million shares. As
of July 16, the company said about 1.74 million shares had been
bought back and held as treasury shares. These shares were purchased
at an average price of P2,532, representing a total outlay of P4.4
billion.
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