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PLDT tops expectations
The country’s largest telecommunications company, Philippine Long Distance Telephone Co. (PLDT), yesterday reported a 22% increase in 2004 net income to P34.1 billion from 2004’s P28 billion, beating guidance numbers of P30-32 billion set by its executives and independent analysts.

The listed firm’s financial performance provided a boost for the stock market, which ended up a little under 1% in the wake of last Friday’s declaration of a state of national emergency by Malacańang and a short-lived protest by the Marines on Sunday.

PLDT Group Chairman Manuel V. Pangilinan, however, warned that core earnings for 2006 will turn "benign" as it would not likely repeat the "stellar performance of double-digit growth" in the last few years.

Mr. Pangilinan noted that the group will have to battle foreign exchange volatility resulting from unseen macroeconomic events, increased taxes and an end in the tax holiday of cash cow unit Smart Communications, Inc., and the transition from traditional revenues streams to new technologies.

"Because we expect a more challenging operating environment, we have chosen to take a prudent view of our 2006 prospects," Mr. Pangilinan said.

"We will still aim to increase shareholder returns by raising dividends to at least 50% of 2006 earnings and continue strengthening our balance sheet by reducing debts by at least $300 million. In effect, we anticipate 2006 to be a year of transition as we lay the groundwork for future growth before reaping the benefits in 2007 and onwards," he said.

An analyst said PLDT will have to maximize existing investments to stem any possible decline in core earnings this year.

Eagle Equities President Joey Roxas said PLDT’s investment in non-traditional revenue streams could parry adverse business conditions. But he said PLDT should contain costs and maximize traditional services.

"I guess growth will come from value-added services which use the phone as the delivery mechanism," Mr. Roxas said.

"It is very difficult to give a forecast of its earnings because the company is operating in a very volatile environment. But I think its first quarter performance will still be good because of foreign exchange gains. If things at the macro level changes for the worse, then that would be a different matter."

Mr. Pangilinan said PLDT will also sink in every year from 2006 to 2008 some P18 billion in capital spend.

PLDT seeks to reduce debts by $300 million this year from a consolidated debt balance of $2.1 billion in 2005.

With the disclosure of its 2005 financial performance, the PLDT Group’s Board of Directors declared a final dividend of P28 per share, bringing its total dividends for 2005 at P70 per share equivalent to a payout of over 40% of 2005 core earnings.


Meanwhile, PLDT unit Pilipino Telephone Corp. (Piltel), operator of the Talk ’N Text brand, ended 2005 with a 38% higher net income of P13.5 billion, from P9.8 billion in 2004.

"Piltel’s turnaround is a source of much pride for us at the PLDT Group," Piltel President and Chief Executive Officer Napoleon L. Nazareno said. -- K. G. Bautista/BusinessWorld


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