PLDT 2010 Net Income Hits PhP40.2B

Philippine Long Distance Telephone Co. (PLDT, PSE: TEL) has announced net income of PhP40.2 billion for 2010, up 1% from the PhP39.8 billion recorded last year. Core net income, net of exceptional items, rose 2% to PhP42 billion.

A closer look at the underlying revenue mix will show the ongoing transition of revenue streams with the lower traditional sources being replaced by the growth of new revenue streams. Overall consolidated service revenues decreased by 2% to PhP142.2 billion, reflecting the combined effect of:

• a 16% increase in combined fixed and wireless broadband and Internet revenues;
• a 9% growth in cellular voice revenues, which includes a 19% increase in domestic voice revenues offset by a 5% decline in international voice revenues;
• a 16% rise in revenues from fixed data and other network services to third parties;
• a 12% reduction in cellular text revenues;
• a 25% decline in National Long Distance revenues; and,
• a 17% decrease in Fixed Line International Long Distance revenues.

In addition, the company’s service revenues were impacted by the strengthening of the peso during the year, which resulted in reduced service revenues of PhP2.2 billion; as well as the sale of Mabuhay’s satellite business, which reduced revenues by PhP900 million.

Consolidated EBITDA was lower at PhP83.7 billion while EBITDA margin was at 59%, the same level as 2009. Approximately 26% of consolidated service revenues are linked to the US Dollar. Had the peso remained stable, service revenues and EBITDA for 2010 would have each declined by 1% relative to 2009.

Consolidated free cash flow for the year was at PhP43.7 billion. Consolidated capital expenditures stood at PhP28.8 billion for 2010, or 20% of service revenues. Capital expenditures were utilized to improve the Group’s broadband and cellular coverage and capacity and included as well the modernization and upgrade of both our mobile and fixed networks.

The Group’s consolidated debt balance as at the end of 2010 was $2.1 billion with net debt at approximately $1.3 billion. Net debt to EBITDA remained at 0.7x. The Company’s debt maturities continue to be well spread out, with more than 50% due in and after 2014. The percentage of US Dollar-denominated debt to the Group’s total debt portfolio further declined to 45%, down from 48% at the end of 2009. Taking into account our peso borrowings, our hedges and our U. S. Dollar cash holdings, only 25% of total debt remains unhedged. The Group’s cash and short-term securities are invested primarily in bank placements and Government securities.

Meanwhile, the Company’s Board of Directors declared a final dividend of PhP78 per share, fulfilling the Company’s commitment to pay out a minimum ratio of 70% of core earnings. In addition, the Board, consistent with its year-end “look back” approach, approved a special dividend of PhP66 per share. Added to the interim dividend of PhP78 per share paid in September 2010, total dividends for the year will amount to PhP222 per share, representing a payout of 100% of 2010 core earnings, similar to the payout ratio of the last three years. Total dividend payments for 2010 will total PhP41.4 billion.