PLDT, Inc. · PSE:TEL
PLDT — Philippine Long Distance Telephone Company — H1 2008 Earnings Presentation
30 slides from PLDT's earnings presentation, Aug 5, 2008
Slide 1: Philippine Long Distance Telephone Company First Half 2008 Results
Philippine Long Distance Telephone Company First Half 2008 Financial and Operating Results 5 August 2008
Slide 2: PLDT Group: 1H 2008 Financial Highlights
PLDT Group: 1H 2008 Financial Highlights 1H 2008 1H 2007 (unaudited) (unaudited) % Y-o-Y Service Revenues P70.3bn P67.1bn 5% EBITDA P43.8bn P41.9bn 4% EBITDA Margin 62% 62% Income Before Tax P30.1bn P26.1bn 15% Reported Net Income P19.3bn P17.1bn 13% Reported Net Income $429mn $369mn 16% Core Net In
Slide 3: PLDT Group: Core and Reported Net Income
PLDT Group: Core and Reported Net Income ¾ Core net income grew by P1.5bn or 9% to P18.7bn in 1H08 due to: • Increases in service revenues and EBITDA of 5% and 4%, respectively • Decrease in financing costs by 19% ¾ Reported net income up by 13% to P19.3 bn on account of: • Increase in net gains fro
Slide 4: PLDT Group: Capital Management
PLDT Group: Capital Management ¾ Consistent with the committed 70% dividend payout ratio, PLDT declared an interim cash dividend of P 70/share, a 17% increase over the P 60 interim dividend in 2007 ¾ Approximately 1.74mn shares (out of 2mn shares under the approved buyback program) have been bought
Slide 5: PLDT Group: Service Revenues and EBITDA
PLDT Group: Service Revenues and EBITDA ¾ Consolidated service revenues increased by 5% to P 70.3bn from P67.1bn in 1H08 due to: – 14% growth in data and ICT which accounted for 53% of total service revenues, and which included a 48% growth in broadband revenues – 4% decline in voice revenues result
Slide 6: Cash Opex: Exercising Tight Management
Cash Opex: Exercising Tight Management ¾ 1H08 consolidated cash opex grew by P 1.6bn or 7% year-on-year to P 24.8bn – P 1bn in higher compensation costs and manpower reduction expenses were offset by lower accruals related to a share-based incentive plan – Maintenance expenses that included the cost
Slide 7: PLDT Group: Capex and Free Cash Flow
PLDT Group: Capex and Free Cash Flow ¾ Free cash flow of P 28.2bn generated in 1H08, P 3.8bn higher than P 24.4bn in 1H07 • Capex at 1H08 amounted to P8.7bn, lower by P 1.3bn compared to last year ¾ Capex guidance for 2008 raised to P 28.5bn from P 25.4bn • Higher capex to support higher than expect
Slide 8: SMART: Remaining Strong
SMART: Remaining Strong • The combined Smart and TNT subscriber base exceeded 33.2mn as at end June 2008, reflecting a 23% growth year-on-year • Net adds of 3.2mn subscribers for 1H08, higher than the 2.9mn net adds for 1H07 • Of the 3.2mn net adds, 2.8mn are TNT subs, nearly three times the TNT net
Slide 9: SMART: Registering Increases
SMART: Registering Increases ¾ Wireless service revenues were up 7% to P45.8bn and contributed 65% to total service revenues in 1H08 driven by: + 11% increase in cellular data revenues + 109% growth in wireless broadband revenues ¾ Growth in revenues achieved despite 16% decline in net blended ARPUs
Slide 10: Smart: Responding to Market Dynamics
Smart: Responding to Market Dynamics ¾ Penetration continues to rise, with the headline rate now hovering at 68% ¾ “Bucket” load packages are the dominant top-up preference, indicative of subscriber affordability issues • LahaTxt/All Text 20/Gaan Text 10 where tariffs are as low as P0.15/SMS • Flat
Slide 11: Smart: Setting the Standard
Smart: Setting the Standard SMART Bro Plug-It prepaid – launched in late March 2008 – mobility provided by USB/dongle which can be plugged into a laptop – P 10 for every 30-minute use – Over 32,000 subscribers as of end-June 2008 with ARPU of P395 • Uzzap, the country’s first flat-rate, all-in-one
Slide 12: Fixed Line: Showing Modest Growth
Fixed Line: Showing Modest Growth ¾ Fixed line service revenues increased 4% Service Revenues to P24.6bn in 1H08 due to the combined (Php billions) impact of: +4% 24.6 + Increase in corporate data and DSL 23.7 Miscellaneous service revenues Data 7.3 9.0 ILD NLD + Stable LEC and NLD revenues 4.6 3.7
Slide 13: Fixed Line: Tapping New Markets
Fixed Line: Tapping New Markets ¾ Our Corporate Business Group continues to aggressively offer various packages providing data services, connectivity, bundled products (hardware, software, connectivity) to corporate clients, making PLDT the partner-of-choice for many corporations in the Philippines
Slide 14: Broadband: Expanding Rapidly
Broadband: Expanding Rapidly ¾ PLDT DSL, SmartBro and WeRoam added 179,000 subscribers during 1H08, Broadband Subscribers representing an increase of 31% from the (thousands) end of 2007 758 661 – SmartBro, the most widely available WeRoam SmartBro 579 broadband service provider in the country Fixed
Slide 15: ePLDT: Managing Challenges
ePLDT: Managing Challenges ¾ ePLDT’s service revenues increased by 3% to P5.0bn due to: + 8% increase in call center (Ventus) revenues + 15% increase in data center revenues - KPS/SPi revenues varied, with revenues in publishing and medical billing broadly in line with expectations; while healthcare
Slide 16: ePLDT: Fine-tuning the Verticals
ePLDT: Fine-tuning the Verticals ¾ Combined number of employees for Ventus and SPi at nearly 14,600 ¾ Number of sites stands at 22: 15 for KPS and 7 for CIS ¾ CIS/voice business has a healthy pipeline of new contracts and expansion of existing contracts – 23% growth in dollar revenues from top two c
Slide 17: PLDT Group: Affirming Guidance for 2008
PLDT Group: Affirming Guidance for 2008 • 7% growth over 2007 Service Revenues P 145 billion • P 10 billion increase • 5% growth over 2007 EBITDA P 87 billion • P 4 billion increase • 5% growth over 2007 Core Net Income P 37 billion • P 1.8 billion increase Dividend Payout Ratio: 70% of Core EPS + “
Slide 18: Forward-looking statements disclaimer
Except for historical financial and operating data and other information in respect of historical matters, the statements contained herein are “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, and Section 21E of the U.S. Securities Exchange Act of 193
Slide 19: Appendix
Appendix 19
Slide 20: 1H 2008: Consolidated Financial Highlights
1H 2008: Consolidated Financial Highlights Consolidated Statement of Income 1H 2008 1H 2007 (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated % Change Service Revenues 45,779 24,582 4,964 70,347 67,141 5% Cash operating expenses 14,869 10,538 4,414 24,780 23,173 7% (1) EBITDA 29,6
Slide 21: Revenues
Revenues 1H 2008 1H 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Service Revenues Wireless Cellular 43,013 43,013 41,082 5% Broadband 1,948 1,948 930 109% VSAT and other services 818 818 952 -14% Fixed line Local exchange 8,031 8,031 7,941 1% International long
Slide 22: Expenses
Expenses 1H 2008 1H 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Operating expenses Compensation and employee benefits 2,381 4,088 2,872 9,372 9,854 -5% Repairs and maintenance 2,156 1,932 281 4,057 3,442 18% Selling and promotions 2,206 763 98 3,066 2,499 23% P
Slide 23: EBITDA
EBITDA 1H 2008 1H 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Income before tax 21,870 8,241 2 30,069 26,109 15% Add (deduct): Depreciation 6,188 6,111 423 12,722 12,876 -1% Financing costs 1,098 2,035 89 3,222 3,989 -19% Asset impairment - - - - 21 -100% Amort
Slide 24: Financing Costs
Financing Costs 1H 2008 1H 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Interest on loans and related items 817 2,211 17 3,045 3,636 -16% Accretion on financial liabilities 405 8 72 485 562 -14% Dividends on CPS 4 - - 4 9 -56% Financing charges 1 29 - 30 37 -19%
Slide 25: Core Net Income
Core Net Income 1H 2008 1H 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Reported net income 13,869 5,415 30 19,270 17,079 13% Add (deduct): Foreign exchange and derivative losses (gains) 1,248 (2,014) (109) (866) (811) 7% Additional depreciation - - - - 1,013 -1
Slide 26: Cash Flows
Cash Flows 1H 2008 1H 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Net cash from operations 22,745 16,759 881 40,385 38,524 5% Add(Deduct): Capital expenditures (5,032) (3,294) (358) (8,683) (9,966) -13% Other investing activities (27) 791 (383) 380 726 -48% Int
Slide 27: Balance Sheet
Balance Sheet Consolidated (in million pesos) June 30, 2008 December 31, 2007 Total Assets 237,158 240,158 Nominal Value of Total Debt 71,028 65,112 in US$ $1,582 $1,572 Less: Unamortized Debt Discount 4,513 4,472 Total Debt 66,515 60,640 Cash and short-term investments 31,602 30,862 (2) Net Debt 39
Slide 28: Earnings Per Share
Earnings Per Share 1H 2008 1H 2007 Basic Diluted Basic Diluted Net Income 19,270 19,270 17,079 17,079 Dividends on preferred shares (227) (227) (227) (227) Adjustments for preferred shares deemed dilutive Dividends on preferred stock subject to mandatory redemption charged to expense for the period
Slide 29: Interest-bearing Liabilities
Interest-bearing Liabilities June 30, 2008 December 31, Unamortized 2007 (in millions) Carrying Value Debt Discount Face Value Face Value Change Debt PLDT $843 $9 $851 $830 $21 Smart 605 92 697 702 (5) 2014 Debt 193 90 283 283 - Others 412 2 414 419 (5) Others* 33 - 33 40 (7) Total Debt $1,481 $101
Slide 30: Quarterly Consolidated Financial Highlights
Quarterly Consolidated Financial Highlights 2008 % Change (Unaudited) 2007 2Q08 (in million pesos) 1Q 2Q 2Q vs. 2Q07 Service Revenues 34,933 35,414 34,069 4% Non-service Revenues 482 773 703 10% Less: Cost of sales 919 1,389 1,413 -2% Operating Expenses Cash operating expenses 12,377 12,449 11,432 9
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