PLDT, Inc. · PSE:TEL
PLDT — Philippine Long Distance Telephone Company — FY2005 Earnings Presentation
36 slides from PLDT's earnings presentation, Feb 27, 2006
Slide 1: FY 2005 Financial and Operating Results
Click to edit Master title style Click to edit Master text styles Second level Third level Philippine Long Distance Fourth level Fifth level Telephone Company FY 2005 Financial and Operating Results February 27, 2006
Slide 2: Overview
Overview Financial and Operating Highlights • Consolidated service revenues rose 5% to P121.1 billion • Net income improved by 22% to P34.1 billion as core net income grew 9% to P31.3 billion • EBITDA increased 12% to P78.9 billion • Free cash flow surged 37% to P51.2 billion • Debts reduced by P38.
Slide 3: Agenda
Agenda FINANCIAL AND OPERATING HIGHLIGHTS OUTLOOK AND FRAMEWORK FOR GROWTH 2
Slide 4: PLDT Group: Enhancing Revenue Growth
PLDT Group: Enhancing Revenue Growth • Service revenues up 5% to P121.1 billion driven by an 8% increase in Smart’s service revenues • 22.5 million wireless and fixed line subscribers on a Group-wide basis • Continued development of new products and services to attract a broader market while launchi
Slide 5: PLDT Group: Managing Costs Effectively
PLDT Group: Managing Costs Effectively PLDT Group Cash Expenses (billion pesos) 2005 2004 ∆% Growth in service revenues outpaced the Sale of handsets 3.0 6.3 -52 increase in cash operating expenses Less: cost of sales (6.2) (11.1) -44 Cash expenses increased by 3% mainly due to Net cost of hands
Slide 6: PLDT Group: Increasing Profitability
PLDT Group: Increasing Profitability • Reported net income surged 22% to P34.1 billion boosted by net foreign exchange and derivative gains of P2.9 billion • Core net income increased by 9% to P31.3 billion reflecting continued growth in the business and the recognition of certain deferred tax asset
Slide 7: PLDT Group: Improving Free Cash Flow
PLDT Group: Improving Free Cash Flow PLDT Group Free Cash Flow* (billion pesos) Free Cash Flow Utilization (2005) 51.2 Common dividends 37.3 ≈ 20% 22.6 ≈ 80% Debt repayment 2003 2004 2005 • Debt reduction increased to P38.9 ∆ 2004-05 billion or US$713 million Ï Cash EBIT 3.6 • Common dividend paymen
Slide 8: PLDT Group: Strengthening the Balance Sheet
PLDT Group: Strengthening the Balance Sheet • Consolidated debt balance down to US$2.1 billion (from US$3.8 billion in 2002) • Consolidated net debt reduced to US$1.6 billion • Debt to EBITDA and debt to free cash flow improved to 1.4 and 2.2 times, respectively • Net debt to EBITDA and net debt to
Slide 9: SMART: Upholding Market Leadership
SMART: Upholding Market Leadership • Cellular subscribers at 20.4 million representing a market share of approximately 59% • Net subscriber additions of 1.2 million achieved notwithstanding net disconnections of 370,000 in 4Q05 as a result of the termination of SIM-swap activities in May 2005 • Serv
Slide 10: SMART: Balancing ARPUs and SACs
SMART: Balancing ARPUs and SACs • Prepaid ARPUs recover slightly in 4Q05 reflecting the impact of SIM-swap termination and enhanced usage normally associated with the holiday season • Smart Load “All Text” and flat rate voice plans encourage usage; other services in pipeline to tap into the broader,
Slide 11: SMART: Sustaining Earnings Momentum
SMART: Sustaining Earnings Momentum • EBITDA grew 13% to P49.5 billion reflecting improvements in revenues, decline subscriber related expenses which were more than the increase in network-related and manpower costs • EBITDA margin improved to 66% • Core net income increased 23% to P31.3 billion as
Slide 12: SMART: Maximizing Cash Flow
SMART: Maximizing Cash Flow Smart Capital Expenditures (billion pesos) Smart Free Cash Flow (billion pesos) 37.8 14.7 11.3 22.9 8.8 16.7 2003 2004 2005 2003 2004 2005 • Capex declined to P8.8 billion largely due to ∆ 2004-05 the substantial geographic and population Ï Cash EBIT 4.6 coverage already
Slide 13: PLDT Fixed Line: Driving Up Data Revenues
PLDT Fixed Line: Driving Up Data Revenues • Fixed Line revenues increased 2% to P49.7 billion mainly driven by the growth of data services which more than compensated the decline in local exchange, ILD and NLD • Fixed Line revenue mix will continue to shift as contribution from data services increas
Slide 14: PLDT Broadband: Developing a New Growth Platform
PLDT Broadband: Developing a New Growth Platform • DSL and wireless broadband subscribers more than doubled to 114,000 • Broadband capacity and subscribers have been doubling every year since 2002 • International bandwidth capacity is expanding to over 20 Gbps in 2006 to accommodate increased intern
Slide 15: PLDT Fixed Line: Improving Stakeholder Returns
PLDT Fixed Line: Improving Stakeholder Returns Fixed Line Free Cash Fixed Line Fixed Line Capex (billion pesos) Flow (billion pesos) Debt Reduction (million US$) 37.5 30.2 574 500 25.0 16.1 12.5 180 6.1 5.9 5.5 6.2 14.1 12.5 6.3 2003 2004 2005 2003 2004 2005 2003 2004 2005 Distributions from Smart •
Slide 16: ePLDT: Gaining More Importance
ePLDT: Gaining More Importance • Service revenues grew by 42% to P3.0 billion driven mainly by a 52% growth in call center revenues • Call center seats expanded by 30% to 3,300 as of year end 2005 • Vitro Internet Data Center revenues surged 117% to P376 million due to a 75% increase in capacity uti
Slide 17: Consolidated Financial Highlights
Consolidated Financial Highlights Total Dividends per share Record Date Final Dividend per Share Payment Date for FY 05 20-March-2006 P28.00 20-April-2006 P70.00 (3) Based on net income before FX and derivatives, EPS calculation provided in appendix (4) Nominal value of total debt (5) Net Debt calcu
Slide 18: Agenda
Agenda FINANCIAL AND OPERATING HIGHLIGHTS OUTLOOK AND FRAMEWORK FOR GROWTH 17
Slide 19: PLDT Group: Investing in Nation Building
PLDT Group: Investing in Nation Building • PLDT Group has invested US$2.7 billion (approximately P150 billion) for the past 7 years in its various infrastructures 2005 Network Coverage • This represents an investment of P42 for every P100 of Smart GSM Network: EBITDA realized from 1999 to 2005 No. o
Slide 20: PLDT Group: Enabling Efficiencies in Business
PLDT Group: Enabling Efficiencies in Business • We provide international and domestic connectivity to more than 300 call centers, BPO and other ICT related businesses • We continue to develop innovative products and services relevant to enterprises that can improve efficiencies and increase competit
Slide 21: PLDT Group: Innovating & Giving Better Value to Consumers
PLDT Group: Innovating & Giving Better Value to Consumers • Pioneered prepaid cellular service in the Philippines • First to launch electronic micro-prepaid loading service in the world • Innovated a whole range of consumer products and services that benefited the Filipino consumer 20
Slide 22: PLDT Group: Contributing to Economic Development
PLDT Group: Contributing to Economic Development • We are one of the leading tax payers in the country • We are becoming more actively involved in Corporate Social Responsibility projects • We promote micro-businesses in the lower income sector (e.g., more than 700,000 Smart eLoad retailers) • We ar
Slide 23: PLDT Group: Assessing the Past Seven Years
PLDT Group: Assessing the Past Seven Years • We are a serious partner to this country’s economic growth and welfare. • Our performance has not been the result of our size but because of our commitment to innovation and focused execution of our business plans. In fact, our strong financial results ar
Slide 24: Sources of Future Growth: Optimizing Wireless and Wireline Technology
Sources of Future Growth: Optimizing Wireless and Wireline Technology Maximizing 2G • Developing content and new services to encourage higher usage • Broadening market presence in lower income market Introducing 3G • Free trials launched in February 2006 • US$150 million investment in the next 3 yea
Slide 25: Sources of Future Growth: Expanding Broadband
Sources of Future Growth: Expanding Broadband • Expanding our Fixed Line and DSL network facilities • Rapid build out of our wireless broadband WiFi/WiMax network to cover a major part of the national market • Affordable broadband pricing plans to stimulate brisk growth • PC/laptop penetration being
Slide 26: 2006 Outlook: A Year of Transition for Future Growth
2006 Outlook: A Year of Transition for Future Growth Because our operating environment will be more challenging, we have taken a more prudent view of 2006 prospects • Growth in core earnings will be benign – Revenues will grow – Costs will be managed, but depreciation will be higher – Interest expen
Slide 27: Appendix
Click to edit Master title style Click to edit Master text styles Second level Third level Fourth level Fifth level APPENDIX
Slide 28: Service Revenues
Service Revenues 2005 2004 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Service Revenues Wireless Cellular 71,998 71,998 66,782 8% Others 2,677 2,677 2,233 20% Fixed line Local exchange 20,503 20,503 20,799 -1% International long distance 12,245 12,245 12,803 -4% Nat
Slide 29: Operating Expenses
Operating Expenses 2005 2004 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Operating expenses Compensation 4,249 8,319 1,350 13,913 12,025 16% Maintenance 3,655 3,309 283 6,705 5,671 18% Selling and promotions 3,092 1,567 421 5,068 5,708 -11% Rent 5,593 1,712 362 2,08
Slide 30: EBITDA
EBITDA 2005 2004 % Wireless Fixed Line Consolidated Consolidated Change (in million pesos) (As Restated) Income before tax 38,464 93 38,615 32,932 17% Add back: Financing costs 591 8,581 9,211 19,264 -52% Gain on debt exchange transactions - - - (4,419) -100% Depreciation 10,156 20,251 30,822 21,405
Slide 31: Financing Costs
Financing Costs 2005 2004 % (in million pesos) Wireless Fixed Line Consolidated Consolidated Change Interest on loans and related items 1,799 9,058 10,881 12,448 -13% Accretion on financial liabilities 2,561 322 2,882 3,412 -16% Hedge cost - 1,234 1,234 1,011 22% Dividends on CPS 251 - 251 284 -11%
Slide 32: Cash Flows
Cash Flows 2005 2004 % (in million pesos) Wireless Fixed Line Consolidated Consolidated Change Net cash from operations 46,340 27,760 74,902 74,287 1% Add(Deduct): Capital expenditures (8,827) (5,544) (14,990) (21,162) -29% Investments and other investing activities 1,867 20 1,816 (3,745) -148% Inte
Slide 33: Balance Sheet
Balance Sheet Consolidated December 31 December 31 (in million pesos) 2005 2004 Total Assets 251,984 264,751 Nominal Value of Total Debt 112,435 159,528 in US$ $2,117 $2,829 Less: Unamortized Debt Discount 8,829 10,440 Total Debt 103,606 149,088 Cash and short-term investments 32,810 31,194 Net Debt
Slide 34: Earnings Per Share
Earnings Per Share 2005 2004 Basic Diluted Basic Diluted Net Income 34,113 34,113 28,031 28,031 Dividends on preferred shares (1,426) (49) (1,529) (49) Adjustments for preferred shares deemed dilutive Dividends on preferred stock subject to mandatory redemption charged to expense for the period - 23
Slide 35: Interest-bearing Liabilities
Interest-bearing Liabilities December 31, 2005 December 31, Unamortized 2004 (in millions) Carrying Value Debt Discount Face Value Face Value Change Debt PLDT $1,383 $13 $1,396 $1,971 ($575) Smart $414 $118 $532 $654 ($122) 2014 Debt $162 $118 $280 280 - Others $252 - $252 374 ($122) Piltel $97 $31
Slide 36: Quarterly Consolidated Financial Highlights
Quarterly Consolidated Financial Highlights % Change 2005 2004 4Q05 (in million pesos) 1Q 2Q 3Q 4Q 4Q vs. 4Q04 Service Revenues 29,254 30,268 30,165 31,374 29,163 8% Non-service Revenues 815 607 731 835 1,101 -24% Less: Cost of sales 2,004 1,267 1,534 1,396 2,319 -40% Operating Expenses Cash operati
Philippine Long Distance Telephone Company — FY2005 Earnings Presentation on 6ix