PLDT, Inc. · PSE:TEL
PLDT — Philippine Long Distance Telephone Company — FY2007 Earnings Presentation
32 slides from PLDT's earnings presentation, Mar 4, 2008
Slide 1: Philippine Long Distance Telephone Company Full Year 2007 Results
Philippine Long Distance Telephone Company Full Year 2007 Financial and Operating Results 4 March 2008
Slide 2: PLDT Group: 2007 Financial Summary
PLDT Group: 2007 Financial Summary 2007* 2006 % Y-o-Y Service Revenues P135.5bn P125.0bn 8% EBITDA P82.9bn P79.8bn 4% EBITDA Margin 61% 64% Income Before Tax P53.3bn P42.2bn 26% Reported Net Income P36.0bn P35.1bn 2% Reported Net Income $869mn $716mn 21% Core Net Income P35.2bn P31.6bn 11% Core Net
Slide 3: PLDT Group: Core Income
PLDT Group: Core Income ¾ Core net income in FY07 up by P 3.6bn or 11% to P35.2bn due to the combined impact of: + Increases in revenues and EBITDA of 8% and 4%, respectively – Decrease in financing costs of 60% Core Net Income Core Net Income (PhP Billions) (US$ Millions) +11% 849 35.2 +32% 31.6 64
Slide 4: PLDT Group: Reported Net Income
PLDT Group: Reported Net Income ¾ Reported net income in FY07 improved by 2% to P36bn due to: + Boost in forex gains and derivatives – Increase in effective tax rate to 32% in FY07 by 96% to P3bn from 16% in FY06 due to recognition of deferred tax asset of P 5.5bn in FY06 + Decline in additional dep
Slide 5: PLDT Group: Cash Dividend Declaration
PLDT Group: Cash Dividend Declaration ¾ Following a robust 2007 performance and continued strong cash position, PLDT is declaring the following dividends: – Regular Dividend: P 68 per share, in line with the 70% dividend payout ratio, net of the P 60 interim dividend already paid – Special Dividend:
Slide 6: PLDT Group: Service Revenues and EBITDA
PLDT Group: Service Revenues and EBITDA ¾ Consolidated service revenues grew by P10.5bn or 8% to P135.5bn in FY07 as a result of: – 22% growth in data and ICT which now accounts for 51% of total service revenues, and which includes a 71% growth in ICT revenues – 2% decline in voice revenues ¾ Approx
Slide 7: PLDT Capex: Investing in the Future
PLDT Capex: Investing in the Future ¾ Capex for 2007 increased by 20% to P24.8bn to: • Provide additional capacity to support higher subscriber take up in both wireless and broadband • Build incremental international capacity as well as redundancy • Upgrade the fixed line for flexibility and improve
Slide 8: Free Cash Flow: Continuing to Rise
Free Cash Flow: Continuing to Rise ¾ Free cash flow increased to P46.5 billion notwithstanding the increase in capex to about P25 billion in 2007 ¾ Free cash flow in 2007 was utilized as follows: • PhP10.2 billion in net debt reduction bringing the debt balance to PhP65.6 billion or US$1.6 billion •
Slide 9: SMART: Continuing to Build the Base
SMART: Continuing to Build the Base • Smart and TNT subscriber base exceeded 30 mn in FY07 reflecting net adds of 5.9mn cellular subscribers or a growth of 24% from year-end 2006 • Net adds are 56% higher than 3.8mn for FY06 • 39% growth y-o-y in TNT subs; 18% growth y-o-y in Smart prepaid subs • Ne
Slide 10: SMART: Setting the Pace
SMART: Setting the Pace • Wireless grew 10% to P86.5bn and contributed 64% to total service revenues in FY07 driven by: + 14% increase in data revenues + 3% growth in voice revenues + 190% rise in wireless broadband revenues • Smart maintained its leadership in both subscriber and revenue terms at a
Slide 11: SMART: Spurring Growth
SMART: Spurring Growth In 2007, Smart continued to successfully defend its market leadership by offering distinct voice and SMS packages to drive activations, boost usage and strengthen brand equity NATIONAL (BROAD SCALE) PROVINCIAL (AREA/EVENT -SPECIFIC) SOCIAL CIRCLE (GROUP - SPECIFIC) SEGMENTIZED
Slide 12: Fixed Line: Facing the Challenges
Fixed Line: Facing the Challenges Service Revenues (Php billions) ¾ Fixed Line revenues decreased 1% to 49.2 P48.6bn in FY07 due to the combined -1% 48.6 impact of: 13.7 15.9 Miscellaneous + Increase in corporate data and DSL service revenues Data NLD − Lower NLD revenues 6.9 6.3 ILD − Decrease in I
Slide 13: Broadband: Fortifying our Lead
Broadband: Fortifying our Lead Broadband Subscribers ¾ PLDT DSL, SmartBro and (thousands) WeRoam more than doubled FY06 WeRoam 579 subscriber base to 579,000 as of SmartBro +119% YE07, adding about 315,000 Fixed 302 subscribers for the year 265 119 122 – SmartBro, the most widely 24 133 264 availabl
Slide 14: Broadband: Enabling the Broadband Explosion
Broadband: Enabling the Broadband Explosion • PLDT Group has more than 70% of the Philippine broadband market • Able to offer a variety of products supported by a range of fixed and wireless technologies availability within the group • Continuing to explore additional options to deliver broadband •
Slide 15: ePLDT: Building Strong Foundations
ePLDT: Building Strong Foundations ¾ ePLDT’s service revenues grew by 60% to P10.1bn on account of: + Consolidation of SPI, which contributed revenues of P5.3bn in FY07 + 24% increase in customer interaction service (Ventus) revenues ¾ About 84% of ePLDT’s revenues come from Ventus and SPI; of the t
Slide 16: ePLDT: Growing its Presence
ePLDT: Growing its Presence ¾ Combined number of seats for Ventus and SPi almost reaching 11,000 at YE07, representing an 18% growth from 2006 – Non-voice grew by 22% to over 4,500 seats – Voice grew by 14% to over 6,400 seats ¾ Number of sites grew to 24: 15 for non-voice and 9 for voice ¾ Total nu
Slide 17: PLDT at 80: Our Transformation Story
PLDT at 80: Our Transformation Story ¾ Premise: The PLDT Group must transform itself to sustain growth and extend its leadership in 2008 and beyond ¾ Goal: We will transform ourselves from an integrated telco to a customer-centric, multi-media company delivering communications, information, technolo
Slide 18: PLDT at 80: Our Transformation Story - Organic Growth
PLDT at 80: Our Transformation Story ¾ Organic Growth: Our organic growth will come principally from: • Broadband applications on fixed (DSL) and wireless (SmartBro) platforms • Call center and bpos • PLDT Landline Plus (PLP) – our fixed wireless solution • GSM at Sea – Blue Ocean Wireless (BOW) • M
Slide 19: PLDT Group: Guidance for 2008
PLDT Group: Guidance for 2008 • 7-8% growth over Service Revenues P 145 – 146 billion 2008 • P 10-11 billion increase • 5% growth over 2007 EBITDA P 87 billion • P 4 billion increase • 5% growth over 2008 Core Net Income P 37 billion • P 1.8 billion increase Dividend Payout Ratio: 70% of Core EPS +
Slide 20: Forward-looking statements
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, as amended, and Section 21E of the U.S. Securities Exchang
Slide 21: Appendix
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Slide 22: FY 2007: Consolidated Financial Highlights
FY 2007: Consolidated Financial Highlights Profit and Loss FY 2007 (Unaudited) FY 2006 (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated % Change Service Revenues 86,497 48,551 10,055 135,476 124,975 8% Operating expenses 28,960 22,307 9,828 51,256 44,977 14% (1) EBITDA 55,304 26,
Slide 23: Revenues
Revenues FY 2007 (Unaudited) FY 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Service Revenues Wireless Cellular 82,334 82,334 75,605 9% Broadband 2,532 2,532 899 182% VSAT and other services 1,631 1,631 1,879 -13% Fixed line Local exchange 16,205 16,205 16,964 -
Slide 24: Expenses
Expenses FY 2007 (Unaudited) FY 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Operating expenses Compensation 4,608 10,411 5,455 20,470 18,359 -11% Selling and promotions 3,804 1,707 321 5,824 5,010 16% Professional and other contracted services 3,238 1,727 1,129
Slide 25: EBITDA
EBITDA FY 2007 (Unaudited) FY 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Income before tax 45,731 7,668 (211) 53,257 42,231 26% Add (deduct): Depreciation 12,202 15,477 934 28,613 31,869 -10% Financing costs (1,814) 5,426 111 3,653 9,084 -60% Asset impairment
Slide 26: Financing Costs
Financing Costs FY 2007 (Unaudited) FY 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Interest on loans and related items 1,581 4,642 33 6,256 7,908 -21% Accretion on financial liabilities 877 185 99 1,161 3,314 -65% Hedge costs - 1,125 - 1,125 1,446 -22% Loss (ga
Slide 27: Core Net Income
Core Net Income FY 2007 (Unaudited) FY06 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Reported net income 30,635 5,270 30 36,004 35,138 2% Add (deduct): Foreign exchange and derivative losses (gains) (2,927) (60) - (3,057) (1,562) 96% Additional depreciation - 734 -
Slide 28: Cash Flows
Cash Flows FY 2007 (Unaudited) FY 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Net cash from operations 49,609 24,246 1,877 77,355 67,739 14% Add(Deduct): Capital expenditures (14,263) (9,882) (679) (24,825) (20,675) 20% Other investing activities (100) 5,702 (3
Slide 29: Balance Sheet
Balance Sheet Consolidated December 31 2007 2006 (in million pesos) (Unaudited) Total Assets 240,158 242,118 Nominal Value of Total Debt 65,112 86,107 in US$ $1,572 $1,756 Less: Unamortized Debt Discount 4,472 5,953 Total Debt 60,640 80,154 Cash and short-term investments 30,862 25,197 Net Debt 29,7
Slide 30: Earnings Per Share
Earnings Per Share FY07 (Unaudited) FY06 Basic Diluted Basic Diluted Net Income 36,004 36,004 35,138 35,138 Dividends on preferred shares (455) (455) (455) (455) Adjustments for preferred shares deemed dilutive Dividends on preferred stock subject to mandatory redemption charged to expense for the p
Slide 31: Interest-bearing Liabilities
Interest-bearing Liabilities Unamortized 2006 (in millions) Carrying Value Debt Discount Face Value Face Value Change Debt PLDT $821 $9 $830 $1,080 ($251) Smart $604 99 702 628 75 2014 Debt $181 99 280 280 - Others $422 422 348 75 Others* $40 - 40 48 (8) Total Debt $1,464 $108 $1,572 $1,756 ($184) O
Slide 32: Quarterly Consolidated Financial Highlights
Quarterly Consolidated Financial Highlights 2007 % Change (Unaudited) 2006 4Q07 (in million pesos) 1Q 2Q 3Q 4Q 4Q vs. 4Q06 Service Revenues 33,012 34,010 33,449 35,006 32,971 6% Non-service Revenues 613 703 544 620 806 -23% Less: Cost of sales 1,220 1,413 1,111 1,099 1,517 -28% Operating Expenses Ca
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