PLDT, Inc. · PSE:TEL
PLDT — Philippine Long Distance Telephone Company — Q1 2006 Earnings Presentation
30 slides from PLDT's earnings presentation, May 9, 2006
Slide 1: First Quarter 2006 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 First Quarter 2006 Financial and Operating Results May 9, 2006
Slide 2: 1Q06: Financial Highlights
1Q06: Financial Highlights First Quarter 2006 Financial and Operating Highlights • Core net income(1) grew by 16% to P7.6 billion while core net income available to common shareholders increased by 22% to P7.5 billion • Core earnings per share up 14% to P41 per share driven by higher core earnings o
Slide 3: PLDT Group: Reinforcing Leadership Position
PLDT Group: Reinforcing Leadership Position • Service revenues up 2% Y-o-Y to P30 billion in 1Q06 driven by the combined impact of higher wireless and ICT revenues, offset in part by a decline in fixed line revenues • 23 million wireless and fixed line subscribers on a Group-wide basis as of March 2
Slide 4: PLDT Group: Containing Costs and Improving Margins
PLDT Group: Containing Costs and Improving Margins PLDT Group Operating Expenses 1Q05 1Q06 ∆% Non-service revenues 0.8 0.7 -13% Cash expenses decreased by 2% y-o-y Less: cost of sales (2.0) (1.2) -38% mainly due to the combined impact of: Net cost of handsets 1.2 0.5 -56% Selling and promotions 1.
Slide 5: PLDT Group: Increasing Core Profitability
PLDT Group: Increasing Core Profitability Net income (in billions) 1Q05 1Q06 ∆% Core net income Reported Net Income 9.2 8.6 -7% (billion pesos) Adjustments: Additional depreciation - 1.9 8.1 7.6 FX and derivative gains (3.3) (1.6) -53% 7.2 7.3 6.5 Deferred tax assets and tax impact 0.6 (1.4) -332% C
Slide 6: PLDT Group: Investing in the Future
PLDT Group: Investing in the Future • Consolidated capex reached P4.9 billion compared with full year 2006 capex estimate of P18 billion mainly for the NGN upgrade and 3G and wireless broadband roll out – Wireless and fixed line capex in 1Q06 were P2.5 billion and P2.0 billion, respectively • Free c
Slide 7: PLDT Group: Strengthening the Balance Sheet
PLDT Group: Strengthening the Balance Sheet • PLDT Fixed Line reduced debts by US$65 million in 1Q06 while Smart borrowed debts of US$50 million during the period • Consolidated net debt levels are 35% lower at less than US$1.4 billion • Net debt to EBITDA and net debt to free cash flow down to belo
Slide 8: SMART: Upholding Market Leadership
SMART: Upholding Market Leadership • Cellular subscribers at 20.9 million representing a market share of approximately 58% • Net subscriber additions of 490,000 achieved in 1Q06 • Service revenues grew 6% to P19 billion in 1Q06 boosted by increased contributions from Smart 258 Unlimited Text which m
Slide 9: SMART: Balancing ARPUs and SACs
SMART: Balancing ARPUs and SACs • Smart’s prepaid ARPUs improved slightly y-o-y mainly due to the impact of the termination of SIM-swapping activities. ARPUs declined q-o-q mainly due to seasonality factors • Smart 258 Unlimited text and Smart Load “All Text” provide better value to subscribers and
Slide 10: SMART: Applying Strategies that Work
SMART: Applying Strategies that Work • Maintaining SMS as key driver for growth in lower income brackets • Smart Load Unlimited Text provides unlimited on-net SMS per day at P15/P30/P60 per top-up • Smart Load “All-Text” provides 15 no-expiry SMS at P12 per load • Bringing back voice by offering “fl
Slide 11: SMART: Sustaining Returns
SMART: Sustaining Returns Core net income (billion pesos) Net income (in billions) 1Q05 1Q06 ∆% Reported Net Income 6.9 7.7 11% 5.5 5.7 Adjustments: FX and derivative gains (1.5) (1.0) -32% Deferred tax assets and tax impact 0.1 (0.9) -1765% Core net income 5.5 5.7 4% 1Q05 1Q06 • Core net income gre
Slide 12: PLDT Fixed Line: Deriving Growth from Data
PLDT Fixed Line: Deriving Growth from Data • Fixed Line revenues increased 3% y-o-y to P12.1 billion due to the combined impact of: – increase in data revenues inclusive of DFON rental income from Smart – decline in LEC revenues due to US dollar-Peso FX appreciation – decline in ILD revenues due to
Slide 13: PLDT Broadband: Developing a New Growth Platform
PLDT Broadband: Developing a New Growth Platform • DSL and wireless broadband subscribers increased by over 25,000 subscribers in 1Q06 to about 140,000 as of the end of March 2006 • Broadband subscribers targeted to double in 2006 as both DSL and wireless broadband coverage rapidly expands – Potenti
Slide 14: PLDT Fixed Line: Reaping Benefits
PLDT Fixed Line: Reaping Benefits Fixed Line EBITDA (billion pesos) + 9% EBITDA increased by 9% to P7.5 billion in 1Q06 due to higher revenues and boosted by lower provisions 6.9 7.5 EBITDA margin improved to 62% 1Q05 1Q06 Margin 58% 62% Fixed Line Core Net Income (billion pesos) Core net inco
Slide 15: PLDT Fixed Line: Increasing Financial Flexibility
PLDT Fixed Line: Increasing Financial Flexibility • PLDT received cash distributions from Smart of P7 billion in 1Q06 • Free cash flow was utilized to reduce debts of US$65 million with full year debt reduction target increased to approximately US$300 million • Debt balance as of end-1Q06 stood at U
Slide 16: PLDT: Moving into Next Generation Communications
PLDT: Moving into Next Generation Communications • NGN upgrade is necessary to service the UA new communications environment IP Phone – Convergence of voice, video and data POTS – Broadband as an inherent capability – Greater portability and mobility DSL Modem – More service features – Give customer
Slide 17: ePLDT: Moving to the Forefront
ePLDT: Moving to the Forefront • Service revenues grew by 25% to P813 million driven mainly by the growth in call center revenues • ePLDT is moving into the development of content through its acquisition of Level Up! Philippines and its investment of a 20% stake in PhilWeb ePLDT Service Revenues (mi
Slide 18: ePLDT Ventus: Expanding in New Directions
ePLDT Ventus: Expanding in New Directions • Call center revenues grew by 38% y-o-y to P563 million mainly driven by the continued expansion of the business, offset in part by the strengthening of the peso • Ventus, the rebranded consolidated ePLDT Call Center Group, is on track to ramping up its cal
Slide 19: 2006 Outlook
2006 Outlook • Growth in core earnings will be achieved – Revenues will grow – Cash costs will be managed – Interest expense will continue to decline – Provision for income taxes will increase • Cash flows will be robust – Balance sheet will be strengthened further by reducing debts by US$350 millio
Slide 20: The Group
PLDT is an innovative market leader and a full service integrated operator well positioned to capitalize on future market opportunities Convergence Leading Market In Networks and Position Across Products all Segments The Strong Strategic Proven Ability to Relationships Innovate Group Extensive Integ
Slide 21: Appendix
Click to edit Master title style Click to edit Master text styles Second level Third level Fourth level Fifth level Appendix
Slide 22: Financial Highlights
Financial Highlights Profit and Loss (in million pesos) e 1Q 2006 1Q 2005 % Change Service Revenues 29,975 29,275 2% Cash Operating Expenses 9,348 8,921 5% Provisions 229 599 -62% (1) EBITDA 20,068 18,620 8% EBITDA Margin 67% 64% 5% Depreciation 7,667 5,556 38% Interest and other financing costs 2,6
Slide 23: Financial Highlights
Financial Highlights Cash Flow and Balance Sheet (in million pesos) e 1Q 2006 1Q 2005 % Change Cash flow from Operations 15,429 15,464 0% Capex 4,869 4,263 14% Free Cash Flow 6,369 11,337 -44% Debt Reduction (in US$ millions) $ 21 $ 165 -87% Outstanding Debt Balance(4) $ 2,096 $ 2,665 -21% Net Debt5
Slide 24: Revenues
Revenues 1Q 2006 1Q 2005 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Service Revenues Wireless Cellular 18,205 18,205 17,188 6% Others 739 739 653 13% Fixed line Local exchange 4,348 4,348 4,664 -7% International long distance 2,559 2,559 3,010 -15% National long di
Slide 25: Operating Expenses
Operating Expenses 1Q 2006 1Q 2005 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Operating expenses Compensation 1,042 2,216 386 3,644 3,086 18% Maintenance 923 808 58 1,654 1,544 7% Selling and promotions 793 386 81 1,257 1,452 -13% Rent 1,702 427 99 546 630 -13% Tax
Slide 26: EBITDA
EBITDA 1Q 2006 1Q 2005 % (in million pesos) Wireless Fixed Line Consolidated Consolidated Change Income before tax 10,130 1,133 11,277 12,714 -11% Add back: Financing costs (360) 1,408 1,061 279 280% Depreciation 2,576 4,971 7,667 5,556 38% Amortization of intangible assets 63 - 63 71 -10% EBITDA 12
Slide 27: Financing Costs
Financing Costs 1Q 2006 1Q 2005 % (in million pesos) Wireless Fixed Line Consolidated Consolidated Change Interest on loans and related items 405 1,718 2,127 2,935 -28% Accretion on financial liabilities 545 69 615 796 -23% Hedge cost - 341 341 241 41% Dividends on CPS 49 - 49 67 -27% Financing char
Slide 28: Cash Flows
Cash Flows 1Q 2006 1Q 2005 % (in million pesos) Wireless Fixed Line Consolidated Consolidated Change Net cash from operations 7,730 7,383 15,429 15,464 0% Add(Deduct): Capital expenditures (2,524) (2,013) (4,869) (4,263) 14% Investments and other investing activities (1,232) 10 (1,222) 1,425 -186% I
Slide 29: Balance Sheet
Balance Sheet Consolidated March 31 December 31 (in million pesos) 2006 2005 Total Assets 251,110 249,713 Nominal Value of Total Debt 107,257 112,373 in US$ $2,096 $2,117 Less: Unamortized Debt Discount 8,270 8,829 Total Debt 98,987 103,544 Cash and short-term investments 37,945 32,810 Net Debt 61,0
Slide 30: Earnings Per Share
Earnings Per Share 1Q06 1Q05 Basic Diluted Basic Diluted Net Income 8,581 8,581 9,217 9,217 Dividends on preferred shares (114) (12) (374) (12) Adjustments for preferred shares deemed dilutive Dividends on preferred stock subject to mandatory redemption charged to expense for the period - 49 - 67 Ac
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