PLDT, Inc. · PSE:TEL
PLDT — Philippine Long Distance Telephone Company — FY2004 Earnings Presentation
33 slides from PLDT's earnings presentation, Mar 1, 2005
Slide 1: Full Year 2004 Financial and Operating Results
Philippine Long Distance Telephone Company Full Year 2004 Financial and Operating Results March 1, 2005
Slide 2: 2004: Financial Highlights
2004: Financial Highlights § Consolidated service revenues grow by 15% to P115.3 billion due to a 27% growth in Smart’s cellular service revenues to P67.4 billion § Consolidated expenses declined by 16% to P93.3 billion due to decreases in non- cash operating expenses, financing costs and cash opera
Slide 3: 2004 Financial and Operating Results
2004 Financial and Operating Results 3 3
Slide 4: 2004: Financial Highlights
2004: Financial Highlights FY 2003 FY 2004 Consolidated % (in million pesos) Wireless Fixed Line Consolidated (As Restated) Change No. of Subscribers Cellular (Smart and TNT) 19,208,232 - 19,208,232 12,947,197 48% Fixed Line - 2,152,027 2,152,027 2,185,951 -2% Service Revenues 69,349 48,486 115,254
Slide 5: 2004: Financial Highlights
2004: Financial Highlights FY 2003 FY 2004 Consolidated % (in million pesos) Wireless Fixed Line Consolidated (As Restated) Change Cash flow from Operations 42,082 31,353 73,512 55,972 31% Capex 14,721 5,794 21,162 18,019 17% Free Cash Flow(3) 23,344 29,398 37,321 22,629 65% Debt Reduction (in US$ m
Slide 6: PLDT Group: Pulling in One Direction
PLDT Group: Pulling in One Direction n PLDT fully adopts all applicable IAS, including IAS 21 (foreign exchange accounting), for FY04 n Consolidated service revenues up by 15% to P115.3 billion (FY03: P100.6 billion) and EBITDA increased 26% to P70.4 billion (FY03: P55.5 billion) largely driven by t
Slide 7: PLDT Group: Maximizing Cash Flows
PLDT Group: Maximizing Cash Flows n Consolidated capex in FY04 increased to P21.2 billion mainly due to the continued expansion of Smart’s GSM network. Consolidated capex expected to decline to approximately P18 billion in 2005 n Consolidated free cash flow in FY04 reached a high of P37.3 billion (F
Slide 8: PLDT Group: Fulfilling a Commitment
PLDT Group: Fulfilling a Commitment § PLDT declares common dividend of P14.00 per share, representing 10% of FY04 recurring EPS § Target is to increase next year’s dividend payout to a minimum of 15% based on FY05 EPS Dividend per Declaration Date Record Date Payment Date share 1 March 2005 31 March
Slide 9: Cellular: Financial Highlights
Cellular: Financial Highlights (in million pesos) FY04 FY03 % Change (As Restated) Service Revenues 67,391 53,141 27% Non-service Revenues 6,111 10,357 -41% Less: Cost of Sales 10,839 15,886 -32% Operating Expenses Cash operating expenses 19,869 15,082 32% Non-cash operating expenses 10,531 12,918 -
Slide 10: Cellular: Increasing Profitability
Cellular: Increasing Profitability n Growth in subscribers has translated to a 27% year-on-year increase in service revenues to P67.4 billion (FY03: P53.1 billion) n EBITDA grew significantly to P42.5 billion (FY03: P32.4 billion) as margins improved to 63% (FY03: 61%) n Financial results of Smart i
Slide 11: Cellular: Staying Ahead of Competition
Cellular: Staying Ahead of Competition n Smart has been able to maintain market leadership despite increased competitive pressures n Cellular subscribers at 19.2 million as of year end 04 (Smart 14.6 million, Talk ‘N Text 4.6 million), representing an estimated combined market share of 58% n Smart a
Slide 12: Cellular: Managing the Cost Curve
Cellular: Managing the Cost Curve n Increase in subscriber acquisition cost driven by higher selling and promotion expenses as a result of numerous product launches during the year (i.e., Smart Padala, amp and Smart Kid prepaid) n Payback period on prepaid subscribers was 1.4 months in FY04 (FY03: 1
Slide 13: Cellular: Generating Significant Cash Flows
Cellular: Generating Significant Cash Flows n Capex spending for 2004 was P14.7 billion and is expected to decline to approximately P10 billion in 2005 as Smart already has substantial geographic and population coverage n Smart’s network currently consists of 36 switching centers and over 5,200 base
Slide 14: Cellular: Maintaining a Strong Balance Sheet
Cellular: Maintaining a Strong Balance Sheet n Smart acquired US$289 million equivalent to 69.4% of Piltel’s total debts in July 2004 in exchange for US$283 million of new Smart debt and US$1.5 million in cash n As of YE04, Smart’s consolidated debts stood at US$781 million comprising of US$654 mill
Slide 15: PLDT Fixed Line: Financial Highlights
PLDT Fixed Line: Financial Highlights FY04 FY03 (in million pesos) (As Restated) % Change Service Revenues 48,486 46,920 3% Operating Expenses 32,345 34,687 -7% Cash operating expenses 17,789 20,323 -12% Non-cash operating expenses 14,556 14,364 1% Operating Income 16,141 12,233 32% EBITDA(1) 26,266
Slide 16: Fixed Line: Staying the Course
Fixed Line: Staying the Course n Fixed Line revenues increased by 3% to P48.5 billion (FY03: P46.9 billion) mainly due to the positive impact of rate and interconnect changes on NLD and higher data revenues n EBITDA improved to P26.3 billion (FY03: P22 billion) as the increase in revenues were furth
Slide 17: Fixed Line: Focusing on Costs and Cashflows
Fixed Line: Focusing on Costs and Cashflows n Cash operating expenses declined by 12% to P17.8 billion (FY03: P20.3 billion) mainly due to savings generated from headcount reductions in FY03 and FY04 and lower manpower rightsizing expenses n PLDT incurred capex of P5.8 billion in 2004 to finance the
Slide 18: Fixed Line: Stepping Up Debt Reduction
Fixed Line: Stepping Up Debt Reduction n PLDT’s debt reduction in 2004 was approximately US$500 million, allowing its stand-alone debt balance to decline from US$2.47 billion to US$1.97 billion n Accelerating debt reduction allows PLDT’s interest expense and other financing costs to decline as well
Slide 19: ePLDT: Financial Highlights
ePLDT: Financial Highlights in pesos millions FY04 FY03 % Change (As Restated) Service Revenues 2,080 1,467 42% Call Centers 1,213 927 31% Internet 569 380 50% Vitro Data Center 243 120 103% Others 55 40 38% Non-Service Revenues 321 316 2% Operating Expenses Cash operating expenses 2,063 1,519 36% N
Slide 20: ePLDT Call Centers: Capitalizing on Growth Opportunities
ePLDT Call Centers: Capitalizing on Growth Opportunities • ePLDT is expanding its call center operations from 2,575 seats as YE04 to 3,350 by mid-05 • Parlance, Vocativ and Ventus presently employ 1,905 CSRs • Parlance and Vocativ generated revenues of P1.2 billion in FY04, accounting for 58% of tot
Slide 21: Netopia: Providing Internet Access to the Mass Market
Netopia: Providing Internet Access to the Mass Market Netopia has 131 branches nationwide with over 6,000 terminals being utilized by approximately 2.1 million users per month for Internet access, gaming and desk-top publishing. Netopia uses its Mobile Internet Café to develop or test new or under-s
Slide 22: PLDT Group: Pushing Innovation to a New Level
PLDT Group: Pushing Innovation to a New Level n PLDT Group is developing new products and services that capitalize on the group’s fixed line, wireless and ICT capabilities n PLDT Group is also redefining service packages on traditional voice services to maximize network utilization n PLDT Group is i
Slide 23: PLDT Group: Objectives for 2005
PLDT Group: Objectives for 2005 • Continue deleveraging thrust and increase dividends to common shareholders – Target debt reductions in 2005: • PLDT Fixed Line: US$400 million from internally generated cash and increased dividends from Smart • PLDT Group: US$500 million – Target leverage ratio: • C
Slide 24: Appendix
Appendix \@ PLDT >
Slide 25: Reconciliation of Net Income
Reconciliation of Net Income 2004 2003 Net income before IAS 25,783 11,182 Adjustments relating to IAS: 2,261 (9,059) IAS 27 - Consolidation of Piltel - (3,445) IAS 21 - Changes in FX Rates 2,477 (595) IAS 32/39 - CPS (1,574) (1,774) IAS 32/39 - Derivatives and Debt Discount 2,105 (2,033) Other IAS
Slide 26: Revenues
Revenues FY 2003 FY 2004 Consolidated % (in million pesos) Wireless Fixed Line ICT Consolidated (As Restated) Change Service Revenues Wireless services Cellular 67,391 67,391 52,950 27% Others 1,958 1,958 1,703 15% Fixed line services Local exchange 20,458 20,458 20,837 -2% International long distan
Slide 27: Expenses
Expenses FY 2003 FY 2004 Consolidated % (in million pesos) Wireless Fixed Line Consolidated (As Restated) Change Operating expenses Compensation 3,341 7,792 12,025 14,860 -19% Selling and promotions 4,260 1,160 5,708 4,399 30% Maintenance 2,596 3,211 5,671 4,931 15% Rent 3,962 1,700 1,907 2,201 -13%
Slide 28: EBITDA Calculation
EBITDA Calculation Full Year Full Year 2004 2003 % Wireless Fixed Line Consolidated Consolidated Change (in million pesos) (As Restated) Service revenues 69,349 48,486 115,254 100,604 15% Non-service revenues 6,111 - 6,269 10,714 -41% Less: Cost of sales (11,122) - (11,122) (16,094) -31% 64,338 48,4
Slide 29: Breakdown of Financing Costs
Breakdown of Financing Costs Full Year FY 2004 2003 % (in million pesos) Wireless Fixed Line Consolidated Consolidated Change (As Restated) Interest on Loans and related items 1,754 10,699 12,448 13,009 -4% Interest income (724) (248) (942) (513) 84% Capitalized interest (98) (497) (595) (887) -33%
Slide 30: Statement of Cash Flow
Statement of Cash Flow FY 2004 FY 2003 % Consolidated Consolidated Change (in million pesos) (As Restated) Net cash from operations 73,512 55,972 31% Less: Capital expenditures (21,162) (18,019) 17% Investments (3,864) (1,806) 114% Interest, net (11,356) (12,163) -7% Dividends from Smart - - - Prefe
Slide 31: Balance Sheet
Balance Sheet Consolidated December 31, (in million pesos) 2004 2003 (As Restated) Total Assets 252,727 243,706 Short-term Debt 58 2,133 Long-term Debt 149,030 176,456 Total Debt 149,088 178,589 in US$* $2,829 $3,356 Net Debt 121,767 159,217 Equity 48,515 21,449 Debt/Equity 3.07x 8.33x Net Debt/Equi
Slide 32: Interest-Bearing Liabilities
Interest-Bearing Liabilities as of December 31, 2004 Unamortized 2003 (in millions) Carrying Value Debt Discount Face Value Face Value Change Debt PLDT $1,970 - $1,970 $2,471 ($501) Smart $526 $128 $654 $370 $284 2014 Debt $152 $128 $280 - $280 Others $374 - $374 $370 $4 Piltel $91 $36 $127 $424 ($2
Slide 33: International Recognition for Outstanding Management
International Recognition for Outstanding Management
Philippine Long Distance Telephone Company — FY2004 Earnings Presentation on 6ix