PLDT, Inc. · PSE:TEL
PLDT — 9M 2009 Earnings Presentation
35 slides from PLDT's earnings presentation, Nov 3, 2009
Slide 1: Nine Months 2009 Financial and Operating Results
We’re changing lives. Nine Months 2009 Financial and Operating Results 3 November 2009 1
Slide 2: PLDT Group: 9M 2009 Financial Highlights
PLDT Group: 9M 2009 Financial Highlights 9M 2009 9M 2008 (unaudited) (unaudited) % Y-o-Y Service Revenues P108.3bn P105.6bn 3% • Wireless P71.2bn P68.8bn 3% • Fixed Line P38.2bn P36.7bn 4% EBITDA P65.7bn P65.7bn - • Wireless P44.5bn P44.5bn - • Fixed Line P20.3bn P20.5bn 1% EBITDA Margin 61% 62% Rep
Slide 3: PLDT Group: 3Q 2009 Financial Highlights
PLDT Group: 3Q 2009 Financial Highlights 3Q 2009 3Q 2008 (unaudited) (unaudited) % Y-o-Y Service Revenues P35.6bn P35.2bn 1% • Wireless P23.1bn P23.0bn - • Fixed Line P12.8bn P12.1bn 6% EBITDA P21.7bn P21.8bn 1% • Wireless P14.3bn P14.8bn 3% • Fixed Line P 7.0bn P 6.8bn 2% EBITDA Margin 61% 62% Repo
Slide 4: PLDT Group: Core and Reported Income
PLDT Group: Core and Reported Income ¾ Core income for 9M09 grew by 11% or P3.2bn to P31.0bn compared to 9M08 due to: + 3% rise in service revenues + Lower provision for income tax largely due to the reduced corporate income tax rate + Recognition of P361mn of equity share in earnings of Meralco – 5
Slide 5: PLDT Group: Service Revenues and EBITDA
PLDT Group: Service Revenues and EBITDA ¾ Consolidated service revenues increased by 3% to P108.3bn in 9M09 from P105.6bn in 9M08 on account of: + 4% increase in data and ICT revenues which included a 26% growth in broadband revenues – Steady voice revenues ¾ Data and ICT revenues now account for 54
Slide 6: PLDT Group: Capex
PLDT Group: Capex ¾ Capex at 9M09 increased by P1.2bn or 7% to P18.0bn, or about two-thirds of the P27bn total capex projected for the year Wireless capex of P10.6bn invested largely in the HSPA and multi-platform broadband networks as well as upgrade of the existing transmission, core and access
Slide 7: PLDT Group: Free Cash Flow
PLDT Group: Free Cash Flow ¾ Free cash flow of P43.3bn generated in 9M09, P4.2bn or 11% more than P39.0bn in 9M08, and higher than the P38.1bn core income for FY08 • P18.8bn in additional funds provided by net proceeds from borrowings • P38.6bn in dividends were paid in April and September 2009 • Sh
Slide 8: PLDT Group: Debt Profile
PLDT Group: Debt Profile ¾ At the end of September 2009, net debt stood at US$1.5bn, an increase of US$0.5bn from the end of 2008 as a result of the increased borrowing by the group to support capex and the investment in Meralco ¾ As of 9M09, total group debt amounted to US$2.1bn compared to US$1.5b
Slide 9: PLDT Group: 9M2009 Segment Highlights
PLDT Group: 9M2009 Segment Highlights ¾ Wireless Business – Subscriber base at 39.1mn with 3.9mn net adds for 9M09 – Service revenues hit P71.2bn for the first nine months of 2009, a 3% increase compared to 9M08 – EBITDA steady at P44.5bn ¾ Fixed Line – Service revenues of P38.2bn in 9M09 reflect a
Slide 10: SMART: Advancing steadily
SMART: Advancing steadily ¾ The combined Smart and TNT subscriber base grew to 39.1mn as at end September 2009 equivalent to a 15% growth year-on-year • 3.9mn net adds for 9M09, 5% lower than the 4.1mn net adds for 9M08 • Of the 3.9mn net adds, 2.3mn are TNT subscribers and 1.6mn are Buddy subscribe
Slide 11: SMART: Pushing ahead
SMART: Pushing ahead ¾ Wireless service revenues grew by 3% to P71.2bn and contributed 61% to total service revenues in 9M09 on account of: + 26% increase in wireless broadband revenues + 4% growth in cellular voice revenues – Flat data revenues ¾ Revenue increase attributable to a 15% y-o-y growth
Slide 12: Smart: Broadbanding the nation
Smart: Broadbanding the nation • 70% growth in broadband subscribers driven by aggressive activation programs • Increased usage driven by added values: – SMS offered to Smart Bro subs in July • Broadband seeding plan anchored on: • Reduced dongle prices • Aggressive distribution plan – Partnership w
Slide 13: Fixed Line: Continuing to transform
Fixed Line: Continuing to transform ¾ Fixed line service revenues increased by 4% to P38.2bn in 9M09 due to the combined effect of: + Growth in corporate data and DSL service revenues – Net decline in LEC revenues where lower fixed charges resulting from bundling of voice and data services was offse
Slide 14: Fixed Line: Introducing more services
Fixed Line: Introducing more services • PLDT post-paid landline bundled with Call All wireless landline SIM • ARPU: P 850/month • Broadband solution, built for business • Enhanced/upgraded to allow: faster speeds, LAN networking, WiFi • ARPU: P4,200 • PLDT Budget Card: P1.50/minute to Canada and the
Slide 15: Broadband: Forging our lead
Broadband: Forging our lead ¾ PLDT DSL, SmartBro and WeRoam added 370,000 subscribers during 9M09, representing a 37% growth from the end of 2008 – 3Q09 net adds of 150,858 accounts for 41% of total broadband net adds year-to-date and is 27% higher than 3Q08 net adds – SmartBro, today’s most widely
Slide 16: ePLDT: Showing respectable gains
ePLDT: Showing respectable gains ¾ ePLDT’s service revenues, now 7% of PLDT group service revenues, increased by 5% to P8bn in 9M09 due to: + 57% growth in data center revenues due to increased contracts for co-location/server hosting, disaster recovery and business continuity services - 1% decrease
Slide 17: Meralco: Highlights
Meralco: Highlights ¾ PLDT’s 3Q09 results reflect P361mn equity share in the earnings of Meralco for the period 14 July to 30 September 2009, as well as a P1.2 billion derivative gain arising from the P2bn exchangeable note issued by First Philippine Utilities Corporation as part of Piltel’s acquisi
Slide 18: Broad areas where synergy is happening
Broad areas where synergy is happening 3-year Joint Pole Set up of network-to-network Agreement finalized interface for TDM and Ethernet Services Three pilot areas for co- Use of each other’s location of Smart cell fibre optic sites are expected to be infrastructure (eMVI Infrastructure completed wi
Slide 19: Factors to consider for 4Q09
Factors to consider for 4Q09 + Holiday spending V Impact of the typhoons Ondoy and Pepeng on consumer budgets and spending patterns/priorities Æ uncertain V Peso/dollar exchange rate Æ dependent on the inflow of OFW remittances and the level of intervention of the BSP V Impact of per pulse billing Æ
Slide 20: PLDT Group: Affirming Guidance for 2009
PLDT Group: Affirming Guidance for 2009 • 2% growth over 2008 Service Revenues P146 billion • P3 billion increase • 0.5-1% growth over 2008 EBITDA P88-88.5 billion • P400-900 million increase • 8% growth over 2008 Core Net Income P41 billion • P3 billion increase Dividend Payout Ratio: 70% of Core E
Slide 21: 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 22: Appendix
Appendix Appendix 22
Slide 23: 9M 2009: Consolidated Financial Highlights
9M 2009: Consolidated Financial Highlights 9M 2009 9M 2008 (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated % Change Service Revenues 71,202 38,214 7,957 108,277 105,588 3% Cash operating expenses 24,061 17,181 6,991 38,876 36,948 5% (1) EBITDA 44,521 20,254 846 65,745 65,722 - E
Slide 24: Revenues
Revenues 9M 2009 9M 2008 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Service Revenues Wireless Cellular 65,844 65,844 64,461 2% Broadband 3,899 3,899 3,095 26% Satellite and other services 1,459 1,459 1,248 17% Fixed line Local exchange 11,739 11,739 11,876 -1% Inte
Slide 25: Expenses
Expenses 9M 2009 9M 2008 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Operating expenses Compensation and employee benefits 4,629 7,683 4,848 17,149 14,744 16% Repairs and maintenance 3,283 2,984 489 6,238 6,482 -4% Selling and promotions 3,197 990 79 4,263 4,115 4%
Slide 26: EBITDA
EBITDA 9M 2009 9M 2008 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Income before tax 36,157 6,548 327 42,949 41,354 4% Add (deduct): Depreciation and amortization 9,836 8,777 570 19,266 18,666 3% Financing costs, net 1,938 2,710 128 4,753 4,799 -1% Asset impairment
Slide 27: Other Income (Expenses)
Other Income (Expenses) 9M 2009 9M 2008 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Gains (losses) on derivative financial instruments, net 1,166 (1,233) 5 (62) 3,507 -102% Interest income 976 318 20 1,291 1,314 -2% Equity share in net earnings (losses) of associate
Slide 28: Core Net Income
Core Net Income 9M 2009 9M 2008 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Reported net income 25,198 4,713 165 30,018 26,179 15% Add (deduct): Foreign exchange losses (gains), net (118) (102) (10) (232) 5,985 -104% Losses (gains) on derivatives financial instrumen
Slide 29: Cash Flows
Cash Flows 9M 2009 9M 2008 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Net cash from operations 44,026 19,521 1,156 64,706 60,076 8% Add(Deduct): Capital expenditures (10,592) (7,047) (425) (18,064) (16,841) 7% Other investing activities 199 304 (90) 727 539 35% Int
Slide 30: Balance Sheet
Balance Sheet Consolidated (in million pesos) September 30, 2009 December 31, 2008 Total Assets 266,531 252,558 Nominal Value of Total Debt 97,731 78,487 in US$ $1,726 $1,647 Less: Unamortized Debt Discount 4,122 4,576 Total Debt 93,609 73,911 (1) Cash and short-term investments 28,523 40,354 (3) Ne
Slide 31: Earnings Per Share
Earnings Per Share 9M2009 9M 2008 Basic Diluted Basic Diluted Net Income attributable to equity holders of PLDT 30,018 30,018 26,179 26,179 Dividends on preferred shares (347) (347) (341) (341) Net Income applicable to common shares 29,671 29,671 25,838 25,838 Outstanding common shares, beginning 18
Slide 32: Interest-bearing Liabilities
Interest-bearing Liabilities September 30, 2009 December 31, Unamortized 2008 (in millions) Carrying Value Debt Discount Face Value Face Value Change Debt PLDT $1,033 $7 $1,039 $822 $217 Smart 925 80 1,006 800 206 2014 Debt 206 74 280 280 - Others 719 6 726 520 206 Others 16 - 16 25 (9) Total Debt*
Slide 33: Consolidated Quarterly Financial Highlights
Consolidated Quarterly Financial Highlights % Change 2009 2008 3Q09 (in million pesos) 1Q 2Q 3Q 3Q vs. 3Q08 Service Revenues 36,249 36,391 35,637 35,239 1% Non-service Revenues 565 642 486 660 -26% Less: Cost of sales 1,182 1,381 1,308 1,347 -3% Operating Expenses Cash operating expenses 13,319 12,9
Slide 34: Foreign Exchange Risk / Hedges
Foreign Exchange Risk / Hedges ¾ For accounting purposes, at the end of each reporting period, the FCY assets and liabilities are revalued at the then current exchange rate: • Given our net FCY liability position, a weaker peso results in a revaluation loss; while a stronger peso translates to a rev
Slide 35: Factors that affect MTM valuation
Factors that affect MTM valuation ¾ Due to the long term duration of our forex derivatives, changes in their MTM values affected by changes in US$ and Php interest rates as well as movements in the peso/$ exchange rate. • Interest differentials between the Php and US$ determine the cost of hedging;