PLDT, Inc. · PSE:TEL
PLDT — 9M 2008 Earnings Presentation
32 slides from PLDT's earnings presentation, Nov 4, 2008
Slide 1: Philippine Long Distance Telephone Company Nine Months 2008 Results
Philippine Long Distance Telephone Company Nine Months 2008 Financial and Operating Results 4 November 2008
Slide 2: PLDT Group: 9M 2008 Financial Highlights
PLDT Group: 9M 2008 Financial Highlights 9M 2008 9M 2007 (unaudited) (unaudited) % Y-o-Y Service Revenues P105.6bn P100.6bn 5% • Wireless P68.8bn P64.1bn 7% • Fixed Line P36.7bn P35.8bn 2% EBITDA P65.6bn P62.2bn 6% • Wireless P44.4bn P41.9bn 6% • Fixed Line P20.5bn P19.5bn 5% EBITDA Margin 62% 62% I
Slide 3: PLDT Group: 3Q 2008 Financial Highlights
PLDT Group: 3Q 2008 Financial Highlights 3Q 2008 3Q 2007 (unaudited) (unaudited) % Y-o-Y Service Revenues P35.2bn P33.5bn 5% Wireless P23.0bn P21.1bn 9% Fixed Line P12.1bn P12.1bn - EBITDA P21.8bn P20.2bn 8% Wireless P14.8bn P13.7bn 8% Fixed Line P6.9bn P6.3bn 10% EBITDA Margin 62% 60% Core Net Inco
Slide 4: Core Income Up 5%, Reported Income Down 2% Due to Forex
Core Income Up 5%, Reported Income Down 2% Due to Forex ¾ Core net income grew by P1.4bn or 5% to P27.8bn at 9M08 as a result of: • Increases in service revenues and EBITDA of 5% and 6%, respectively • Decrease in financing costs by 13% ¾ Reported net income decreased by 2% to P26.2bn due to forex l
Slide 5: Continued Growth in Service Revenues and EBITDA
Continued Growth in Service Revenues and EBITDA ¾ Consolidated service revenues increased by 5% to P105.6bn from P100.6bn in 9M08 due to: – 12% growth in data and ICT revenues which accounted for 53% of total service revenues, and which included a 48% growth in broadband revenues – 2% decline in voi
Slide 6: Free Cash Flow Remains Strong
Free Cash Flow Remains Strong ¾ Free cash flow of P39.0bn generated in 9M08, P3.0bn higher than P36.0bn in 9M07 • Capex for 9M08 amounted to P16.8bn, higher by P2.3bn compared with last year ¾ Capex guidance for 2008 reviewed and reduced to P 27.0bn ¾ Capital management initiatives sustained • Divid
Slide 7: Debt Profile Stays at Manageable Levels
Debt Profile Stays at Manageable Levels ¾ Net debt stood at US$0.9bn as of September 2008 and net debt/EBITDA at 0.5x ¾ Debt maturities are well spread out with the bulk of the scheduled payments at 2012 and beyond • PLDT had US$677mn in US$-denominated revenues and US$262mn in expenses, or a net fo
Slide 8: SMART: Continuing to Grow
SMART: Continuing to Grow ¾ The combined Smart and TNT subscriber base grew to 34.2mn as at end September 2008, reflecting a 21% growth year-on-year • Net adds of 4.1mn subscribers for 9M08, 1% higher than net adds for 9M07 • Of the 4.1mn net adds, 3.6mn are TNT subs • Net adds for 3Q08 of 0.9mn: -
Slide 9: SMART: Rising Steadily
SMART: Rising Steadily ¾ Wireless service revenues were up 7% to P68.8bn and contributed 65% to total service revenues in 9M08 driven by: + 8% increase in cellular data revenues + 94% growth in wireless broadband revenues ¾ Growth in revenues achieved despite 14% decline in net blended ARPUs due to
Slide 10: Fixed Line: Sustaining Modest Growth
Fixed Line: Sustaining Modest Growth ¾ Fixed line service revenues increased by Service Revenues 2% to P36.7bn in 9M08 due to the (Php billions) combined impact of: +2% 35.8 36.7 + Increase in corporate data and DSL 11.2 13.6 Miscellaneous service revenues Data 6.7 ILD NLD – Declines in LEC and NLD
Slide 11: Broadband: Leading in Expanding Coverage
Broadband: Leading in Expanding Coverage ¾ PLDT DSL, SmartBro and WeRoam added 297,000 subscribers during 9M08, a 51% Broadband Subscribers increase from the end of 2007 (thousands) 876 – SmartBro, the most widely available 758 broadband service provider in the country WeRoam SmartBro 661 today, add
Slide 12: Broadband: Launching HSPA850
Broadband: Launching HSPA850 ¾ PLDT launching HSPA850 in 4Q08 as a complementary platform to deliver broadband in areas beyond the NGN/DSL/Canopy footprint ¾ HSPA850 will be layered onto Smart’s 2.1 3G network to provide wider coverage ¾ Factors considered in choosing HSPA850: Relatively low incre
Slide 13: ePLDT: Registering Mixed Results
ePLDT: Registering Mixed Results ¾ ePLDT service revenues, 7% of PLDT group service revenues, increased by 2% to P7.6bn due to: + 6% increase in call center (Ventus) revenues + 35% increase in data center revenues - KPS/SPi revenues down 2%, with revenues in publishing and medical billing broadly in
Slide 14: PLDT Group: Affirming Guidance for 2008
PLDT Group: Affirming Guidance for 2008 • 5% growth over 2007 Service Revenues P 142 billion • P 7 billion increase • 5% growth over 2007 EBITDA P 87 billion • P 4 billion increase • 5% growth over 2007 Core Net Income P 37 billion • P 1.8 billion increase Dividend Payout Ratio: 70% of Core EPS Capi
Slide 15: 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, and Section 21E of the U.S. Securities Exchange Act of 193
Slide 16: Appendix
APPENDIX 16
Slide 17: Piltel Update
Piltel Update ¾ Piltel Board authorized share buyback program of 58 million shares or 0.5% of outstanding common shares ¾ Piltel Board approved amendment to revenue-sharing agreement between Piltel and Smart to 70-30 in favor of Piltel from previous 80-20 arrangement • Since Talk ‘N Text’s launch in
Slide 18: Balance Sheet Items Affected by Forex Movement
Balance Sheet Items Affected by Forex Movement ¾ As of September 30, 2008, PLDT has foreign currency (FCY) denominated assets and liabilities as follows: Debt*: US$ 1,297mn (90% of total debt) Net Payables: US$ 164mn Cash and S/T Investment: US$ 145mn ------------------------------------ Net Liabili
Slide 19: Balance Sheet Items Affected by Forex Movement
Balance Sheet Items Affected by Forex Movement ¾ IFRS accounting requires us to mark-to-market our forex derivatives and due to their long term duration, changes in the value of our derivatives will be affected by changes in US$ and Php interest rates as well as movements in the peso/$ exchange rate
Slide 20: P&L Items Affected by Forex Movement
P&L Items Affected by Forex Movement ¾ For the 9M08, 28% of PLDT revenues are denominated in FCY arising from, among others: • Termination Charges for Inbound International Calls terminating on mobile and fixed line (net of outbound international calls) • Call center and BPO revenues • Data service
Slide 21: P&L Impact of Foreign Exchange Exposures
P&L Impact of Foreign Exchange Exposures ¾ For 9M08, we recognized forex revaluation loss on our financial assets and liabilities amounting to P6bn, while the total gain on derivative transactions amounted to P3.5bn • The weakening of the peso from P41.411 to P47.264 (14.1%) resulted to a forex loss
Slide 22: 9M 2008: Consolidated Financial Highlights
9M 2008: Consolidated Financial Highlights Consolidated Statement of Income 9M 2008 9M 2007 (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated % Change Service Revenues 68,801 36,707 7,601 105,585 100,648 5% Cash operating expenses 22,354 15,672 6,836 37,215 35,466 5% (1) EBITDA 44
Slide 23: Revenues
Revenues 9M 2008 9M 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Service Revenues Wireless Cellular 64,461 64,461 61,121 5% Broadband 3,095 3,095 1,597 94% VSAT and other services 1,245 1,245 1,341 -7% Fixed line Local exchange 11,876 11,876 12,067 -2% Internati
Slide 24: Expenses
Expenses 9M 2008 9M 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Operating expenses Compensation and employee benefits 3,820 6,352 4,523 14,744 15,589 -5% Repairs and maintenance 3,255 3,335 429 6,482 5,299 22% Selling and promotions 3,067 1,053 167 4,285 3,855
Slide 25: EBITDA
EBITDA 9M 2008 9M 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Income before tax 32,812 8,663 (48) 41,354 40,158 3% Add (deduct): Depreciation 9,033 9,009 624 18,666 18,952 -2% Financing costs 1,547 3,123 129 4,799 5,516 -13% Asset impairment - - - - 21 -100% Am
Slide 26: Financing Costs
Financing Costs 9M 2008 9M 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Interest on loans and related items 1,162 3,373 25 4,560 5,029 -9% Accretion on financial liabilities 588 26 104 718 834 -14% Dividends on CPS 4 - - 4 14 -71% Financing charges 3 40 - 43 38
Slide 27: Core Net Income
Core Net Income 9M 2008 9M 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Reported net income 20,875 5,385 (8) 26,179 26,622 -2% Add (deduct): Foreign exchange and derivative losses (gains) 2,100 501 (142) 2,478 (1,455) -270% Additional depreciation - - - - 1,013
Slide 28: Cash Flows
Cash Flows 9M 2008 9M 2007 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Net cash from operations 32,754 26,199 1,156 60,076 56,276 7% Add(Deduct): Capital expenditures (11,184) (5,125) (532) (16,841) (14,529) 16% Other investing activities 147 797 (438) 539 175 208%
Slide 29: Balance Sheet
Balance Sheet Consolidated (in million pesos) September 30, 2008 December 31, 2007 Total Assets 237,460 240,158 Nominal Value of Total Debt 72,682 65,112 in US$ $1,538 $1,572 Less: Unamortized Debt Discount 4,572 4,472 Total Debt 68,110 60,640 Cash and short-term investments 27,207 30,862 (2) Net De
Slide 30: Earnings Per Share
Earnings Per Share 9M 2008 9M 2007 Basic Diluted Basic Diluted Net Income 26,179 26,179 26,622 26,622 Dividends on preferred shares (341) (341) (341) (341) Adjustments for preferred shares deemed dilutive Dividends on preferred stock subject to mandatory redemption charged to expense for the period
Slide 31: Interest-bearing Liabilities
Interest-bearing Liabilities September 30, 2008 December 31, Unamortized 2007 (in millions) Carrying Value Debt Discount Face Value Face Value Change Debt PLDT $842 $8 $850 $830 $20 Smart 566 89 654 702 (48) 2014 Debt 196 87 283 283 - Others 370 2 371 419 (48) Others* 33 - 33 40 (7) Total Debt $1,44
Slide 32: Quarterly Consolidated Financial Highlights
Quarterly Consolidated Financial Highlights 2008 % Change (Unaudited) 2007 3Q08 (in million pesos) 1Q 2Q 3Q 3Q vs. 3Q07 Service Revenues 34,933 35,414 35,238 33,508 5% Non-service Revenues 482 773 661 543 22% Less: Cost of sales 919 1,389 1,343 1,112 21% Operating Expenses Cash operating expenses 12