PLDT, Inc. · PSE:TEL
PLDT — 9M 2007 Earnings Presentation
30 slides from PLDT's earnings presentation, Nov 6, 2007
Slide 1: Nine Months 2007 Financial and Operating Results
Philippine Long Distance Telephone Company Nine Months 2007 Financial and Operating Results 6 November 2007 1
Slide 2: PLDT Group: Core and Reported Net Income
PLDT Group: Core and Reported Net Income • Core net income in 9M07 up 13% to P26.2bn due to the combined impact of: + Increase in revenues and EBITDA + Lower financing costs • 3Q07 income is higher than 2Q07 despite seasonality and without the benefit of election spend • Reported net income in 9M07
Slide 3: PLDT Group: Service Revenues
PLDT Group: Service Revenues • Consolidated service revenues grew by P8.5bn or 9% to P100.5bn in 9M07 as a result of: + Wireless service revenues up by 10% + ICT revenues increased by 96% - Fixed line revenues declining by 1% • Approximately 38% of consolidated service revenues are USD linked • Serv
Slide 4: PLDT Group: EBITDA
PLDT Group: EBITDA • EBITDA increased by 4% to P62.0bn while EBTIDA margin declined to 62% due to: – Wireless margin at 65% – Fixed line margin at 54% – ICT margin of 11% • EBITDA decreased 6% q-o-q brought about by seasonally lower revenues and a P533 million manpower rightsizing cost in 3Q07 cover
Slide 5: PLDT Group: Capex and Free Cash Flow
PLDT Group: Capex and Free Cash Flow • PLDT Group’s capex in 9M07 reached P14.5bn and is expected to reach a maximum of P25bn for FY07 as a result of: – Better than expected cellular and broadband take up requiring additional capacity • Free cash flow surged to P36bn in 9M07 which allowed PLDT Group
Slide 6: PLDT Group: 9M07 Financial Summary
PLDT Group: 9M07 Financial Summary 9M07 9M06 % Y-o-Y Service Revenues P100.5bn P92.0bn 9% EBITDA P62.0bn P59.4bn 4% EBITDA Margin 62% 65% Income Before Tax P40.0bn P29.5bn 36% Core Net Income P26.2bn P23.2bn 13% Core EPS 137.30 124.98 10% Reported P26.5bn P25.7bn 3% Net Income 6
Slide 7: SMART: Continuing to Trend Upwards
SMART: Continuing to Trend Upwards • Service revenues grew 10% to P64.1bn in 9M07 driven by: + 15% increase cellular data revenues + 3% growth in voice revenues + 205% rise in wireless broadband revenues • Service revenues in 3Q07 were 9% higher than 3Q06 but 5% lower q-on-q due to annual seasonalit
Slide 8: SMART: Reaching New Highs
SMART: Reaching New Highs • Smart and TNT subscriber base reached 28.3 mn in 9M07 reflecting net additions of 4.1mn cellular subscribers from year-end 2006, higher than total net additions of 3.8 million for the entire 2006 • Net additions of 1.2mn in 3Q07 as a result of a more aggressive and focuse
Slide 9: SMART: Serving the Market's Needs
SMART: Serving the Market’s Needs Growth in cellular service revenues enabled by our ability to segment subscriber base according to specific parameters, allowing for tailor-made, “below the line” usage campaigns Effective acquisition campaigns and focused on the ground efforts have resulted in sign
Slide 10: PLDT Fixed Line: Addressing the Challenges
PLDT Fixed Line: Addressing the Challenges • Fixed Line revenues decreased 1% to P35.7bn in 9M07 due to the combined impact of: + increase in corporate data and DSL service revenues - decrease in LEC revenues as a result of the reduction in basic monthly fees due to the imputed 7% appreciation of th
Slide 11: Broadband: Showing Dramatic Growth
Broadband: Showing Dramatic Growth • PLDT DSL, SmartBro and PLDT WeRoam had a combined 501,000 subscribers as of 9M07, adding about 236,000 subscribers for the nine-month period • SmartBro added 138,000 broadband subscribers in 9M07 to reach 259,000 subscribers; SmartBro is the most widely available
Slide 12: ePLDT: Riding the Outsourcing Wave
ePLDT: Riding the Outsourcing Wave • ePLDT’s service revenues grew by 96% to P7.4bn on account of: + 23% increase in call center revenues + Consolidation of SPI, which contributed revenues of P4.0bn in 9M07 • About 86% of ePLDT’s revenues come from Ventus and SPI; of the total Ventus and SPI revenue
Slide 13: BPO Business: Preparing to Take-Off
BPO Business: Preparing to Take-Off • SPI generated P4.0bn in revenues in 9M07 reflecting the combined impact of: – Healthy and predictable growth in the Publishing unit – High-value but volatile revenue streams from the Legal unit reflecting project-based nature of contracts – Consolidation of Spri
Slide 14: Call Center Business: Ramping Up Steadily
Call Center Business: Ramping Up Steadily • Ventus’ revenues grew by 23% to P2.4bn in 9M07 resulting from the ramp-up of FTEs for several clients, offset in part by the effects of the appreciation of peso • Ventus’ 3Q07 revenues increased by 10% to P 826mn over 2Q07 and 21% versus the same period la
Slide 15: Capital Management: Moving to Optimal Levels
Capital Management: Moving to Optimal Levels Transaction Consent Solicitation to be pursued to amend certain restrictive covenants contained in the indentures of the Notes To demonstrate its continued commitment to maintaining a prudent capital structure, PLDT will simultaneously tighten its debt ca
Slide 16: Capital Management: Moving to Optimal Levels
Capital Management: Moving to Optimal Levels Why is PLDT asking for • PLDT’s key financial indicators including revenues, profitability and operating this? cash flows have improved over time compared to when the Notes were issued • PLDT is focused on maintaining its market leadership, investing in n
Slide 17: PLDT Group: 2007 Outlook
PLDT Group: 2007 Outlook • PLDT Group expects to sustain its strong performance to-date although the financial results will continue to be impacted by a number of factors, including movements in the US dollar/Peso exchange rates • Capital expenditures for 2007 are estimated at P 25 billion • PLDT Gr
Slide 18: 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 19: Appendix
Appendix 19 SPLOT starr ePLDT
Slide 20: 9M07: Consolidated Financial Highlights
9M07: Consolidated Financial Highlights Profit and Loss 9M 2007 9M 2006 (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated % Change Service Revenues 64,059 35,664 7,416 100,470 92,003 9% Operating expenses 23,959 16,549 6,996 40,680 35,013 16% (1) EBITDA 41,854 19,235 803 61,957 59
Slide 21: Revenues
Revenues 9M 2007 9M 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Service Revenues Wireless Cellular 61,121 61,121 56,086 9% Others 2,938 2,938 1,930 52% Fixed line Local exchange 11,889 11,889 12,862 -8% International long distance 6,685 6,685 7,434 -10% Nationa
Slide 22: Expenses
Expenses 9M 2007 9M 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Operating expenses Compensation 3,730 7,879 3,984 15,589 13,184 18% Selling and promotions 2,836 831 194 3,855 3,558 8% Professional and other contracted services 1,632 1,243 938 3,468 2,227 56% Re
Slide 23: EBITDA
EBITDA 9M 2007 9M 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Income before tax 34,068 5,978 (66) 39,980 29,498 36% Add (deduct): Depreciation 8,907 9,330 715 18,952 23,659 -20% Financing costs (527) 4,386 (2) 3,857 7,230 -47% Asset impairment - - 21 21 16 35%
Slide 24: Financing Costs
Financing Costs 9M 2007 9M 2006 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Interest on loans and related items 1,205 3,800 24 5,029 6,113 -18% Accretion on financial liabilities 665 130 39 834 3,045 -73% Hedge costs - 908 - 908 1,090 -17% Loss (gain) on derivative
Slide 25: Core Net Income
Core Net Income 9M 2007 9M06 % (in million pesos) Wireless Fixed Line ICT Consolidated Consolidated Change Reported net income 22,465 3,995 46 26,506 25,744 3% Add (deduct): Foreign exchange and derivative losses (gains) (1,464) 60 (51) (1,455) (1,450) - Additional depreciation - 1,013 1,013 6,105 -
Slide 26: Cash Flows
Cash Flows 9M 2007 9M 2006 % (in million pesos) Wireless Fixed Line Consolidated Consolidated Change Net cash from operations 34,502 18,826 55,499 56,146 -1% Add(Deduct): Capital expenditures (7,085) (7,049) (14,529) (16,872) -14% Other investing activities (213) 376 175 1,109 -84% Interest, net (49
Slide 27: Balance Sheet
Balance Sheet Consolidated September 30 December 31 (in million pesos) 2007 2006 Total Assets 227,971 241,892 Nominal Value of Total Debt 69,701 86,107 in US$ $1,550 $1,756 Less: Unamortized Debt Discount 4,976 5,953 Total Debt 64,725 80,154 Cash and short-term investments 19,993 25,197 Net Debt 44,
Slide 28: Earnings Per Share
Earnings Per Share 9M07 9M06 Basic Diluted Basic Diluted Net Income 26,506 26,506 25,744 25,744 Dividends on preferred shares (341) (341) (342) (37) Adjustments for preferred shares deemed dilutive Dividends on preferred stock subject to mandatory redemption charged to expense for the period - 13 -
Slide 29: Interest-bearing Liabilities
Interest-bearing Liabilities September 30, 2007 December 31, Unamortized 2006 (in millions) Carrying Value Debt Discount Face Value Face Value Change Debt PLDT $846 $10 $855 $1,080 ($225) Smart $552 101 653 628 25 2014 Debt $179 101 280 280 - Others $373 373 348 $25 Others $42 - 42 48 ($6) Total Deb
Slide 30: Quarterly Consolidated Financial Highlights
Quarterly Consolidated Financial Highlights % Change 2007 2006 3Q07 (in million pesos) 1Q 2Q 3Q 3Q vs. 3Q06 Service Revenues 33,012 34,010 33,449 31,364 7% Non-service Revenues 613 703 544 696 -22% Less: Cost of sales 1,220 1,413 1,111 1,402 -21% Operating Expenses Cash operating expenses 11,749 11,