Manila, May 16, 2003 By RACHELLE FRIGINAL - Telecom giant Philippine Long Distance Telephone Co. reported a 58 percent surge in consolidated net income for the first quarter of the year to P2.5 billion from P1.6 billion of the same quarter last year, driven by the robust growth from its mobile phone subsidiary Smart Communications Inc.

PLDT president and chief executive officer Manuel V. Pangilinan said it is likely that the company would sustain the P2.5 billion per quarter income. With that, full-year profits of the company would reach P10 billion against P3.1 billion in 2002.

"Our broad strategy for PLDT is simple - to grow our wireless business and strengthen our fixed line business," said Pangilinan adding, "that the results of our performance in the first quarter of 2003 validates that we are moving forward in the right direction."

Consolidated revenues for this quarter grew 22 percent to P22.7 billion while EBITDA (earnings before interest, tax, depreciation and amortization) rose 13 percent to P12.5 billion from P11 billion the previous year. EBITDA margins remain solid at 55 percent of revenues.

Smart continued to be the main driver for much of PLDT's robust growth in terms of net income, revenues as a result of an increase in its subscriber base of 9.4 million against leading competitor - Globe Telecom's 7.11 million.

At the end of the first quarter, Smart and Talk'en' Text secured a 57 percent market share. Smart has 7.4 million subscribers, representing 45 percent of the market while Talk 'en' Text had 2 million subscribers accounting for 12 percent of the market.

"Smart's strategy has always been one of offering a host of innovative services to as wide a market as possible. We truly believe that if we can keep our costs down, we can keep growing our subscriber base without sacrificing profits," Napoleon Nazareno, president and chief executive officer of Smart said.

On a stand-alone basis Smart's net income surged 87 percent to P2.8 billion in the first quarter from P1.5 billion in the same period last year. Revenues jumped by 51 percent to P10.7 billion as a result of an increased traffic on the network by a growing subscriber base.

Revenues from cellular data services, which include all text-related services as well as value-added services, increased by 45 percent to P4 billion compared to P2.8 billion the same period last year.

Data revenues represented 42 percent of total GSM revenues. Smart handled a total of 5.1 billion outbound SMS compared to 3.8 billion last year.

Pangilinan said he expected the penetration rate of the wireless industry to exceed 25 percent in the next few years from the current 20 percent of the country's 80 million population.

PLDT fixed line meanwhile continued the implementation its manpower reduction program as headcount was reduced by 313 in the first quarter of 2003 in line with the company's ongoing efforts to bring down its cost base.

The fixed line business expects to further reduce headcount over the balance of this year in an effort to contain operating expenses of the company.

PLDT said they fixed lines in service per employee to 177 from 163 in the previous year. PLDT expects to achieve even greater operational efficiencies as the company reduces headcount to below 10,500 over the balance of the year as a result of its ongoing manpower reduction program.

Overall fixed line revenues registered a slight increase due to the growth of data and international long distance revenues compared to the same period last year.

International long distance revenues rose by 15 percent, from P2.5 billion in the first quarter of 2002 to P2.9 billion in 2003 due to the increase in settlement rates implemented February of this year.

Total revenues from PLDT's fixed line business increased to P11.3 billion from last year's P11.2 billion. PLDT fixed line EBITDA declined to P6 billion in the first quarter of 2003 mainly due to upfront costs incurred in relation to PLDT's manpower reduction program.

Revenues from data and other network services of the fixed line business rose by 9 percent to P1.4 billion in the first quarter of 2003. The company's initiatives to penetrate the residential data market with PLDT Vibe and myDSL services is expected to drive the growth in this sector.

Reported by: Sol Jose Vanzi

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