, March 2, 2005
 (STAR) (AFP) Dominant carrier Philippine Long Distance Telephone Co. (PLDT) said Tuesday its net profit more than doubled to 28 billion pesos (512 million US dollars) in 2004, beating analyst forecasts for 22-25 billion pesos.

The company reported a 2003 net profit of 11.2 billion pesos.

The strong results reflected the rapid growth of its wireless business, with mobile subscribers rising 6.2 million over the past year, it said in a statement to the Philippine Stock Exchange. It did not give the new total.

PLDT looks to fixed-line data delivery to sustain record profits STAR 03/01 5:20:43 PM

MANILA (AFP) - Philippine Long Distance Telephone (PLDT), reporting record 2004 net profits of 28 billion pesos (512 million US dollars), said Tuesday it is putting money into an upgraded fixed line business for data services to sustain revenue streams now derived mainly from its wireless business.

Noting that it had to face up to a series of challenges in a fast changing industry, the company said it would have to spend considerable amounts on the new services whilst earnings could be flat this year.

"I'd like to achieve something in the order of 27 billion pesos" in net profit for 2005, company chairman Manuel Pangilinan told reporters.

PLDT's recurring net profit rose 237 percent to 25.2 billion pesos compared to a restated 2003 result of 7.5 billion pesos. A one-off gain on a debt exchange transaction brought up the total to 28 billion pesos.

The company shifted to International Accounting Standards this year, leading to the restatement of its 2003 net profit.

Pangilinan cautioned that while PLDT was ahead in January compared to year-ago numbers, the 2005 environment may not be as good as 2004 due to larger foreign exchange risks -- partly due to the shift in accounting standard -- and as rates of growth in a maturing mobile telephone business slow.

"A great deal of uncertainty will affect (earnings) in terms of the foreign exchange numbers" due to PLDT's dollar-denominated debt, which stood at 1.97 billion dollars at end-2004 after some 500 million dollars were repaid.

PLDT reported 15 percent revenue growth to 115.3 billion pesos last year, mainly due to a 27 percent gain at its mobile telephone unit Smart Communications Inc. to 67.4 billion pesos.

Smart and another wireless unit, Pilipino Telephone Corp. raised their combined subscriber base by more than 6.2 million to 19.2 million for a market share of 58 percent.

However, PLDT officials warned that their rate of growth would now flatten out after the country's subscriber rate reached 39 percent, near saturation.

With voice services on fixed line networks worldwide "increasingly becoming a commodity business," Pangilinan said the group clearly "has got to move on a big time basis toward the data business," including possibly video services delivered over land lines.

"PLDT is not about to settle into a middle-age status. We have to change the paradigm because the paradigms are changing," he added.

The delivery system would be reconfigured so it could service both fixed lines, wireless, "and other gateways that could develop over time," he added.

PLDT planned capital spending of 18-20 billion pesos annually over the next three years, with half of that be devoted to the fixed line business, he said.

For the wireless operations, the way forward is to offer more innovative products and services as well as to get subscribers to "increase their usage" of the existing services, Pangilinan said.

PLDT would also have to decide whether the domestic market is ready for 3G or third-generation mobile phone services. "I don't think it will be this year," he added.

Pangilinan said PLDT incurred a 2.7 billion-peso foreign exchange loss last year, on top of a nine billion-peso drain in 2003. The company is hoping for exchange rate stability this year "so that core earnings are preserved."

He said the Philippine government's rising debt and poor revenue streams, which earned it a double-notch sovereign credit rating downgrade by Moody's Investors Service last month, "is affecting everybody, definitely."

President Gloria Arroyo's efforts to get Congress to pass a set of tax measures "will help," he said, adding that he was "more sanguine" than others that new tax measures would be passed "in some shape or form".

Reported by: Sol Jose Vanzi

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