(STAR) By Mary Ann Ll. Reyes - Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) posted a consolidated reported net income of P26.5 billion in the first nine months of this year, three percent more than the P25.7 billion recorded in the same period last year.

Company officials said lower additional depreciation charges, increase in provision for taxes, and similar levels of foreign exchange gains helped boost the net income figures.

Core net profit, before foreign exchange translation and derivative gains, reached P26.2 billion for the first nine months of 2007, up 13 percent from P23.2 billion in the same period last year.

Consolidated reported net income during the third quarter of 2007, however, was lower at P9.5 billion, compared to the P10.4 billion registered in the same period last year. Core net income for the July to September 2007 period grew to P9 billion as against last year’s P8 billion.

PLDT group chairman Manuel Pangilinan said the sustained strength in the core numbers and the sturdy underlying fundamentals, as manifested in the robust nine months’ figures, point to another year of record-high core profitability.

“In that light, we are upgrading our core earnings forecast for the year to be between P34.5 and P35 billion, up from the P32 billion that we had estimated at the beginning of the year. But it may be closer to P35 billion,” he said.

As for the full-year reported net income, Pangilinan expected it to at least match the P35.1 billion generated in 2006 “or at least improve on it.”

He emphasized that it will depend on how the exchange rate will move for the rest of the year.

Pangilinan also said regular dividend payout for the year will be 70 percent of core earnings per share. “We are also adopting a ‘look-back policy’ on top of our regular dividend payout of 70 percent,” he said.

Also yesterday, Pangilinan reported that the existing contact center and business process outsourcing businesses of ePLDT will be consolidated under a new company to be named SPI Global Solutions Corp. which will go public next year. The new company will consolidate the businesses of SPI and Ventus, both subsidiaries of ePLDT.

The Group’s income before tax during the January to September 2007 period increased by 36 percent to P40 billion. Provision for income tax, however, also increased by over 300 percent, or about P10 billion, to P13 billion as the effective tax rate rose to 33 percent.

Consolidated service revenues increased by nine percent to P100.5 billion, despite the nine percent appreciation of the peso which negatively impacted the growth of service revenues by almost four percent, owing to the linkage to the US dollar of 38 percent of PLDT’s consolidated revenues. Group earnings before interests, taxes, depreciation and amortization (EBITDA) improved by four percent to P62 billion while EBITDA margin was at 62 percent.

Free cash flow remained robust at P36 billion in the first nine months of 2007, with capital expenditures of P14.5 billion during the period. Capex for the Group are expected to reach P25 billion in 2007 as a result of the better-than-expected take-up of cellular and broadband subscribers. Of the P25 billion, around P15 billion will be spent for cellular and the balance for the fixed line business, which will include international cable investments, the next generation network (NGN), and DSL upgrade. But company officials said it might be difficult to spend P10 billion for the fourth quarter of 2007 alone. “So total capex for the year may undershoot P25 billion which is also good because we will have more cash on hand,” Pangilinan said. A similar capex level of P25 billion is expected for 2008.

Chief News Editor: Sol Jose Vanzi

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