AMID the global financial crisis, the country’s biggest telecommunications service provider is “pragmatically optimistic” about its prospects this year.

As an indication of its optimism, the Philippine Long Distance Telephone Co. (PLDT) is planning a capital expenditures (capex) level of P27 billion this year, which is P1.8 billion more than that of 2008.

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PLDT chairman Manuel V. Pangilinan said the amount will be used for the deployment of network and information technology infrastructure to support “new generation, media-rich broadband services.”

PLDT president and chief executive officer Napoleon Nazareno said that the telco’s 2008 capex level also reflected the company’s confidence in the country, which is sustained this year.

“We are looking beyond the near-term uncertainty and positioning for the long-term when the global situation stabilizes,” Nazareno said during the PLDT’s annual stockholders meeting last Tuesday.

In his message to shareholders, Pangilinan said this year’s capex includes the replacement of the nationwide cable network with high-speed data-grade facilities, which will be capable of delivering voice, video and data services more efficiently when combined with the new generation all-Internet protocol switches.

Infra work

“Our capex budget will also support the further deployment of Smart’s high-speed packet access network that will make mobile broadband more pervasive,” he said.

Last year, 66 percent of the P25.2 billion capex was spent for the PLDT group’s wireless business, 31 percent for fixed line, and three percent for the information and communications technology (ICT) business.

PLDT reported an eight-percent increase in its core net income to P38.1 billion in 2008. This surpassed the company’s growth expectation of five percent or P37 billion for the same year.

Nazareno said this growth is driven by the five-percent increase in consolidated service revenues, a six-percent rise in
earnings before interest, taxes, depreciation and amortization (EBITDA) and a 14-percent decrease in financing costs.

Pangilinan said core net income increase was also made possible by “continued growth of the company’s wireless business, the steady performance of fixed line operations, and the robust growth of broadband, both on the wireline and wireless platforms.”

Navarro said that PLDT delivered “another solid performance” in 2008 despite difficult economic conditions brought about by the global economic turmoil.

Strategy

To ride out the economic storm in 2008, Pangilinan said the company implemented a four-pronged strategy to optimize its existing voice and text-based businesses, build its data and broadband operations, and sustain investments in information
technology-based network infrastructure while keeping cash operating expenses under check.

“The solid performance of PLDT in 2008 and the increasing bias in consumer spending preferences towards our products and services provide some cheer to our prospects this year.

Accordingly, we have given our core profit guidance to lie north of P40 billion for 2009,” Pangilinan said in a speech during the stockholders’ meeting.

This year, Nazareno said PLDT will continue to contain costs, raise efficiencies, and optimize revenues and profits as it continues to invest in the future “to ensure that the country has the communications infrastructure and services it requires to recover from this crisis.”

In 2008, PLDT’s service revenues and EBITDA grew five percent to P142.9 billion and six percent to P87.6 billion, respectively.

“We did not, however, escape completely unharmed from the effects of the crisis. Reported net income, after reflecting exceptional losses netted off against exceptional gains, decreased by four percent to P34.6 billion,” Pangilinan said.

He attributed this to asset impairments in the information and communication technology business and a net foreign exchange loss due to large fluctuations in the peso-dollar exchange and interest rates.

PLDT’s free cash flow remained “strong” at P47.9 billion. Its debt position is also considered “extremely sound,” ending 2008 with a net debt of approximately P800 million.

“Our healthy financial position has enabled us to declare 100 percent dividend payout of core earnings for the second consecutive year.