Philippine Long Distance Telephone Co. (PLDT) on Tuesday reported a net income of P9.6 billion for the first three months of the year, an 8-percent drop from P10.4 billion recorded in the same period in 2008.

In a press briefing, PLDT and Smart Communications Inc. President and CEO Napoleon Nazareno attributed the year-on-year decrease to P600 million in foreign exchange and derivative losses resulting from movements in the peso-dollar exchange rate.

Core net income for the first quarter grew 9 percent to P10.2 billion from P9.3 billion last year as a result of growth in service revenues.

"Despite earlier apprehension that our core businesses would already be negatively impacted by the global recession, we are pleased by our strong performance in the first quarter; activations for the period were the highest in recent history and revenues continue to grow," Nazareno said.

Consolidated service revenues rose 4 percent to P36.2 billion from P34.9 billion in the previous year due to the 6-percent growth in revenue on data and information and communications technology (ICT), which now accounts for 54 percent of total service revenues.

For the full year, PLDT is expecting P150 billion in service revenues, a 5-percent growth from 2008.

Higher income

PLDT projected a core net income of P40 billion this year, or a 5-percent growth from 2008.

But PLDT chairman Manuel V. Pangilinan told reporters that core earnings would "likely fall north" of the said guidance after strong subscriber take-up in the first quarter.

"We are buoyed by our strong start for 2009. We have sustained our growth in both subscriber numbers and revenues across business lines. On this basis, prospects for our full year performance are quite encouraging," Pangilinan said.

The PLDT Group's total cellular subscriber base grew 17 percent to 36.9 million, with net additions of 1.7 million subscribers from Smart and Talk 'N Text for the first quarter. Of the said amount, 1.26 million are Talk 'N Text subscribers.

Meanwhile, Pangilinan said the group may post a higher net income this year from P34.6 billion in 2008 if the average foreign exchange rate stays within P48 to P49 per dollar, limiting PLDT's derivative and forex losses.

Debt

PLDT's capital expenditures for 2009 are estimated to reach P27 billion or 18 percent of anticipated service revenues. The company plans to spend P15.8 billion for its wireless services, P10.2 billion for fixed line services, and P1 billion for ICT.

As of end-March, PLDT had a net debt of $1.1 billion. The company said it has already repaid $114 million worth of dollar-denominated notes due this year, with the bulk of its other debt maturities due in, and beyond, 2013.

This year, PLDT is expecting its debt to rise by as much as P15 billion as it issues peso bonds to buy a 20-percent stake in Manila Electric Co. (Meralco) through Pilipino Telephone Corp. (Piltel).

According to PLDT Treasurer Anabelle Chua, the company is not planning to raise the entire amount in one deal, and would likely opt for several small debt sales.

"In aggregate, it would be around P15 billion," she told reporters.

For his part, Pangilinan said the company would most likely be issuing peso-denominated bonds to raise the said amount. He added that Piltel's investment on Meralco is set to be completed by end-August.