MANILA - Pilipino Telephone Corp.’s (Piltel) net income in the first 9 months of the year surged 125% to P17.8 billion from P7.9 billion in the same period last year mainly due to the proceeds booked from the sale of the company’s assets to it parent firm Smart Communications Inc.

Piltel no longer operates as a phone company. Effective on ºAugust 17, its cellular assets, subscriber base and Talk ‘N Text trademark were sold and transferred to Smart. Piltel is now 99.5% owned by Smart. This transaction, which entailed removing the said assets from Piltel’s books, resulted in a one-time net gain of P7.6 billion.

Piltel also recorded a one-time gain of P1.2 billion as a result of the purchase transaction inked with the Lopez Group for the sale of shares in power retailer Manila Electric Co. (Meralco).

In March, Piltel inked an exchangeable note agreement with the Lopezes where the former purchased an exchangeable note issued by First Philippine Utilities Corp., with a face value of P2 billion. This was subsequently exchanged into 22.22 million Meralco shares and which constitute part of the 20% now held by Piltel. If not for these 2 reasons, Piltel’s core net income rose by only 8% to P8.5 billion in the first 9 months of 2009 from P7.9 billion recorded in 2008.

Having acquired 223 million shares in Meralco, equivalent to 20% of the retailer outstanding shares of common stock in July, Piltel financial reports now include the power retailer’s financial results, under the equity accounting method.

For the period on July 15 to September 30, the equity share in Meralco’s earnings accounted for P361.3 million of Piltel’s revenues. Meralco’s revenues consist primarily of income from the transmission, generation and distribution of electricity, the first 2 of which are “pass-through” charges.