Philippine Long Distance Telephone Co. (PLDT), the country's largest listed firm, delayed some capital spending after quarterly net profit fell 28 percent due to higher costs and slowing demand but maintained its outlook.

The Philippines' dominant phone firm said on Tuesday it kept its forecast of a 5 percent rise in core net profit to P37 billion ($757 million) this year, braking from last year's 11 percent growth as high inflation dampens consumer spending.

PLDT, the country's largest listed firm with a market value of $7.8 billion, said it would re-assess its capital expenditure program early next year when it calculated the effects of high inflation and global financial turmoil.

Analysts said PLDT results in its seasonally strong fourth quarter may be dampened by slower usage as the overall economy braces itself for a more severe impact of the financial crisis.

"Core earnings growth in the fourth quarter will not be as strong anymore," said Jody Santiago, head of research at UBS Securities Phils Inc. "PLDT and telcos will no longer be growth stocks, they will be viewed as yield plays."

PLDT, owned by Hong Kong's First Pacific Co. Ltd. and Japan's NTT Communications and NTT DoCoMo, reported net income of P6.91 billion in the third quarter against P9.54 billion a year ago.

In the first nine months of the year, PLDT's net profit slid 2.0 percent year-on-year to P26.2 billion. Analysts do not provide quarterly forecasts for PLDT.

Ahead of its results, analysts had estimated the firm's full year net profit to rise by a modest 4 percent to P37.5 billion, according to Reuters Estimates. The consensus forecast was lower than the 5.3 percent growth estimate as of early August.

PLDT's stock has lost about 37 percent so far this year, but outperformed a 45 percent fall in the broader market.

The company said despite slowing demand, it would maintain its dividend policy payout ratio at 70 percent of core earnings.

Core earnings steady

PLDT chairman Manuel Pangilinan said in a statement the company had postponed some investments in its wireless broadband and wider mobile phone infrastructure and would limit its expenditures by P1.5 billion  to P27 billion.

Core earnings, which strip out currency and derivative gains, stood at P9.1 billion in the third quarter, flat from a year ago but up 5 percent in the first nine months of the year.

The company said groupwide service revenues in the third quarter reached P35.2 billion, up 5 percent from a year ago.

"While the third quarter is seasonally a slow one for us, we are beginning to see the effect of inflation on activations and usage," PLDT President Napoleon Nazareno said.

Annual inflation hit a peak at 12.5 percent in August before sliding to 11.9 percent in September. The central bank expects consumer prices to continue to decelerate and reach single-digit levels by early 2009.