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PHILIPPINE Long Distance Telephone Co. (PLDT) said it lost hundred
billions of pesos in market value so far this month owing to the
weak financial market caused by the US economic slowdown and higher
food and fuel prices.
“Despite our record profits and
dividends—disappointingly and perhaps painfully—our share price
has declined since December 2007, reflecting the pronounced bearish
tone of financial markets globally,” Manuel V. Pangilinan, PLDT
chairman said.
Partly owned by Hong Kong’s First Pacific Co.
Ltd. and Japan’s NTT group, the Philippines’ largest telecom
company last year reported a P36-billion net income, 22 times higher
compared 10 years ago or a compound growth rate of 43 percent per
year.
In the first quarter this year, PLDT posted a
net income of P10.4 billion, 21 percent higher than the P8.6 billion
in the same period last year.
As of June 10, the company’s share closed at
P2,345 per share or a sharp reduction of 23 percent since year-end.
Its market value amounted to P460 billion, equivalent to about $10.3
billion, based on that closing price.
“We have lost P139 billion in market
value—more than our entire market capitalization 10 years ago. The
consolidation in the Philippine Stock Exchange Index has dropped by
more than [the] share price—by 27 percent for the period,”
Pangilinan said.
PLDT is worth about four times what it was 10
years ago, having increased in value by P340 billion.
In 1998, its market value stood at P121
billion—equivalent to about $3 billion at the then exchange rate,
with a price of P1,000 per share.
This year, Pangilinan said the company faces
unprecedented risks and pressures. “The Asian financial crisis of
1997 involved the failure of financial assets, arising from
exuberant and exaggerated values then. This time, we’re seeing not
only financial assets languishing—as they did 10 years ago—but,
as well, rising food and fuel prices,” he said.
Pangilinan said the company expects growth in
consumption spending to abate because of high food and fuel prices.
“This is critically important since consumer
expenditures is the mainstay of our business. The good news might
lie in the continued strength in the flows of overseas remittances,
to compensate for accelerating prices,” he said.
Pangilinan, however, said that the direction of
remittance-led spending is likely to shift away from asset
acquisitions such as the purchase of real estate and move towards
maintaining people’s ability to spend on life’s necessities like
food, rent and education.
Despite this, he is optimistic about posting a
“steady” growth this year. PLDT maintained its core net income
guidance this year of P37 billion and service revenue of between
P145 billion and P146 billion. Last year, the company’s core net
income amounted to P35.2 billion.
The company plans to raise its regular dividends
by P2 billion to about P26 billion or 70 percent of estimated 2008
core earnings.
-- Darwin G. Amojelar
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