PLDT’s ICT arm more than doubles income to P687M

ePLDT, the information and communications technology arm of the Philippine Long Distance Telephone Co. (PLDT) group, a 160-percent growth in core net income, from P264 million in 2006 to P687 million last year.

The ICT firm likewise posted a 59 percent growth in  service revenues from P6.3 billion in 2006 to P10.1 billion in 2007.

Company officials said the increase in service revenues was driven by the continued growth in the call center business (ePLDT Ventus) and the consolidation of SPi Technologies after its acquisition by ePLDT in July 2006.

Despite its significant growth, ePLDT’s revenues were likewise adversely impacted by the strong appreciation of the peso since approximately 82 percent of its service revenues are in US dollars.

As a result, ePLDT’s earnings before interests, taxes, depreciation and amortization (EBITDA) margin last year declined to 11 percent compared with 14 percent in 2006.

PLDT president and chief executive officer Napoleon Nazareno said the lower EBITDA margin was due to the negative impact of the 10 percent peso appreciation on ePLDT’s dollar-denominated revenues, higher compensation and benefit costs associated with the implementation by Ventus of new incentive schemes designed to increase retention, and longer lead times needed to offshore the medical transcription business from the US to the Philippines said India.

The company would have reported an additional 74 percent growth in revenues if the peso had remained stable year-on-year.

ePLDT’s revenues now account for seven percent of the PLDT group’s consolidated revenues. About 84 percent of ePLDT’s revenues come from Ventus and SPi. Of the total revenues of the two companies, 38 percent is accounted for by voice, 25 percent by healthcare, 22 percent by publishing and 15 percent by legal.

Around six percent of the PLDT group’s 2008 capital expenditure budget of P25.4 billion will be used for ICT.

Consolidated call center revenues continued to make significant gains, growing 24 percent to P3.3 billion as a result of increased capacity utilization and billable hours, for new and existing clients, despite the appreciation of the peso. Ventus now operates nine facilities with combined seats of 6,400.

SPi, on the other hand, generated revenues of P5.3 billion last year. In addition to the Philippines and the US, SPi has operations in India and Vietnam. Consolidated seats numbered 4,500 of which 80 percent are located in the Philippines.

The combined number of seats for Ventus and SPi almost reached 11,000 as of end-2007, representing an 18 percent growth from 2006. Non-voice grew 22 percent to over 4,500 seats while voice grew 14 percent to over 6,400 seats. The number of sites grew to 24: 15 for non-voice and nine for voice.

ePLDT president and CEO Ray Espinosa noted that the continuing integration of SPi and Ventus has resulted in operating efficiencies and enhanced processes across both companies “which we anticipate will contribute to improved margins in due course.”

“We also have high expectations for improving results from our world-class data center, VITRO, which recently achieved its ISO27001:2005 and ISO9001:2000 recertification as well as PEZA accreditation,” he added.