Piltel income up 34% to P7 billon in first half

MANILA, Philippines - Pilipino Telephone Corp. (Piltel) posted a 34 percent increase in its net income to P7 billon during the first half of 2009, from P5.2 billion in the same period last year, the company said in a statement. 

With a subscriber base of 16.6 million at the end of June, Piltel’s wireless brand Talk ‘N Text remained the second largest cellular brand in the country. Talk ‘N Text added around 2.28 million subscribers in the first six months of this year.

Service revenues grew five percent to P8.6 billion while earnings before interests, taxes, depreciation and amortization (EBITDA) increased three percent to P7.7 billion.

Last July 14, after securing the necessary shareholder approval, Piltel completed its acquisition of 223 million shares of Manila Electric Co. (Meralco), equivalent to 20 percent of the power utility’s outstanding common shares. As a result of this investment, Meralco’s financial results will be reflected in Piltel’s financial reports under the equity accounting method beginning the third quarter of 2009, company officials said.

Also approved was the sale and transfer of Piltel’s cellular assets, subscribers and the Talk ‘N Text trademark to parent firm Smart Communications.

These transactions, officials said, are expected to be completed in the third quarter of 2009, after which Piltel will divest of its cellular business and will instead act as holding company for the Meralco shares.

Piltel is selling for P11.5 billion its telecommunications business to Smart, which owns 92.8 percent of Piltel. The amount, to be paid in cash and sourced from Smart’s corporate funds, will be broken down into P8 billion for the sale of the Piltel trademark; P1.2 billion for the transfer of Piltel’s 16.6 million subscriber base to Smart; and P2.3 billion for the sale of its GSM fixed assets.

To provide the minority shareholders of Piltel holding a total of 7.19 percent stake an exit as the company ceases to be a telco provider, Smart has offered to acquire their shares at P8.50 each.

Philippine Long Distance Telephone Co. group chairman Manuel Pangilinan, who also chairs Piltel, earlier said they have not made up their minds on the planned delisting of Piltel once Smart consolidates its stake. “But those who will not avail of the tender offer face the prospects of delisting,” he said.

Piltel informed its shareholders that in the event that the company’s public float becomes very minimal, there is a possibility that its common shares would not be actively traded or the trading volume of its common shares would fall below the trading volume requirement of the Philippine Stock Exchange. In such case, Piltel could be subject to an involuntary delisting proceeding.