The Philippine Long Distance Telephone (PLDT) yesterday reported its net profit for last year plunged 85.5 per cent to 1.1 billion pesos (about HK$217.47 million). PLDT chief executive Manuel Pangilinan attributed the decline to 4.5 billion pesos in provisioning for doubtful accounts and asset depreciation and a 2.1 billion share in the losses by mobile-phone subsidiary, Pilipino Telephone (Piltel). Despite the decline, Mr Pangilinan said Hong Kong's First Pacific - which owns a controlling interest in PLDT - would push through with its plan to infuse more capital into the Philippines' dominant telecommunications carrier. The investment would be carried in two phases, he said - a cash infusion of about US$500 million from First Pacific, and at least $500 million more in the form of a share swap between PLDT and mobile-phone provider Smart Communications, which is controlled by First Pacific's Philippine subsidiary. Piltel is 34 billion pesos in debt and came dangerously close to defaulting on its loans earlier this year. A rehabilitation plan is being worked out with creditors, who insist PLDT must guarantee Piltel's loans. Mr Pangilinan insists Piltel can still be 'saved' and, possibly merged with Smart by mid-year. He expects Piltel to remain in the red this year, but is optimistic its losses will decline considerably. Mr Pangilinan admitted that First Pacific did not have a clear picture of PLDT's financial position when the firm took it over in November. 'The extent of the loans were more significant than we anticipated,' he said. He agreed that the losses of Piltel, in particular, had 'to some degree' diminished the lustre of PLDT, which was in 1997 the country's seventh-largest corporation in terms of gross income. Now that the figures are in, he said 'we would have preferred to have paid a lower price' than the $750 million it paid for a 27.4 per cent voting interest in PLDT. Nonetheless, he said 'the underlying strength of PLDT' would allow it 'to go through this rather rough patch', which he expects to end this year.
