“The rating for Philippine Long Distance Telephone Company’s (PLDT) P2.0 billion short-term commercial papers (STCPs) is PRS 1,†PhilRatings announced. PRS 1 is the highest rating possible on PhilRatings’ short-term rating scale. A PRS 1 (Best Grade) rating is defined as: “Strongest capability for timely payment of debt instrument issue on both principal and interest. †PLDT will file an application to issue its STCPs with the Securities and Exchange Commission (SEC) within November.
In assigning the rating, PhilRatings focused on the expected improvement in cash flow generation that will result from sustained earnings growth and a reduction in planned capital spending going forward as the bulk of needed infrastructure has already been put in place. PLDT continues to have a very strong market position in the vital and growing telecommunications sector. It has demonstrated its capability to compete in a liberalized environment as shown by its present 63% share of fixed-line subscribers and a 57% share in the fast-growing wireless segment, through its holdings in SMART Communications (SMART) and Piltel.
Recently, PLDT has put in place several credit facilities to cover a significant portion of its debt that will mature in 2002-2004, addressing the issue of re-financing risk in a timely manner. This likewise shows the company’s strong financial flexibility even with its relatively significant debt level at present. PLDT aims to reduce its debt in the next few years. In addition, as a result of the completion of the debt restructuring of Piltel in June 2001, PLDT’s required support for Piltel has been addressed and the market gains made by Piltel from its “Talk ‘N Text†brand are expected to improve its operating results moving forward.
The company’s consolidated earnings increased by 208% to P3.4 billion in 2001 underpinned by strong revenue growth of wireless subsidiary SMART coupled with PLDT’s continuing cost control initiatives. SMART is expected to sustain a healthy growth in cellular subscription and generate significant cash flows even as the market is projected to be increasingly competitive.