PSE Circular for Brokers No. 2160-98

September 17, 1998 PSE CIRCULAR FOR BROKERS NO. 2160-98 September 16, 1998 Philippine Stock Exchange, Inc. PSE Center, Exchange Road Ortigas Center, Pasig City Gentlemen : Thank you for allowing us to clarify the contents of the news article in the September 15, 1998 issue of the Business World. The reference to a potential P5M loss per day in the event of a strike is grossly exaggerated and taken out of context. Additionally, the article "en toto" is as sorely lacking in important historical and factual detail. prcd While P5M roughly represents the collective daily revenue target of the key business lines referred to, we assure you that with our contingency plans, a strike will have a minimal impact on our revenue-earning and collecting capacity. Of particular importance is the fact that a major cost-containment program including a workforce rightsizing effort is precisely being undertaken, among other major cost reduction programs, to improve the company's financial situation. Already we are seeing significant improvements in our cash flows despite the external pressures brought about by the peso devaluation and higher credit costs. The news article failed to mention that a 20% cut in our workforce has been realized through a Voluntary Staff Reduction Program and the further cut through the Temporary Staff Reduction Program being availed by the union is meant to address the rightsizing shortfall as we reengineer and restructure our organization for greater competitiveness. Also noteworthy is the fact that we have a most unique and comprehensive Post-Separation Assistance Program for separated employees. The union has filed a notice of strike on non-strikable grounds. Nonetheless, while we are most optimistic that the labor dispute will soon be settled amicably with the help of the NCMB as mediator. Being a business concern imbued with national interest and security, we have taken the precautionary measure of petitioning for assumption of jurisdiction in the event of a breakdown in the conciliation talks. Conciliation are continuing at the NCMB where we aim for resolution within the week. We would appreciate your apprising member-brokers and the investing public of the foregoing. The PT&T management team under the leadership of Ms. Marilyn E. Santiago, President and CEO, is resolute and single minded in its business transformation efforts. Should you have further queries, please do not hesitate to call us. Very truly yours, PHILIPPINE TELEGRAPH & TELEPHONE CORP. (SGD.) GERARDO R. DE LEON Senior Vice president-Finance