Piltel, Posts Reduced Loss of P3.9 B for 1999 Despite Lower Revenues

March 1, 2000 PSE CIRCULAR FOR BROKERS NO. 526-00 PILTEL, POSTS REDUCED LOSS OF P3.9 B FOR 1999 DESPITE LOWER REVENUES Pilipino Telephone Corporation (Piltel) announced today that it recorded a loss of P3.9 billion in 1999 compared with a loss of P4.1 billion in 1998, reflecting a net operating loss for the year of P2.7 billion and other expenses, of which P1.2 billion related principally to interest. In the face of increased competition from GSM providers and the growing dominance of the prepaid service, the Company's net operating revenues declined by 19 per cent to P3.7 billion in 1999 from P4.6 billion in 1998. Operating expenses fell by 2 per cent, from P6.5 billion in 1998 to P6.4 billion in 1999. Piltel's cellular subscriber base increased by 21 per cent to 457,000 at year-end 1999 from 377,000 in 1998. This was bolstered by an 82 per cent growth in prepaid card customers to 323,000 from 177,000 at the start of the year. Prepaid subscribers now account for more than 70 per cent of the Company's total cellular subscriber base. Subscribers to its paging network decreased 11 per cent to 46,000 at year-end 1999 from 52,000 at year-end 1998, while fixed-line customers rose, 3 per cent to 78,000 in 1999 from 76,000 in 1998. From May to July of 1999, Piltel implemented. a retrenchment program that resulted in 377 employees leaving the Company. The Company presently has 1,376 employees, a reduction of 25 per cent from the 1998 year-end count of 1,841. On 8 October, the Company signed a Memorandum of Understanding with its creditor banks. The MOU is intended to be the basis for the restructuring of Piltel's debt. The Company's indebtedness stood at P22.4 billion at year-end 1999, approximately the same level as at year-end 1998 Piltel also has a contingent liability of US$280 million, related to the Build/Transfer contract with Marubeni Corporation for its fixed-line network in Mindanao. The Company is negotiating separate restructuring agreements with its bondholders and with Marubeni Corporation. LibLex Piltel's President and CEO, Napoleon Nazareno, said: "We have had one full year managing the Company and I am pleased to report that operations and costs, as well as capital expenditures, are now under control. We have made major strides in restructuring debt and hope to complete the entire procedure by the end of the year. While our subscriber numbers are up, the highly competitive environment made it difficult for us to achieve our revenue goals. However, we are preparing a number of innovative product offerings to be launched within 2000 that should enable us to re-establish our presence in the market."