DIGITAL earns P801.1 million in 1997

April 24, 1998 PSE CIRCULAR FOR BROKERS NO. 795-98 April 22, 1998 Reference Person: Atty. William Pamintuan Tel No. 633-0000 DIGITAL earns P801 . 1 million in 1997 Capping another successful year, Digital Telecommunications Phils., Inc. (DIGITEL) reported a net income of P801.1 million in 1997, or 14.0% higher than the 1996 figure of P702.5 million. Its operating revenues rose to P1,818.2 million in 1997, a 51% increase from P1,207.8 million in 1996. This growth reflected the combined effects of (a) growth in the number of telephone lines connected from 80,586 in 1996 to 150,688 in 1997; (b) higher Peso income from the dollar-based revenues derived from its international toll traffic as a result of depreciation of the Peso relative to the US Dollar; (c) and imposition of foreign currency adjustment which allows the Company to adjust its monthly basic rates by certain percentages from the change in the Peso/US dollar exchange rate as measured by the Philippine Dealing System reference rate. cdlex Operating and general expenses increased to P899.0 million in 1997 from P547.0 million in 1996. The increase is mainly due to higher employee-related expenses resulting from the growth in manpower resources and skills training program, increase in rental facilities and equipment and other outside services cost arising from the expansion of existing telephone network; higher provision for doubtful accounts; and additional costs associated with DIGITEL's sales and marketing thrusts. Depreciation and amortization expenses registered an increase of P227.1 million from P256.9 million in 1996 to P484.0 million in 1997 due to continuing investments in telecommunications facilities and equipment as well as incremental depreciation charges on the capitalized foreign exchange losses. As a result of the foregoing factors, DIGITEL generated an operating income P435.2 million in 1997, an improvement of 7.7% from P403.9 million in 1996. A reduction in other income-net (principally interest income, net of interest expense) from P599.2 million in 1996 to P569.8 million in 1997, due to higher interest expense in 1997, resulted in a slight improvement in pre-tax accounting income from P1,003.1 million in 1996 to P1,004.0 million in 1997.