PLDT regains ‘investment grade’ status from S&P

MANILA, Philippines–Philippine Long Distance Telephone Co. (PLDT) has regained its investment grade status following the recent upgrade of the country’s own sovereign credit debt rating.

The Philippines was recently upgraded to a notch below investment grade by global debt watcher Standard & Poor’s (S&P), which cited the country’s improved economic fundamentals.

The Asean scale long-term rating on PLDT was raised by one notch to  ‘axA-’ from ‘axBBB+’. The company’s ratings remain constrained by the Philippines’ sovereign rating. The company cannot be rated more than a notch above the country it operates in.

“The rating on PLDT also reflects the country and macroeconomic risk of the Philippines and intense competition in the matured domestic cellular market,” S&P credit analyst Paul Draffin said in a statement.

“PLDT’s strong position in the domestic market, diversified services, integrated network and solid cash flow measures temper these weaknesses,” he said.

Last year, PLDT acquired rival network Digitel Telecommunications Philippines Inc., operator of Sun Cellular, to cement its position as the leader of the country’s lucrative telecom market.

The PLDT group now has more than 65 million mobile phone subscribers, or roughly two-thirds of the total Philippine market.

For the first quarter of 2012, PLDT’s core profit, which excluded exceptional gains, slipped to P9.3 billion from P10.6 billion a year earlier.

Its reported net income, including the integration of Digitel’s operations, reached P10.1 billion in the three-month period. This was lower than the P10.7 billion booked in the same period last year. PLDT’s consolidated earnings before income tax, depreciation and amortization (Ebitda) slipped 2 percent to P20.5 billion in the quarter, mainly due to the integration of Digitel’s lower-margin operations into PLDT’s books.