SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 

 

FORM 6-K

Report of Foreign Private Issuer 

 

Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

 

 

**For the month of July 2006**
 

 

**Commission File Number 1-03006**

 

 

Philippine Long Distance Telephone Company
(Exact Name of Registrant asSpecified in Its Charter)

 

**Ramon****Cojuangco Building**

**Makati Avenue**

**Makati****City**

**Philippines**

(Address of principal executiveoffices)

 

 

(Indicate by check markwhether the registrant files or will file annual reports under cover Form 20-For Form 40-F.)

 

Form20-F      Ö                                  Form40-F

 

 

(Indicate by check markwhether by furnishing the information contained in this Form, the registrant isalso thereby furnishing the information to the Commission pursuant to Rule12g3-2(b) under the Securities Exchange Act of 1934.)

 

Yes                                                        No       Ö

 

 

(If "Yes" ismarked, indicate below the file number assigned to the registrant in connectionwith Rule 12g3-2(b): 82- ________ )
****
 

 

NOTE REGARDINGFORWARD-LOOKING STATEMENTS

 

Some information in this report may containforward-looking statements within the meaning of Section 27A of the U.S.Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of1934.  We have based these forward-looking statements on our current beliefs,expectations and intentions as to facts, actions and events that will or mayoccur in the future.  Such statements generally are identified byforward-looking words such as “believe,” “plan,” “anticipate,” “continue,” “estimate,”“expect,” “may,” “will” or other similar words.

A forward-looking statement may include astatement of the assumptions or bases underlying the forward-lookingstatement.  We have chosen these assumptions or bases in good faith.  Theseforward-looking statements are subject to risks, uncertainties and assumptions,some of which are beyond our control.  In addition, these forward-lookingstatements reflect our current views with respect to future events and are nota guarantee of future performance.  Actual results may differ materially frominformation contained in the forward-looking statements as a result of a numberof factors, including, without limitation, the risk factors set forth in“Item 3. Key Information – Risk Factors” in our annual report on Form 20-Ffor the fiscal year ended December 31, 2005.  You should also keep in mind thatany forward-looking statement made by us in this report or elsewhere speaksonly as at the date on which we made it.  New risks and uncertainties come upfrom time to time, and it is impossible for us to predict these events or howthey may affect us.  We have no duty to, and do not intend to, update or revisethe statements in this report after the date hereof.  In light of these risksand uncertainties, you should keep in mind that actual results may differmaterially from any forward-looking statement made in this report or elsewhere.

 
 

 

**EXHIBITS**
 

 

 

Exhibit Number

 

Page

 

1

 

A copy of the disclosure letter we sent today to the Philippine Stock Exchange and the Securities and Exchange Commission regarding the press release issued by Moody’s Investors Service (Moody’s) entitled “Moody’s Upgrades PLDT’s Local Currency Rating to Baa3; Outlook Positive”.

 

 

 

6

 

Exhibit 1

 

 

 

** **

   
 July 19, 2006

 
 

 

The Philippine Stock Exchange
Disclosure Department

4th Floor PSECentre

Exchange Road, Ortigas Center

Pasig City

 

Attention:        Ms.Jurisita M. Quintos 

SeniorVice President 

 

Ladies and Gentlemen:

 

In compliancewith Section 17.1(b) and Section 17.3 of the Securities Regulation Code, wesubmit herewith a copy of SEC Form 17-C with a press release issued by Moody’sInvestors Service (Moody’s) attached thereto entitled “Moody’s Upgrades PLDT’sLocal Currency Rating to Baa3; Outlook Positive”.

 

This shall also serve asthe disclosure letter for the purpose of complying with PSE CorporateDisclosure Requirements.

 

 

Respectfully yours,

 

 

/s/Ma. Lourdes C. Rausa-Chan

MA. LOURDES C. RAUSA-CHAN 

Corporate Secretary 

 

MLCRC:amq

Encs.

 

Page 1 of 6

  Exhibit 1

 

 

 

 

July 19, 2006 

 

 

SECURITIES &EXCHANGE COMMISSION

Money MarketOperations Department

SEC Building, EDSA

Mandaluyong City

 

Attention         :           DirectorJustina F. Callangan

                                    CorporationsFinance Department

 

Gentlemen:

 

Re       :           PhilippineLong Distance Telephone Company

                        SECRegistration No. PW-55

 

In accordancewith Section 17.1 (b) of the Securities Regulation Code, we submit herewithfive (5) copies of SEC Form 17-C with a press release issued by Moody’sInvestors Service (Moody’s) attached thereto entitled “Moody’s Upgrades PLDT’sLocal Currency Rating to Baa3; Outlook Positive”.

 

 

Very trulyyours,

 

 

/s/Ma. Lourdes C. Rausa-Chan

MA. LOURDES C. RAUSA-CHAN

Corporate Secretary

 

MLCRC:amq

Encs.

 

 

 

Page 2 of 6

  Exhibit 1

 

 

 

SECURITIES ANDEXCHANGE COMMISSION

 

 

SEC FORM 17-C

 

CURRENT REPORTUNDER SECTION 17

OF THESECURITIES REGULATION CODE

AND SRCRULE 17.1

 

 

 

 

1.                 July 19, 2006 

(Date of earliest event reported)

 

2.                 SEC Identification Number  PW-55

 

3.                 BIR Tax Identification No. 000-488-793

 

4.                 PHILIPPINE LONGDISTANCE TELEPHONE COMPANY                                        

            Exactname of registrant as specified in its charter

 

5.         PHILIPPINES6. _____________ (SEC Use Only)  

           Province, country or otherjurisdiction             Industry Classification Code

of Incorporation

 

7.         Ramon Cojuangco Building, Makati Avenue, Makati City             1200

     Address of principal office                                                      PostalCode

 

8.         (632)816-8553; 816-8556                                            

            Registrant's telephone number, including areacode
 

9.         NotApplicable                                                               

            Formername or former address, if changed since last report

 

10.       Securitiesregistered pursuant to Sections 8 and 12 of the SRC

 

            Titleof Each Class                             Number of Shares of Common Stock

          Licensed and Amount of Debt Outstanding

Page 3 of 6

  Exhibit 1

 

 

            Attachedhereto is a press release issued by Moody’s Investors Service (Moody’s)entitled “Moody’s Upgrades PLDT’s Local Currency Rating to Baa3; OutlookPositive”.

 

 

 

SIGNATURE

 

            Pursuantto the requirements of the Securities Regulation Code, the Registrant has dulycaused this report to be signed on its behalf by the undersigned hereto dulyauthorized.

 

 

 

 

PHILIPPINE LONG DISTANCE

TELEPHONE COMPANY

 

 

/s/ Ma. Lourdes C. Rausa-Chan

MA. LOURDES C. RAUSA-CHAN 

Corporate Secretary

 

 

 

 

 

Date:  July 19, 2006 

 

Distribution Copies:  5copies – Securities & Exchange Commission

                        1copy    - Philippine Stock Exchange

                                    1copy    - Company Secretary

 

 

  
** **

  
Page 4 of 6

   

Exhibit 1

 

 

***Moody’sInvestors Service*****Global Credit Research**

**RatingAction**

**18JUL 2006**

 

 

**Rating Action: PhilippineLong Distance Telephone Company**

 

 

**MOODY'S UPGRADES PLDT'SLOCAL CURRENCY RATING TO Baa3; OUTLOOK POSITIVE**

 

 

Hong Kong, July 18, 2006 --Moody'sInvestors Service has today raised the local currency corporate family ratingof Philippine Long Distance Company (PLDT) to Baa3 from Ba1 with a positiveoutlook. This action concludes the review for possible upgrade commenced onMarch 29, 2006. At the same time, Moody's has withdrawn the Baa3 corporatefamily rating and assigned a Baa3 local currency issuer rating --positiveoutlook -given the company is investment grade without issues of subordination.Moody's has affirmed PLDT's Ba2 foreign currency senior unsecured ratings,which were not subject to the review, with a negative outlook. 

 

"Theupgrade has been prompted by continued improvements in PLDT's credit profile,such that it now enjoys a lowly geared balance sheet, a 65% share in revenueterms of the Filipino market, where only one major competitor is present, andhas flexibility significant enough to invest its free cash flows into upgradingits technology base," says Moody's Charles Macgregor, VP/Senior CreditOfficer and lead analyst for the company. 

 

Moody's notes that the company has firmgrowth prospects; manageable capex requirements notwithstanding prospectiveinvestment in 3G technology and a next generation fixed network; no meaningfulstructural subordination, notwithstanding debt at its Smart Cellularsubsidiary; conservative financial policies; and a sound liquidity risk profileto ensure that it is appropriate for an investment grade company. 

 

"Thecompany, however, remains exposed to changes in government fiscal policy and,to a lesser degree, regulatory and foreign exchange risk, such that continuedopen access to global capital markets may be threatened by any precipitousdevelopments within the Philippines. At the same time, the magnitude of thisrisk diminishes as PLDT repays maturing debt given lack of need to access debtmarkets," Moody's Macgregor adds. 

 

Thelocal currency issuer rating outlook is positive, while the foreign currencyrating has a negative outlook and would be downgraded if the Philippines' B1 foreign currency country ceiling with negative outlook is downgraded. 

 

Inaccordance with Moody's global rating methodology for telecommunicationscompanies (please refer to Rating Methodology: Global TelecommunicationsIndustry, February 2005), PLDT's overall performance measurements on aconsolidated basis, relative to the rating methodology, indicate a Baa3 ratingcategory being constrained by country specific factors, which is consistentwith its Local Currency rating. 

 

The positive outlook reflects that PLDT'scredit metrics already exhibit a strong investment grade quality; hence upwardpressure on the local currency rating is now a function of a more stableeconomic, political and social environment, and which could reduce theuncertainties associated with the company's prospective operating environment.Indicators of a stabilising environment could be reflected by a strengtheningof EBITDA, both absolutely and as a percentage of revenue above PHP90 billionand 65% respectively. A seamless transition to a 3G platform would also be apositive development. The foreign currency ratings would further be upgradedwith an upgrade in the sovereign rating. 

 

Page 5 of 6

  Exhibit 1

 

 

PLDTcurrently enjoys a healthy financial and operating risk profile, and downwardpressure on the rating is not expected. Event risk is, however, apparent due tosovereign-related issues that could manifest in changes to either the tax orregulatory environments. Such an outcome may be seen in weaker credit metrics,specifically with the EBITDA margin falling below 50%, debt/EBITDA rising above2.0x, and FFO Interest coverage trending towards 4x. In addition, PLDT'sforeign currency ratings are sensitive to movements in the sovereign rating. 

 

PhilippineLong Distance Company, based in Manila, Republic of Philippines, is thatcountry's leading provider of integrated telecommunications services. 

 

 

Sydney

Brian Cahill Managing Director

Corporate Finance Group

Moody's Investors Service Pty Ltd

JOURNALISTS: (612) 9270-8102

SUBSCRIBERS: (612) 9270-8100 

 

Sydney

Charles F. Macgregor

VP -Senior Credit Officer

Corporate Finance Group

Moody's Investors Service Pty Ltd

JOURNALISTS: (612) 9270-8102

SUBSCRIBERS: (612) 9270-8100 

 

© Copyright 2006, Moody's InvestorsService, Inc. and/or its licensors including Moody's Assurance Company, Inc.(together, "MOODY'S"). All rights reserved. 

 

ALL INFORMATIONCONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAYBE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED,TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENTUSE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANYMEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. Allinformation contained herein is obtained by MOODY'S from sources believed by itto be accurate and reliable. Because of the possibility of human or mechanicalerror as well as other factors, however, such information is provided "asis" without warranty of any kind and MOODY'S, in particular, makes norepresentation or warranty, express or implied, as to the accuracy, timeliness,completeness, merchantability or fitness for any particular purpose of any suchinformation. Under no circumstances shall MOODY'S have any liability to anyperson or entity for (a) any loss or damage in whole or in part caused by,resulting from, or relating to, any error (negligent or otherwise) or othercircumstance or contingency within or outside the control of MOODY'S or any ofits directors, officers, employees or agents in connection with theprocurement, collection, compilation, analysis, interpretation, communication,publication or delivery of any such information, or (b) any direct, indirect,special, consequential, compensatory or incidental damages whatsoever(including without limitation, lost profits), even if MOODY'S is advised inadvance of the possibility of such damages, resulting from the use of orinability to use, any such information. The credit ratings and financialreporting analysis observations, if any, constituting part of the information containedherein are, and must be construed solely as, statements of opinion and notstatements of fact or recommendations to purchase, sell or hold any securities.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS,MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OROTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNERWHATSOEVER. Each rating or other opinion must be weighed solely as one factorin any investment decision made by or on behalf of any user of the informationcontained herein, and each such user must accordingly make its own study andevaluation of each security and of each issuer and guarantor of, and eachprovider of credit support for, each security that it may consider purchasing,holding or selling. 

MOODY'S herebydiscloses that most issuers of debt securities (including corporate andmunicipal bonds, debentures, notes and commercial paper) and preferred stockrated by MOODY'S have, prior to assignment of any rating, agreed to pay toMOODY'S for appraisal and rating services rendered by it fees ranging from$1,500 to $2,400,000. Moody's Corporation (MCO) and its wholly-owned creditrating agency subsidiary, Moody's Investors Service (MIS), also maintainpolicies and procedures to address the independence of MIS's ratings and ratingprocesses. Information regarding certain affiliations that may exist betweendirectors of MCO and rated entities, and between entities who hold ratings fromMIS and have also publicly reported to the SEC an ownership interest in MCO ofmore than 5%, is posted annually on Moody's website at www.moodys.com under theheading "Shareholder Relations -Corporate Governance -Director andShareholder Affiliation Policy." 

Moody's Investors Service Pty Limited doesnot hold an Australian financial services licence under the Corporations Act.This credit rating opinion has been prepared without taking into account any ofyour objectives, financial situation or needs. You should, before acting on theopinion, consider the appropriateness of the opinion having regard to your ownobjectives, financial situation and needs. 

 

Page 6 of 6

    

 

Signatures

 

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

 

 

 

PHILIPPINE LONG DISTANCE

TELEPHONE COMPANY

 

 

 

By        :     /s/ Ma. Lourdes C. Rausa-Chan

Name  :     Ma. Lourdes C. Rausa-Chan

Title     :     Senior Vice President, Corporate

                  Affairs and Legal Services Head 

                  and Corporate Secretary

 

 

 

 

 

 

 

Date:July 19, 2006