##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT
OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from _________ to _________
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  Date of event requiring this shell company report __________
 Commission file number 1-03006
 Philippine Long Distance Telephone Company
  Republic of the Philippines
 Ramon Cojuangco Building
Makati Avenue
Makati City, Philippines
 Atty. Ma. Lourdes C. Rausa-Chan, telephone: +(632) 816-8556; lrchan@pldt.com.ph;
Ramon Cojuangco Bldg., Makati Avenue, Makati City, Philippines
  Title of each class
    
    Name of each exchange
on which registeredCommon Capital Stock, Par Value Five Philippine Pesos Per Share
    
    New York Stock Exchange*American Depositary Shares, evidenced by American Depositary Receipts, each 
representing one share of Common Capital Stock
    
    New York Stock Exchange
 *
    
    Registered on the New York Stock Exchange not for trading but only in connection with the
registration of American Depositary Shares pursuant to the requirements of such stock exchange.    
     Yes þ No o
 Yes o No þ
 Yes þ No o
 Yes o No o
  Large Accelerated Filer þ
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
  o
 þ
 o
  o o
 Yes o No þ




---



##### Table of Contents



TABLE OF CONTENTS
 CERTAIN CONVENTIONS AND TERMS USED IN THIS REPORT
    
    
    3FORWARD-LOOKING STATEMENTS
    
    
    5PRESENTATION OF FINANCIAL INFORMATION
    
    
    6PART I
    
    
    6Item 1. Identity of Directors, Senior Management and Advisors
    
    
    6Item 2. Offer Statistics and Expected Timetable
    
    
    6Item 3. Key Information
    
    
    6Selected Financial Data
    
    
    6Capital Stock
    
    
    9Dividends Declared
    
    
    9Dividends Paid
    
    
    10Exchange Rates
    
    
    10Risk Factors
    
    
    11Item 4. Information on the Company
    
    
    21Overview
    
    
    21Historical Background and Development
    
    
    22Recent Developments
    
    
    22Organization
    
    
    25Strengths
    
    
    30Strategy
    
    
    30Business
    
    
    31Infrastructure
    
    
    42Interconnection Agreements
    
    
    45Licenses and Regulation
    
    
    46Competition
    
    
    50Environmental Matters
    
    
    52Intellectual Property Rights
    
    
    52Properties
    
    
    52Item 4A. Unresolved Staff Comments
    
    
    53Item 5. Operating and Financial Review and Prospects
    
    
    54Overview
    
    
    54Critical Accounting Policies
    
    
    55New Accounting Standards and Pronouncements Effective Subsequent to 2009
    
    
    60Results of Operations
    
    
    61Plans and Prospects
    
    
    96Liquidity and Capital Resources
    
    
    97Impact of Inflation and Changing Prices
    
    
    104Item 6. Directors, Senior Management and Employees
    
    
    104Directors, Key Officers and Advisors
    
    
    104Terms of Office
    
    
    112Family Relationships
    
    
    112Compensation of Key Management Personnel of the PLDT Group
    
    
    113Long-Term Incentive Plan
    
    
    114Share Ownership
    
    
    114Board of Directors  Independent Directors
    
    
    115Audit, Governance and Nomination, Executive Compensation and Technology
Strategy Committees
    
    
    115Directors and Officers Involvement in Certain Legal Proceedings
    
    
    117Employees and Labor Relations
    
    
    119Pension and Retirement Benefits
    
    
    120Item 7. Major Shareholders and Related Party Transactions
    
    
    121Related Party Transactions
    
    
    123Item 8. Financial Information
    
    
    123Consolidated Statements and Other Financial Information
    
    
    123Legal Proceedings
    
    
    123Dividend Distribution Policy
    
    
    125Item 9. The Offer and Listing
    
    
    126Common Capital Stock and Amercian Depositary Shares
    
    
    126Item 10. Additional Information
    
    
    126Articles of Incorporation and By-Laws
    
    
    126Material Contracts
    
    
    131Exchange Controls and Other Limitations Affecting Securities Holders
    
    
    131Taxation
    
    
    132Documents on Display
    
    
    135
  i




---



##### Table of Contents



Item 11. Quantitative and Qualitative Disclosures About Market Risks
    
    
    136Liquidity Risk
    
    
    136Foreign Currency Exchange Risk
    
    
    136Interest Rate Risk
    
    
    137Credit Risk
    
    
    141Impairment Assessments
    
    
    143Item 12. Description of Securities Other than Equity Securities
    
    
    145PART II
    
    
    146Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    146Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    146Item 15. Controls and Procedures
    
    
    146Item 16A. Audit Committee Financial Expert
    
    
    147Item 16B. Code of Business Conduct and Ethics
    
    
    147Item 16C. Principal Accountant Fees and Services
    
    
    151Item 16D. Exemption from the Listing Standards for Audit Committees
    
    
    151Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchaser
    
    
    151Item 16F. Change in Registrants Certifying Accountant
    
    
    152Item 16G. Corporate Governance
    
    
    152PART III
    
    
    153Item 17. Financial Statements
    
    
    153Item 18. Financial Statements
    
    
    153Item 19. Exhibits
    
    
    156EXHIBIT INDEX
    
    
    158CERTIFICATIONExhibit 6Exhibit 7Exhibit 8Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2
   ii




---



##### Table of Contents



CERTAIN CONVENTIONS AND TERMS USED IN THIS REPORT
 Note 2  Summary of Significant Accounting Policies
   
  
    
    3rd Brand means 3rd Brand Pte. Ltd., an 85%-owned subsidiary of SCH;
 
    
    ACeS Philippines means ACeS Philippines Cellular Satellite Corporation, a
wholly-owned subsidiary of PLDT;
 
    
    AIL means ACeS International Limited, a 36.99%-owned associate of ACeS Philippines;
 
    
    Airborne Access means Airborne Access Corporation, a 99.4%-owned subsidiary of SBI;
 
    
    ARPU means average revenue per user;
 
    
    BTS means base transceiver station;
 
    
    BayanTrade means BayanTrade, Inc. (formerly BayanTrade Dotcom, Inc.), a 93.5%-owned
subsidiary of ePLDT;
 
    
    BCC means Bonifacio Communications Corporation, a 75%-owned subsidiary of PLDT;
 
    
    BSP means Bangko Sentral ng Pilipinas;
 
    
    ClarkTel means PLDT Clark Telecom, Inc., a wholly-owned subsidiary of PLDT;
 
    
    CMTS means cellular mobile telephone system;
 
    
    CPCN means Certificate of Public Convenience and Necessity;
 
    
    CURE means Connectivity Unlimited Resource Enterprise, a wholly-owned subsidiary of
FHI;
 
    
    CyMed means CyMed, Inc., a wholly-owned subsidiary of SPi;
 
    
    DigiPar Thailand means Digital Paradise Thailand, an 87.5%-owned subsidiary of
ePLDT;
 
    
    Digital Paradise means Digital Paradise, Inc., a 75%-owned subsidiary of ePLDT;
 
    
    Digitel means Digital Telecommunications Philippines, Inc.;
 
    
    DSL means digital subscriber line;
 
    
    ePLDT means ePLDT, Inc., a wholly-owned subsidiary of PLDT;
  3




---



##### Table of Contents




    
    ePLDT Ventus means the umbrella brand name for ePLDTs customer interaction
solutions, including Ventus, Vocativ and Parlance;
 
    
    First Pacific means First Pacific Company Limited;
 
    
    First Pacific Group means First Pacific and its Philippine and other affiliates;
 
    
    FHI means Francom Holdings, Inc., a wholly-owned subsidiary of Smart;
 
    
    FPHC means First Philippine Holdings Corporation;
 
    
    FPUC means First Philippine Utilities Corporation;
 
    
    GAAP means generally accepted accounting principles;
 
    
    Globe means Globe Telecom, Inc.;
 
    
    GSM means global system for mobile communications;
 
    
    I-Contacts means I-Contacts Corporation, a wholly-owned subsidiary of Smart;
 
    
    IFRS means International Financial Reporting Standards as issued by the
International Accounting Standards Board;
 
    
    Infocom means Infocom Technologies, Inc., a 99.6%-owned subsidiary of ePLDT;
 
    
    IP means internet protocol;
 
    
    ISP means internet service providers;
 
    
    Level Up! means Level Up! (Philippines), Inc., a 60%-owned subsidiary of ePLDT;
 
    
    Mabuhay Satellite means Mabuhay Satellite Corporation, a 67%-owned subsidiary of
PLDT;
 
    
    Maratel means PLDT-Maratel, Inc., a 97.8%-owned subsidiary of PLDT;
 
    
    Meralco means Manila Electric Company;
 
    
    MPRI means Metro Pacific Resources, Inc.;
 
    
    netGames means netGames, Inc., an 80%-owned subsidiary of ePLDT;
 
    
    NTC means the National Telecommunications Commission of the Philippines;
 
    
    NTT means Nippon Telegraph and Telephone Corporation;
 
    
    NTT Communications means NTT Communications Corporation, a wholly-owned subsidiary
of NTT;
 
    
    NTT DoCoMo means NTT DoCoMo, Inc., a majority-owned and publicly traded subsidiary
of NTT;
 
    
    NTTC-UK means NTT Communications Capital (UK) Ltd., a wholly-owned subsidiary of NTT
Communications;
 
    
    PAPTELCO means Philippine Association of Private Telephone Companies, Inc.;
 
    
    Parlance means Parlance Systems, Inc., a wholly-owned subsidiary of ePLDT;
 
    
    PFRS means Philippine Financial Reporting Standards;
 
    
    PHC means PH Communications Holdings Corporation, a wholly-owned subsidiary of
Smart;
 
    
    Philcom means PLDT-Philcom, Inc. (formerly Philcom Corporation), a wholly-owned
subsidiary of PLDT;
 
    
    Philippine SEC means the Philippine Securities and Exchange Commission;
 
    
    Piltel means Pilipino Telephone Corporation, a 99.5%-owned subsidiary of Smart;
  4




---



##### Table of Contents




    
    PLDT Beneficial Trust Fund means the beneficial trust fund created by PLDT to pay
the benefits under the PLDT Employees Benefit Plan;
 
    
    PLDT Global means PLDT Global Corporation, a wholly-owned subsidiary of PLDT;
 
    
    PSE means the Philippine Stock Exchange;
 
    
    SBI means Smart Broadband, Inc., a wholly-owned subsidiary of Smart;
 
    
    SCH means SmartConnect Holdings Pte. Ltd., a wholly-owned subsidiary of Smart;
 
    
    SGP means SmartConnect Global Pte. Ltd., a wholly-owned subsidiary of SCH;
 
    
    SHI means Smarthub, Inc., a wholly-owned subsidiary of Smart;
 
    
    SIM means subscriber identification module;
 
    
    Smart means Smart Communications, Inc., a wholly-owned subsidiary of PLDT;
 
    
    SMHC means Smart Money Holdings Corporation, a wholly-owned subsidiary of Smart;
 
    
    SMI means Smart Money, Inc., a wholly-owned subsidiary of SMHC;
 
    
    SMS means short messaging service;
 
    
    SNMI means Smart-NTT Multimedia, Inc., a wholly-owned subsidiary of PLDT;
 
    
    SPi means SPi Technologies, Inc., a wholly-owned subsidiary of ePLDT;
 
    
    SPi Group means SPi and its subsidiaries;
 
    
    Springfield means Springfield Service Corp., a wholly-owned subsidiary of SPi;
 
    
    SRC means Securities and Regulation Code;
 
    
    SubicTel means PLDT Subic Telecom, Inc., a wholly-owned subsidiary of PLDT;
 
    
    TSI means Telecoms Solutions, Inc., a wholly-owned subsidiary of SMHC;
 
    
    U.S. SEC means the U.S. Securities and Exchange Commission;
 
    
    VAS means value-added service;
 
    
    VAT means value-added tax;
 
    
    Ventus means ePLDT Ventus, Inc., a wholly-owned subsidiary of ePLDT;
 
    
    Vocativ means Vocativ Systems, Inc., a wholly-owned subsidiary of ePLDT;
 
    
    WAP means wireless application protocol;
 
    
    WCI means Wireless Card, Inc., a wholly-owned subsidiary of Smart;
 
    
    W-CDMA means wireless-code division multiple access; and
 
    
    Wolfpac means Wolfpac Mobile, Inc., a wholly-owned subsidiary of Smart.
 
 FORWARD-LOOKING STATEMENTS
   5




---



##### Table of Contents



PRESENTATION OF FINANCIAL INFORMATION
     
 PART I
 
 Item 1. Identity of Directors, Senior Management and Advisors
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 
 Selected Financial Data
    6




---



##### Table of Contents



Amounts in conformity with IFRS:
 2009(1)
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(in millions, except earnings per common share amounts, weighted average number of common shares,ratio of earnings to fixed charges and dividends declared per common share amounts)Statements of Operating Data:Revenues
    
    US$
    3,188
    
    
       Php
    147,993
    
    
       Php
    145,837
    
    
       Php
    138,704
    
    
       Php
    127,508Service revenues
    
    
    3,137
    
    
    
    145,647
    
    
    
    142,873
    
    
    
    135,478
    
    
    
    124,988Non-service revenues
    
    
    51
    
    
    
    2,346
    
    
    
    2,964
    
    
    
    3,226
    
    
    
    2,520Expenses
    
    
    1,941
    
    
    
    90,111
    
    
    
    85,786
    
    
    
    83,587
    
    
    
    82,003Net income(2)
    
    
    864
    
    
    
    40,095
    
    
    
    34,976
    
    
    
    39,274
    
    
    
    32,581Earnings per common share for the year attributable to equity holders of PLDTBasic
    
    
    4.53
    
    
    
    210.38
    
    
    
    179.96
    
    
    
    205.84
    
    
    
    173.10Diluted
    
    
    4.53
    
    
    
    210.36
    
    
    
    179.95
    
    
    
    204.88
    
    
    
    173.01Balance Sheets Data:Cash and cash equivalents
    
    
    825
    
    
    
    38,319
    
    
    
    33,684
    
    
    
    17,447
    
    
    
    16,870Total assets
    
    
    6,034
    
    
    
    280,148
    
    
    
    252,558
    
    
    
    240,158
    
    
    
    241,904Total long-term debt  net of current portion
    
    
    1,854
    
    
    
    86,066
    
    
    
    58,899
    
    
    
    53,372
    
    
    
    63,769Total debt(3)
    
    
    2,127
    
    
    
    98,729
    
    
    
    73,911
    
    
    
    60,640
    
    
    
    80,154Total liabilities(4)
    
    
    3,899
    
    
    
    181,023
    
    
    
    145,589
    
    
    
    127,813
    
    
    
    139,052Total equity(2)
    
    
    2,135
    
    
    
    99,125
    
    
    
    106,969
    
    
    
    112,345
    
    
    
    102,853Weighted average number of common shares for the year
    
    
    186,916
    
    
    
    186,916
    
    
    
    188,163
    
    
    
    188,656
    
    
    
    184,456Other Data:Depreciation and amortization
    
    
    552
    
    
    
    25,607
    
    
    
    24,709
    
    
    
    28,613
    
    
    
    31,869Ratio of earnings to fixed charges(5)
    
    
    7.7
    x
    
    
    7.7
    x
    
    
    8.0
    x
    
    
    8.3
    x
    
    
    4.6
    xNet cash provided by operating activities
    
    
    1,602
    
    
    
    74,386
    
    
    
    78,302
    
    
    
    77,418
    
    
    
    69,211Net cash used in investing activities
    
    
    1,058
    
    
    
    49,132
    
    
    
    17,014
    
    
    
    31,319
    
    
    
    35,790Net cash used in financing activities
    
    
    437
    
    
    
    20,293
    
    
    
    45,464
    
    
    
    44,819
    
    
    
    45,900Dividends declared to common shareholders
    
    
    835
    
    
    
    38,758
    
    
    
    36,578
    
    
    
    28,299
    
    
    
    14,459Dividends declared per common share
    
    
    4.46
    
    
    
    207.00
    
    
    
    194.00
    
    
    
    150.00
    
    
    
    78.00
  7




---



##### Table of Contents



Amounts in conformity with U.S. GAAP:
 (in millions, except operating income per share amounts, earnings per common share amounts,ratio of earnings to fixed charges and dividends declared per common share amounts)
    
    2005Statements of Operating Data:Revenues
    
       Php
    123,335Service revenues
    
    
    120,348Non-service revenues
    
    
    2,987Expenses
    
    
    74,821Operating income per shareBasic
    
    
    263.81Diluted
    
    
    255.15Net income
    
    
    40,603Earnings per common shareBasic
    
    
    217.84Diluted
    
    
    211.93Balance Sheets Data:Cash and cash equivalents
    
    
    30,059Total assets
    
    
    269,709Total long-term debt  net of current portion
    
    
    93,516Total debt(3)
    
    
    112,313Total liabilities(4)
    
    
    176,980Total stockholders equity
    
    
    79,595Other Data:Depreciation and amortization
    
    
    27,855Ratio of earnings to fixed charges(5)
    
    
    5.9
    xNet cash provided by operating activities
    
    
    66,280Net cash used in investing activities
    
    
    13,080Net cash used in financing activities
    
    
    49,470Dividends declared to common shareholders
    
    
    9,624Dividends declared per common share
    
    
    56.00
 
 (1)
    
    The PLDT Group presentation currency is the Philippine peso. For convenience, the
peso financial information as at and for the year ended December 31, 2009, has been translated
into U.S. dollars at the exchange rate of Php46.43 to US$1.00, the rate quoted through the
Philippine Dealing System as at December 31, 2009. This translation should not be construed
as a representation that the Philippine peso amounts represent, or have been or could be
converted into, U.S. dollars at that rate or any other rate.(2)
    
    Net income and total equity under IFRS includes the proportional share of
non-controlling interests in consolidated net income and consolidated net assets,
respectively. Under U.S. GAAP, net income and total equity does not include the proportional
share of minority interests in net income and total equity and such minority interests are
instead presented separately in the consolidated financial statements.(3)
    
    Total debt represents current portion of long-term debt, long-term debt  net of
current portion and notes payable.(4)
    
    Total liabilities on a consolidated basis in 2009, 2008, 2007 and 2006 under IFRS
represent the sum of current and noncurrent liabilities. Total liabilities on a consolidated
basis in 2005 under U.S. GAAP represent the difference between total assets and
non-controlling interests in consolidated subsidiaries, preferred stock subject to mandatory
redemption and equity attributable to equity holders of PLDT.(5)
    
    For purposes of this ratio, Earnings consist of: (a) pre-tax income from
continuing operations before adjustment for non-controlling interests in consolidated
subsidiaries or income or loss from equity investees; (b) fixed charges; (c) amortization of
capitalized interest; (d) distributed income of equity investees; and (e) share of pre-tax
losses of equity investees for which charges arising from guarantees are included in fixed
charges; less the sum of the following: (1) capitalized interest; (2) preference security
dividend requirements of consolidated subsidiaries; and (3) the non-controlling interests in
pre-tax income of subsidiaries that have not incurred fixed charges.Fixed charges consist of interest expensed and capitalized interest, amortized premiums,
discounts and capitalized expenses related to indebtedness, an estimate of interest within
rental expense, and preference security dividend requirements of consolidated subsidiaries.  8




---



##### Table of Contents



Capital Stock
  December 31,2009
    
    
    2008(in millions)Serial Preferred Stock10% Cumulative Convertible Preferred StockA to EE
    
       Php
    4,056.31
    
    
       Php
    4,054.81Convertible Preferred Stock Subject to Mandatory RedemptionSeries V(1)
    
    
    
    
    
    
    0.01Series VI(1)
    
    
    
    
    
    
    0.04Cumulative Non-convertible Redeemable Preferred StockSeries IV
    
    
    360.00
    
    
    
    360.00Php
    4,416.31
    
    
       Php
    4,414.86Common Stock
    
       Php
    947.40
    
    
       Php
    947.28
 
 (1)
    
    Preferred stock subject to mandatory redemption (see Note 20  Interest-bearing
Financial Liabilities  Preferred Stock Subject to Mandatory Redemption to the accompanying
consolidated financial statements in Item 18 for further discussion). 
 Dividends Declared
  Date
    
    AmountEarnings
    
    Approved
    
    Record
    
    Payable
    
    Per share
    
    
    Total Declared(in millions)2007
    
    August 7, 2007
    
    August 24, 2007
    
    September 24, 2007
    
       Php
    60
    
    
       Php
    11,3222007
    
    March 4, 2008
    
    March 19, 2008
    
    April 21, 2008
    
    
    68
    
    
    
    12,8532007
    
    March 4, 2008
    
    March 19, 2008
    
    April 21, 2008
    
    
    56
    
    
    
    10,585184
    
    
    
    34,7602008
    
    August 5, 2008
    
    August 22, 2008
    
    September 22, 2008
    
    
    70
    
    
    
    13,1402008
    
    March 3, 2009
    
    March 18, 2009
    
    April 21, 2009
    
    
    70
    
    
    
    13,1242008
    
    March 3, 2009
    
    March 18, 2009
    
    April 21, 2009
    
    
    60
    
    
    
    11,250200
    
    
    
    37,5142009
    
    August 4, 2009
    
    August 20, 2009
    
    September 22, 2009
    
    
    77
    
    
    
    14,3842009
    
    March 2, 2010
    
    March 17, 2010
    
    April 20, 2010
    
    
    76
    
    
    
    14,1972009
    
    March 2, 2010
    
    March 17, 2010
    
    April 20, 2010
    
    
    65
    
    
    
    12,142Php
    218
    
    
       Php
    40,723
 Note 19  Equity Note 20 
Interest-bearing Financial Liabilities Note 19  Equity
  9




---



##### Table of Contents



Dividends Paid
  In Philippine Peso
    
    
    In U.S. Dollars2006
    
    
    78.00
    
    
    
    1.542007
    
    
    150.00
    
    
    
    3.262008
    
    
    194.00
    
    
    
    4.47Regular Dividend  April 21, 2008
    
    
    68.00
    
    
    
    1.62Regular Dividend  September 22, 2008
    
    
    70.00
    
    
    
    1.51Special Dividend  April 21, 2008
    
    
    56.00
    
    
    
    1.342009
    
    
    207.00
    
    
    
    4.30Regular Dividend  April 21, 2009
    
    
    70.00
    
    
    
    1.45Regular Dividend  September 22, 2009
    
    
    77.00
    
    
    
    1.62Special Dividend  April 21, 2009
    
    
    60.00
    
    
    
    1.242010
    
    
    141.00
    
    
    
    3.06Regular Dividend  April 20, 2010
    
    
    76.00
    
    
    
    1.71Special Dividend  April 20, 2010
    
    
    65.00
    
    
    
    1.46
  
 Exchange Rates
   Year Ended December 31,Period End
    
    
    Average(1)
    
    
    High(2)
    
    
    Low(3)2005
    
       Php
    53.06
    
    
       Php
    55.01
    
    
       Php
    53.06
    
    
       Php
    56.322006
    
    
    49.05
    
    
    
    51.17
    
    
    
    49.05
    
    
    
    53.592007
    
    
    41.41
    
    
    
    45.88
    
    
    
    41.14
    
    
    
    49.162008
    
    
    47.65
    
    
    
    44.71
    
    
    
    40.36
    
    
    
    49.982009
    
    
    46.43
    
    
    
    47.82
    
    
    
    45.95
    
    
    
    49.062010 (through May 12, 2010)
    
    
    45.09
    
    
    
    45.63
    
    
    
    44.18
    
    
    
    46.74
 
 Source: Philippine Dealing System Reference Rate
 (1)
    
    Calculated by using the average of the exchange rates on the last day of each month
during the period.(2)
    
    Highest exchange rate for the period.(3)
    
    Lowest exchange rate for the period.  10




---



##### Table of Contents



MonthPeriod End
    
    
    Average(1)
    
    
    High(2)
    
    
    Low(3)2009November
    
       Php
    47.13
    
    
       Php
    47.01
    
    
       Php
    46.52
    
    
       Php
    47.69December
    
    
    46.43
    
    
    
    46.38
    
    
    
    45.95
    
    
    
    46.992010January
    
    
    46.65
    
    
    
    46.04
    
    
    
    45.54
    
    
    
    46.74February
    
    
    46.16
    
    
    
    46.29
    
    
    
    45.97
    
    
    
    46.61March
    
    
    45.29
    
    
    
    45.71
    
    
    
    45.22
    
    
    
    46.10April
    
    
    44.51
    
    
    
    44.59
    
    
    
    44.18
    
    
    
    45.04May (through May 12, 2010)
    
    
    45.09
    
    
    
    45.11
    
    
    
    44.54
    
    
    
    45.72
 
 Source: Philippine Dealing System Reference Rate
 (1)
    
    Calculated by using the average of the exchange rates during the month.(2)
    
    Highest exchange rate for the month.(3)
    
    Lowest exchange rate for the month.  
 Risk Factors
 Risks Relating to Us
 We face competition from well-established telecommunications operators and may face competition
from new entrants that may adversely affect our business, results of operations, financial
condition and prospects
  Sun Cellular
 Smart Buddy Talk N Text
  11




---



##### Table of Contents



The cellular telecommunications industry may not continue to grow
  Rapid changes in telecommunications technology may adversely affect the economics of our existing
businesses and the value of our assets, increase our required capital expenditures and create new
competition
   Our results of operations and our financial position could be materially and adversely affected if
the Philippine peso significantly fluctuates against the U.S. dollar
    12




---



##### Table of Contents




    
    political and economic developments affecting the Philippines, including the
level of remittances from overseas Filipino workers;
 
    
    global economic and financial trends;
 
    
    the volatility of regional currencies, particularly the Japanese yen;
 
    
    any interest rate increases by the Federal Reserve Bank of the United States;
and
 
    
    changes in the value of the U.S. dollar relative to the Philippine peso
resulting from either higher demand for U.S. dollars by both banks and domestic
businesses to service their maturing U.S. dollar obligations; and foreign exchange
traders including banks covering their short U.S. dollar positions, among others.
 Our results of operations have been, and may continue to be, adversely affected by competition in,
and the emergence of new services which may put additional pressure on, our traditional
international and national long distance services
   
    
    increased competition from other domestic and international telecommunications
providers;
 
    
    advances in technology;
 
    
    alternative providers offering internet telephony, also known as Voice over Internet
Protocol, or VoIP, and broadband capacity; and
 
    
    unauthorized traffic termination and bypass routings by international simple resale
operators.
    13




---



##### Table of Contents



We may not be successful in our acquisitions of and investments in other companies and businesses,
and may therefore be unable to fully implement our business strategy
  
    
    our ability to identify suitable opportunities for investment or acquisition;
 
    
    our ability to reach an acquisition or investment agreement on terms that are
satisfactory to us or at all;
 
    
    the extent to which we are able to exercise control over the acquired company;
 
    
    the economic, business or other strategic objectives and goals of the acquired
company compared to those of the PLDT Group, as well as the ability to execute the
identified strategies in order to generate fair returns on the investment; and
 
    
    our ability to successfully integrate the acquired company or business with our
existing businesses.
  Our debt instruments contain restrictive covenants which require us to maintain certain financial
tests and our indebtedness could impair our ability to fulfill our financial obligations, service
our other debt and carry out new financings
      14




---



##### Table of Contents



Our subsidiaries could be limited in their ability to pay dividends to us due to internal cash
requirements and their creditors having superior claims over their assets and cash flows, which
could materially and adversely affect our financial condition
    Our businesses require substantial capital investment which we may not be able to finance
    15




---



##### Table of Contents



Our businesses depend on the reliability of our network infrastructure which is subject to
physical, technological and other risks
  
    
    physical damage;
 
    
    power loss;
 
    
    capacity limitation;
 
    
    cable theft;
 
    
    software defects; and
 
    
    breaches of security by computer viruses, break-ins or otherwise.
  A significant number of PLDTs shares are held by three shareholders which may not act in the
interests of other shareholders or stakeholders in PLDT
   
    
    capital expenditures in excess of US$50 million;
 
    
    any investments, if the aggregate amount of all investments for the previous 12
months is greater than US$25 million in the case of all investments to any existing
investees and US$100 million in the case of all investments to any new or existing
investees, determined on a rolling monthly basis;
 
    
    any investments in a specific investee, if the cumulative value of all investments
made by us in that investee is greater than US$10 million in the case of an existing
investee and US$50 million in the case of a new investee;
 
    
    issuance of common stock or stock that is convertible into common stock;
 
    
    new business activities other than those we currently engage in; and
 
    
    merger or consolidation.
  
    
    elections of PLDTs directors; and
 
    
    approval of major corporate actions, which require the vote of common stockholders.
  16




---



##### Table of Contents




    
    NTT DoCoMo is entitled to nominate one additional NTT DoCoMo nominee to the board of
directors of each of PLDT and Smart;
 
    
    PLDT must consult NTT DoCoMo no later than 30 days prior to the first submission to
the board of PLDT or certain of its committees of any proposal of investment in an
entity that would primarily engage in a business that would be in direct competition or
substantially the same business opportunities, customer base, products or services with
business carried on by NTT DoCoMo, or which NTT DoCoMo has announced publicly an
intention to carry on;
 
    
    PLDT must procure that Smart does not cease to carry on its business, dispose of all
of its assets, issue common shares, merge or consolidate, or effect winding up or
liquidation without PLDT first consulting with NTT DoCoMo no later than 30 days prior
to the first submission to the board of PLDT or Smart, or certain of its committees;
and
 
    
    PLDT must first consult with NTT DoCoMo no later than 30 days prior to the first
submission to the board of PLDT or certain of its committees for the approval of any
transfer by any member of the PLDT Group of Smart common capital stock to any person
who is not a member of the PLDT Group.
  If a major shareholder sells its interest in PLDT, the transaction may result in an event of
default under certain circumstances
  The franchise of Smart may be revoked due to its failure to conduct a public offering of its shares
 quo warranto
 quo warranto
  17




---



##### Table of Contents



Our business is significantly affected by governmental laws and regulations, including regulations
in respect of our franchises, rates and taxes
     The NTC may implement proposed changes in existing regulations and introduce new regulations which
may result in increased competition and/or changes in rates, each of which may have negative
implications for our revenues and profitability
     18




---



##### Table of Contents



(a)
    
    guidelines on the mandatory interconnection of backhaul networks to the cable
landing station, which were issued on October 7, 2008 and became effective on October
23, 2008; and
 (b)
    
    guidelines on the interconnection of LECs in local calling areas that eliminate
interconnection access charges between LECs within a local calling area, which were
issued on May 30, 2008 and became effective on June 17, 2008.
   If we are unable to install and maintain telecommunications facilities and equipment in a timely
manner, we may not be able to maintain our current market share and the quality of our services,
which may have negative implications for our revenue and profitability
  
    
    shortages of equipment, materials and labor;
 
    
    work stoppages and labor disputes;
 
    
    interruptions resulting from inclement weather and other natural disasters;
  19




---



##### Table of Contents




    
    unforeseen engineering, environmental and geological problems; and
 
    
    unanticipated cost increases.
  Failure to maintain effective internal control over financial reporting in accordance with Section
404 of the Sarbanes-Oxley Act of 2002 could adversely impact investor confidence and the market
price of our common shares and ADSs
    Risks Relating to the Philippines
 PLDTs business may be affected by political or social or economic instability in the Philippines
      20




---



##### Table of Contents



If foreign exchange controls were to be imposed, our ability to meet our foreign currency payment
obligations could be adversely affected
  
    
    suspend temporarily or restrict sales of foreign exchange;
 
    
    require licensing of foreign exchange transactions; or
 
    
    require the delivery of foreign exchange to the BSP or its designee banks.
  The occurrence of natural catastrophes may materially disrupt our operations
  
 Item 4. Information on the Company
 
 Overview
  Vitro TM
    www.pldt.com.ph
  21




---



##### Table of Contents



Historical Background and Development
   
 Recent Developments
 Transfer of Piltels Equity Interest in Meralco
 Note 10  Investments in
Associates and Joint Ventures
 Investment in Beacon
   22




---



##### Table of Contents



Transfer of Meralco Shares to Beacon
    23




---



##### Table of Contents



Call Option
    Property Dividends
   24




---



##### Table of Contents



Governance Arrangements
    Corporate Merger of Vocativ, Parlance and Ventus
  
 Organization
  2009
    
    
    2008Place of
    
    
    
    Percentage of OwnershipName of Subsidiary
    
    Incorporation
    
    Principal Business Activity
    
    Direct
    
    
    Indirect
    
    
    Direct
    
    
    IndirectWirelessSmart:
    
    Philippines
    
    Cellular mobile services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    Smart Broadband, Inc., or SBI, and Subsidiaries, or SBI Group
    
    Philippines
    
    Internet broadband distribution
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Primeworld Digital System, Inc., or PDSI
    
    Philippines
    
    Cellular and internet broadband  distribution services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    I-Contacts Corporation, or I-Contacts
    
    Philippines
    
    Customer interaction solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Wolfpac Mobile, Inc., or Wolfpac
    
    Philippines
    
    Mobile applications development  and services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Wireless Card, Inc., or WCI
    
    Philippines
    
    Promotion of the sale and/or patronage   of debit and/or charge cards
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Smarthub, Inc., or SHI
    
    Philippines
    
    Development and sale of software, maintenance and support services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Smart Money Holdings Corporation, or SMHC:
    
    Cayman Islands
    
    Investment company
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Smart Money, Inc., or SMI
    
    Cayman Islands
    
    Mobile commerce solutions marketing
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Telecoms Solutions, Inc., or TSI
    
    Mauritius
    
    Mobile commerce platforms
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Far East Capital Limited and Subsidiary
    
    Cayman Islands
    
    Cost effective offshore financing and risk management activities for Smart
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0PH Communications Holdings Corporation, or PHC
    
    Philippines
    
    Investment company
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Francom Holdings, Inc., or FHI:
    
    Philippines
    
    Investment company
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Connectivity Unlimited Resource Enterprise, Inc., or CURE
    
    Philippines
    
    Cellular mobile services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Chikka Holdings Limited, or Chikka, and Subsidiaries, or Chikka Group
    
    British Virgin Islands
    
    Mobile applications development and services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    Pilipino Telephone Corporation, or Piltel,* and Subsidiaries, or Piltel Group
    
    Philippines
    
    Investment company
    
    
    
    
    
    
    99.5
    
    
    
    
    
    
    
    92.5SmartConnect Holdings Pte. Ltd., or SCH:
    
    Singapore
    
    Investment company
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0SmartConnect Global Pte. Ltd., or SGP
    
    Singapore
    
    International trade of satellites and Global System for Mobile Communication,  or GSM, enabled global telecommunications
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.03rd Brand Pte. Ltd., or 3rd Brand
    
    Singapore
    
    Solutions and systems integration services
    
    
    
    
    
    
    85.0
    
    
    
    
    
    
    
    85.0Blue Ocean Wireless, or BOW
    
    Isle of Man
    
    Delivery of GSM communication  capability for the maritime sector
    
    
    
    
    
    
    51.0
    
    
    
    
    
    
    
    28.3Telesat, Inc., or Telesat
    
    Philippines
    
    Satellite communications services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    ACeS Philippines Cellular Satellite Corporation, or ACeS Philippines
    
    Philippines
    
    Satellite information and messaging services
    
    
    88.5
    
    
    
    11.5
    
    
    
    88.5
    
    
    
    11.5Mabuhay Satellite Corporation, or Mabuhay Satellite
    
    Philippines
    
    Satellite communications services
    
    
    67.0
    
    
    
    
    
    
    
    67.0
    
    
    
    
  25




---



##### Table of Contents



2009
    
    
    2008Place of
    
    
    
    Percentage of OwnershipName of Subsidiary
    
    Incorporation
    
    Principal Business Activity
    
    Direct
    
    
    Indirect
    
    
    Direct
    
    
    IndirectFixed LinePLDT Clark Telecom, Inc., or ClarkTel
    
    Philippines
    
    Telecommunications services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    PLDT Subic Telecom, Inc., or SubicTel
    
    Philippines
    
    Telecommunications services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    PLDT Global Corporation, or PLDT Global, and Subsidiaries, or PLDT Global Group
    
    British Virgin Islands
    
    Telecommunications services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    Smart-NTT Multimedia, Inc., or SNMI
    
    Philippines
    
    Data and network services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    PLDT-Philcom, Inc. (formerly known as Philcom Corporation), or Philcom, and Subsidiaries, or Philcom Group
    
    Philippines
    
    Telecommunications services
    
    
    100.0
    
    
    
    
    
    
    
    
    
    
    
    PLDT-Maratel, Inc., or Maratel
    
    Philippines
    
    Telecommunications services
    
    
    97.8
    
    
    
    
    
    
    
    97.5
    
    
    
    Bonifacio Communications Corporation, or BCC
    
    Philippines
    
    Telecommunications, infrastructure and related value-added services
    
    
    75.0
    
    
    
    
    
    
    
    75.0
    
    
    
    Information and Communications Technology, or ICTePLDT, Inc., or ePLDT:
    
    Philippines
    
    Information and communications infrastructure for Internet-based services, e-commerce, customer interaction solutions and IT-related services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    SPi Technologies, Inc., or SPi, and Subsidiaries, or SPi Group
    
    Philippines
    
    Knowledge processing solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0ePLDT Ventus, Inc., or Ventus
    
    Philippines
    
    Customer interaction solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Vocativ Systems, Inc., or Vocativ
    
    Philippines
    
    Customer interaction solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Parlance Systems, Inc., or Parlance
    
    Philippines
    
    Customer interaction solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Infocom Technologies, Inc., or Infocom
    
    Philippines
    
    Internet access services
    
    
    
    
    
    
    99.6
    
    
    
    
    
    
    
    99.6BayanTrade, Inc. (formerly BayanTrade Dotcom, Inc.), or BayanTrade, and Subsidiaries, or BayanTrade Group
    
    Philippines
    
    Internet-based purchasing, IT consulting  and professional services
    
    
    
    
    
    
    93.5
    
    
    
    
    
    
    
    10.8Digital Paradise Thailand, or DigiPar Thailand
    
    Thailand
    
    Internet access services
    
    
    
    
    
    
    87.5
    
    
    
    
    
    
    
    87.5netGames, Inc., or netGames
    
    Philippines
    
    Publisher of online games
    
    
    
    
    
    
    80.0
    
    
    
    
    
    
    
    80.0Digital Paradise, Inc., or Digital Paradise
    
    Philippines
    
    Internet access services
    
    
    
    
    
    
    75.0
    
    
    
    
    
    
    
    75.0Level Up! (Philippines), Inc., or Level Up!
    
    Philippines
    
    Publisher of online games
    
    
    
    
    
    
    60.0
    
    
    
    
    
    
    
    60.0
 
 *
    
    On August 17, 2009, Smart acquired the cellular mobile telephone business of Piltel.      26




---



##### Table of Contents



Note 10  Investments in Associates and Joint Ventures
  Talk N Text Talk N Text Smart Buddy
  Sale/Transfer of Piltels Cellular Mobile
Phone Business/Assets to Smart and Smarts Tender Offer to Piltels Non-Controlling Interest Note 2  Summary of Significant Accounting Policies
   27




---



##### Table of Contents



Note 2  Summary of Significant Accounting Policies, Note 13  Business Combinations and
Acquisition of Non-Controlling Interests Note 14  Goodwill and Intangible Assets
 Wireless
  Talk N Text
   28




---



##### Table of Contents



Fixed Line
     Information and Communications Technology
 Vitro
  29




---



##### Table of Contents



Strengths
  
    
    Recognized Brands. PLDT and Smart are strong and widely recognized brand names in
the Philippines. We have built the PLDT brand name for over 80 years as the leading
telecommunications provider in the Philippines. Smart is recognized in the Philippines
as an innovative provider of high-quality cellular services. The Talk N Textbrand,
which is provided using Smarts network, has also gained significant recognition as a
value for money brand.
 
    
    Leading Market Shares. With over 44 million fixed line, cellular and broadband
subscribers as at December 31, 2009, we have the leading market positions in each of
the fixed line, cellular and broadband markets in the Philippines.
 
    
    Diversified Revenue Sources. We derive our revenues from our three business
segments, namely, wireless, fixed line and ICT businesses, with wireless contributing
61%, fixed line 32% and ICT 7% to our total revenues in 2009. Revenue sources of our
wireless business segment include cellular services, which include voice services and
text message-related and VAS, and wireless broadband services. Our fixed line business
derives service revenues from local exchange, international long distance, national
long distance and data and other network services. In our ICT business, sources of
revenue include knowledge processing solutions, customer interaction solutions and
internet and online gaming business, and data center and other services. Fixed line
revenues, which represented 32%, 32% and 33% of our consolidated revenues in 2009,
2008, and 2007, respectively, have been declining over the past years as a share of our
total revenues due to pressures on traditional fixed line voice revenues, resulting
from decreases in our local exchange, international long distance and national long
distance services, and reduced international interconnection rates. We will continue to
identify and develop new revenue sources to further broaden our diversified revenue
base for our wireless, fixed line and ICT businesses.
 
    
    Advanced Integrated Network. With one of the most advanced and extensive
telecommunications networks in the Philippines, we are able to offer a wide array of
communications services. We are enhancing the capabilities of our fixed line and
wireless networks to allow us to better exploit this competitive strength and achieve
higher levels of network efficiency in providing voice and data services. In addition,
we continue our upgrade to NGN and our roll out of 3G and wireless broadband in order
to increase broadband subscribers, and expand our data/broadband capabilities.
 
    
    Innovative Products and Services. We have successfully introduced a number of
innovative and award-winning cellular products and services, including Smart Loadand
Pasa Load. Smart Loadis an over-the-air electronic loading facility designed to
make reloading of air time credits more convenient for, and accessible to consumers.
Pasa Load(the term pasa means transfer) is a derivative service of Smart Loadthat
allows load transfers to other Smart Buddyand Talk N Textsubscribers.
 
    
    Strong Strategic Relationships. We have important strategic relationships with
First Pacific, NTT DoCoMo and NTT Communications. The technological support,
international experience and management expertise made available to us through these
strategic relationships enhance our market leadership and ability to provide and
cross-sell a more complete range of products and services.
 
 Strategy
  
    
    Build on our leading positions in the fixed line and wireless businesses. We plan
to build on our position as the leading fixed line service provider in the Philippines
by continuing to launch new products and services to increase subscriber value and
utilization of our existing facilities and equipment at reduced cost. We plan to build
on our position as the leading wireless service provider in the Philippines by
continuing to introduce new products and services to increase our subscribers use of
our network for both voice and data, as well as their reliance on our services. We are
currently upgrading our fixed line facilities to NGN, and have rolled out a 3G network
based on a W-CDMA technology as well as expanding our DSL and wireless broadband
facilities. Our operating target is to continue growth in profitability by increasing
our revenues while controlling our costs.
  30




---



##### Table of Contents




    
    Capitalize on our strength as an integrated provider of telecommunications services.
We offer the broadest range of telecommunications services among all operators in the
Philippines. We plan to capitalize on this position to maximize revenue opportunities
by bundling and cross-selling our products and services, and by developing convergent
products that feature the combined benefits of voice and data, fixed line, wireless and
ICT services utilizing our network and business platforms. We are also lowering our
costs by integrating the operations of our different businesses.
 
    
    Strengthen our leading position in the data and broadband market. Leveraging on the
inherent strength of our fixed line and wireless businesses, we are committed to
further develop our fastest growing business segment  broadband, data and other
network services. Consistent with our strategy of introducing innovative products and
services using advanced technology, we have launched various products and services that
address different market needs.
 
    
    Maintain a strong financial position and improve shareholder returns.In recent
years, we have significantly improved our financial position by utilizing our cash
flows principally for debt reduction. While as at December 31, 2009 our consolidated
debt outstanding increased to Php98,729 million (approximately US$2,127 million) in
connection with the financing of our acquisition of shares of Meralco and our increased
capital expenditures, our consolidated ratio of debt to equity was 1.0x at December 31,
2009. As the cash flows generated by our businesses have increased and our leverage
ratios have improved, we have been able to restore the payment of cash dividends to our
common shareholders beginning 2005 and were able to declare dividend payouts of
approximately 70% in 2007 and 100% in each of 2008 and 2009 of our earnings per share
on an adjusted basis. We expect that our free cash flows will continue to be utilized
for the payment of cash dividends to common shareholders and investments in new growth
areas while continuing to maintain a healthy balance sheet position. As part of our
growth strategy, we made and may continue to make acquisitions and investments in
companies or businesses. We will continue to consider value-accretive investments in
telecommunications as well as telco-related businesses such as those in the global
outsourcing and off-shoring industry.
 
 Business
 Wireless
  Cellular Service
 Overview
  Smart Money Mobile Banking
  31




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007Systemwide cellular subscriber base
    
    
    41,328,641
    
    
    
    35,224,604
    
    
    
    30,041,030Smart
    
    
    24,198,357
    
    
    
    20,899,753
    
    
    
    20,339,204Prepaid
    
    
    23,762,814
    
    
    
    20,501,617
    
    
    
    19,997,324Postpaid
    
    
    435,543
    
    
    
    398,136
    
    
    
    341,880Talk N Text(1)
    
    
    17,050,713
    
    
    
    14,308,493
    
    
    
    9,701,826Red Mobile(2)
    
    
    79,571
    
    
    
    16,358
    
    
    
    Growth rate of cellular subscribers
    
    
    17
    %
    
    
    17
    %
    
    
    24
    %Smart
    
    
    16
    %
    
    
    3
    %
    
    
    18
    %Talk N Text(1)
    
    
    19
    %
    
    
    47
    %
    
    
    39
    %Red Mobile(2)
    
    
    386
    %
    
    
    100
    %
    
    
    Cellular revenues (in millions)
    
       Php
    88,410
    
    
       Php
    87,518
    
    
       Php
    82,334Voice
    
    
    38,850
    
    
    
    37,275
    
    
    
    36,105Data
    
    
    47,072
    
    
    
    47,804
    
    
    
    44,092Others(3)
    
    
    2,488
    
    
    
    2,439
    
    
    
    2,137Percentage of cellular revenues to total wireless service revenues
    
    
    92
    %
    
    
    94
    %
    
    
    95
    %Percentage of cellular revenues to total service revenues
    
    
    61
    %
    
    
    61
    %
    
    
    60
    %
 
 (1)
    
    The transfer of Piltels cellular business to Smart was completed on August 17,
2009.(2)
    
    The Red Mobile brand was launched in November 2008 by CURE.(3)
    
    Refers to other non-subscriber-related revenues consisting primarily of inbound
international roaming fees, revenues from Smarts public calling offices and a small number of
leased line contracts, revenues from Wolfpac and other Smart subsidiaries, and revenue share
in PLDTs WeRoam and PLDT Landline Plus services. Service Plans Smart Buddy, Talk N Text, Smart Gold Smart Infinity, Red Mobile.
Smart Buddy, Talk N Text Red Mobile Smart Gold Smart Infinity
   Smartalk Smart Buddy Smart Gold Smart Buddy Smart Gold Smartalk Plus
 Voice Services.
  32




---



##### Table of Contents



Data Services
    
    
    Smart Money,launched in conjunction with MasterCard, enables subscribers to pay for
their purchases by transferring money from their bank accounts to their Smart Money
cards, reload their prepaid cards electronically, as well as download specialized
content such as ringtones, logos, caller ringback tunes and games;
 
    
    Mobile Banking, launched in collaboration with various banks, allows subscribers to
execute banking transactions such as balance inquiries and transfers over their mobile
telephones; and
 
    
    Smart Padala, one of the many innovative initiatives from our Smart Moneyplatform,
is the first cash remittance service through text and is faster and cheaper than
traditional remittance arrangements. It was launched initially as an international
remittance service for overseas Filipino workers but is now available for domestic
remittances as well.
 SmartBro SmartBro SmartBro
  Rates and Discounts
   33




---



##### Table of Contents



Smart Buddy Talk N Text Smart Load Smart Loads Smart Load Pasa Load
 Smart Buddy Smart Buddy Talk N
Text Talk
N Text Talk N Text Smart Buddy Red Mobile Red Mobile Red Mobile Smart Buddy, Talk N Text
 Smart Gold Smart Infinity
   Smart Load Smart Load
  34




---



##### Table of Contents



Wireless Broadband, Satellite and Other Services
 Overview
  SBI
 Smart Bro Smart Bro myDSL
 PDSI
  Airborne Access
  Wolfpac
  Chikka
  Mabuhay Satellite
   35




---



##### Table of Contents



ACeS Philippines
 Note 24  Related Party Transactions Note 26  Contractual Obligations and Commercial Commitments
  Revenues
  Rates
 SmartBro
 SmartBro Plug-It, SmartBro Plug-It Prepaid, SmartBro Share-It SmartBro Share-It SmartBro Share-It SmartBro Plug-It
  WeRoam
  36




---



##### Table of Contents



WeRoam WeLoad
  Fixed Line
  PLDT Landline Plus PLDT Landline
Plus
 Local Exchange Service
   2009
    
    
    2008
    
    
    2007Number of local exchange line subscribers
    
    
    1,816,541
    
    
    
    1,782,356
    
    
    
    1,724,702Number of fixed line employees
    
    
    7,947
    
    
    
    7,813
    
    
    
    8,080Number of local exchange line subscribers per employee
    
    
    229
    
    
    
    228
    
    
    
    213Total local exchange service revenues (in millions)
    
       Php
    15,681
    
    
       Php
    15,923
    
    
       Php
    16,205Local exchange service revenues as a percentage of total fixed line service revenues
    
    
    31
    %
    
    
    32
    %
    
    
    33
    %Local exchange service revenues as a percentage of total service revenues
    
    
    10
    %
    
    
    10
    %
    
    
    11
    %
 Rates
  TelePwede TelePwede PLDT Landline Plus
  37




---



##### Table of Contents



PLDT Landline Plus
   International Long Distance Service
   2009
    
    
    2008
    
    
    2007Total call volumes (in million minutes)
    
    
    1,863
    
    
    
    2,024
    
    
    
    2,280Inbound call volumes (in million minutes)
    
    
    1,653
    
    
    
    1,786
    
    
    
    2,007Outbound call volumes (in million minutes)
    
    
    210
    
    
    
    238
    
    
    
    273Inbound-outbound call ratio
    
    
    7.9:1
    
    
    
    7.5:1
    
    
    
    7.4:1Total international long distance service revenues (in millions)
    
       Php
    6,255
    
    
       Php
    7,063
    
    
       Php
    8,674International long distance service revenues as a percentage of total fixed line
service revenues
    
    
    12
    %
    
    
    14
    %
    
    
    18
    %International long distance service revenues as a percentage of total service revenues
    
    
    4
    %
    
    
    5
    %
    
    
    6
    %
    38




---



##### Table of Contents



Net Settlement2009
    
    
    2008
    
    
    2007(in millions)Saudi Arabia
    
    US$
    33
    
    
    US$
    30
    
    
    US$
    28United States
    
    
    25
    
    
    
    46
    
    
    
    55United Arab Emirates
    
    
    20
    
    
    
    20
    
    
    
    18Japan
    
    
    17
    
    
    
    14
    
    
    
    12Canada
    
    
    9
    
    
    
    9
    
    
    
    17Hongkong
    
    
    8
    
    
    
    4
    
    
    
    7Taiwan
    
    
    6
    
    
    
    6
    
    
    
    6Singapore
    
    
    5
    
    
    
    5
    
    
    
    3Qatar
    
    
    5
    
    
    
    4
    
    
    
    3Others
    
    
    29
    
    
    
    36
    
    
    
    47Total
    
    US$
    157
    
    
    US$
    174
    
    
    US$
    196
 Rates
   Budget Card Budget Card Middle East
Edition Budget Card Budget Card Middle East Edition
 National Long Distance Service
   2009
    
    
    2008
    
    
    2007Total call volumes (in million minutes)
    
    
    1,822
    
    
    
    1,944
    
    
    
    2,183Total national long distance service revenues (in millions)
    
       Php
    5,969
    
    
       Php
    6,207
    
    
       Php
    6,338National long distance service revenue as a percentage of total fixed line
service revenues
    
    
    12
    %
    
    
    13
    %
    
    
    13
    %National long distance service revenue as a percentage of total service revenues
    
    
    4
    %
    
    
    4
    %
    
    
    4
    %
   39




---



##### Table of Contents



Rates
     Data and Other Network Services
   2009
    
    
    2008
    
    
    2007Number of DSLbroadband subscribers
    
    
    559,664
    
    
    
    432,583
    
    
    
    264,291Total data and other network service revenues (in millions)
    
      Php
    21,567
    
    
      Php
    18,607
    
    
      Php
    15,921Data and other network service revenues as a percentage of total fixed line
service revenues
    
    
    42
    %
    
    
    38
    %
    
    
    33
    %Data and other network service revenues as a percentage of total service revenues
    
    
    14
    %
    
    
    12
    %
    
    
    11
    %
    PLDT DSL myDSL BizDSL PLDT Vibe PLDT DSL PLDT Vibe,
  40




---



##### Table of Contents



PLDT WeRoam
   Shops.Work Unplugged
  Information and Communications Technology
 Ventus Vitro
 Knowledge Processing Solutions
  Customer Interaction Solutions
 ePLDT Ventus Ventus ePLDT
Ventus
  41




---



##### Table of Contents



Internet and Online Gaming
 WarpSpeed Speed Tipid Netopia.
 Data Center and Others
 Vitro
 
 Infrastructure
 Wireless Network Infrastructure
 Cellular
    NanoBTS,
   42




---



##### Table of Contents



Wireless Broadband, Satellite and Other Services
    Fixed Line Network Infrastructure
 Domestic
      43




---



##### Table of Contents



th
 th
    International
   44




---



##### Table of Contents



Cable System
    
    Countries Being LinkedG-P
    
    Guam and the PhilippinesAsia-Pacific Cable Network
    
    Korea, Japan, Hong Kong, Taiwan, Australia,
Philippines, Singapore, Malaysia, Indonesia and
ThailandAsia-Pacific Cable Network 2
    
    Philippines, Hong Kong, Japan, Korea, Malaysia,
Singapore, China and TaiwanTranspacific Cable No. 5
    
    Guam, Japan, Hawaii and the U.S. MainlandSEA-ME-WE-3
    
    Japan, Korea, China, Taiwan, Hong Kong, Macau,
Philippines, Vietnam, Brunei, Malaysia, Singapore,
Indonesia, Australia, Thailand, Myanmar, Sri Lanka,
India, Pakistan, United Arab Emirates, Oman, Djibouti,
Saudi Arabia, Egypt, Cyprus, Turkey, Greece, Italy,
Morocco, Portugal, France, UK, Belgium and GermanyChina-U.S. Cable
    
    Japan, China, Taiwan, Korea, Guam and the U.S. MainlandFLAG Cable
    
    Japan, Korea, China, Hong Kong, Malaysia, Thailand,
India, United Arab Emirates, Saudi Arabia, Egypt,
Italy, Spain and UKSouthern Cross Cable
    
    U.S. Mainland, Hawaii, Fiji, Australia and New ZealandEAC Cable
    
    Japan, Hong Kong, Korea, Taiwan, Singapore and the
PhilippinesPC-1, Japan-U.S. Cable and TGN
    
    Japan and the U.S.Asia-America Gateway
    
    Malaysia, Singapore, Thailand, Vietnam, Brunei, Hong
Kong, Philippines, Guam, Hawaii and the U.S. Mainland
  
 Interconnection Agreements
        45




---



##### Table of Contents



Licenses and Regulations
 Licenses
     46




---



##### Table of Contents




    
    begin installation and rollout of its 3G network no later than 18 months from the
date of the award;
 
    
    start commercial operations no later than 30 months from the date of the award; and
 
    
    cover at least 80% of provincial capitals and 80% of chartered cities within five
years.
      47




---



##### Table of Contents



Carrier
    
    Spectrum System
    
    Frequency Assignment
    
    BandwidthSmart
    
    ETACS/GSM 900
    
    897.5-905/942.5-950 MHz
    
    7.5 MHzGSM 1800
    
    1725-1730/1820-1825 MHz
    
    5.0 MHz1730-1732.5/1825-1827.5 MHz
    
    2.5 MHz1735-1740/1830-1835 MHz
    
    5.0 MHz1745-1750/1840-1845 MHz
    
    5.0 MHz1780-1782.5/1875-1877.5 MHz
    
    2.5 MHz3G (W-CDMA)
    
    1920-1935/2110-2125 MHz
    
    15.0 MHz825-835/870-880 MHz
    
    10.0 MHzPiltel(1)
    
    AMPS/CDMA
    
    824-825/869-870 MHz
    
    1.0 MHz845-846.5/890-891.5 MHz
    
    1.5 MHzSBI
    
    Wireless broadband
    
    2670-2690 MHz(2)
    
    20.0 MHz2400-2483.5 MHz(2)
    
    73.0 MHz3400-3590 MHz(2)
    
    94.0 MHz5470-5850 MHz(2)
    
    123.0 MHzCURE
    
    3G
    
    1955-1965/2145-2155 MHz
    
    10.0 MHzPDSI
    
    BWA (WiMAX)
    
    2340-2370 MHz
    
    30.0 MHz
 
 (1)
    
    On January 8, 2010, the NTC approved the transfer of Piltels CPCN to SBI.(2)
    
    SBI frequency assignments on these bands are non-contiguous and are on a per station
and location basis. Material Effects of Regulation on our Business
      48




---



##### Table of Contents




    
    On July 3, 2009, the NTC issued Memorandum Circular No. 03-07-2009, imposing an
extension of the expiration of the prepaid loads from two months to various expiration
periods ranging from from three days to 120 days. Smart has been implementing the new
validity period of prepaid loads since July 19, 2009.
 
    
    On July 7, 2009, the NTC amended its rules on broadcast messaging in Memorandum
Circular No. 04-07-2009, prohibiting content and/or information providers from
initiating push messages. It further requires that subscribers be the party to
initiate any services with public telecommunication entities and/or content providers,
be sent a notification when they subscribe for any service and be given an option
whether to continue with the availed service.
 
    
    On July 23, 2009, the NTC issued Memorandum Circular No. 05-07-2009 mandating
cellular operators, including Smart, to charge calls on a maximum six-second pulse
basis instead of the previous per minute basis whether the subscriber is prepaid or
postpaid. The NTC granted Smart the provisional authority to charge new rates and
implement six second pulse scheme on December 5, 2009. Smart subsequently implemented
the six seconds per pulse directive by billing on a six second per pulse basis, if
subscribers entered additional dialing numbers as a prefix before the actual number.
The NTC opposed Smarts implementation of the six seconds per pulse directive. As of
March 31, 2010, the matter is pending before the Court of Appeals and is the subject of
a temporary restraining order preventing the NTC from implementing its six second per
pulse billing directive.
 
    
    The six second per pulse billing scheme is expected to have a negative impact on
Smarts revenue, profit and ARPU as this is expected to decrease the amount of time
billed per call as a result of moving to shorter billing intervals of six seconds from
the previous one minute.
  quo warranto
  49




---



##### Table of Contents



(a)
    
    guidelines on the mandatory interconnection of backhaul networks to the cable
landing station, which were issued on October 7, 2008 and became effective on October
23, 2008; and
 (b)
    
    guidelines on the interconnection of LECs in local calling areas that eliminate
interconnection access charges between LECs within a local calling area, which were
issued on May 30, 2008 and became effective on June 17, 2008.
  
 Competition
  Cellular Service
 Sun Cellular
      50




---



##### Table of Contents



Local Exchange Service
    PLDT Landline Plus PLDT Landline Plus
 International Long Distance Service
    51




---



##### Table of Contents



National Long Distance Service
    Data and Other Network Services
  
 Environmental Matters
  
 Intellectual Property Rights
  
 Properties
   
    
    68% consisted of cable, wire and cellular facilities, including our domestic fiber
optic network, subscriber cable facilities, inter-office trunking and toll cable
facilities and cellular facilities;
 
    
    15% consisted of central office equipment, including five international gateway
facilities, six pure national toll exchanges and 15 combined local and toll exchanges,
and our communications satellite;
 
    
    11% consisted of land and improvements and buildings, which we acquired to house our
telecommunications equipment, personnel, inventory and/or fleet;
 
    
    5% consisted of information origination and termination equipment, including pay
telephones and radio equipment installed for customers use, and cables and wires
installed within customers premises; and
 
    
    1% consisted of other work equipment.
  52




---



##### Table of Contents



Note 9  Property, Plant and Equipment
    Note 9  Property, Plant
and Equipment  SBIs Acquisition of Cluster 3 Assets from Cruz Telephone Company, Inc., or
Cruztelco
  Note 26  Contractual Obligations and Commercial Commitments
  
 Item 4A. Unresolved Staff Comments
   53




---



##### Table of Contents



Item 5. Operating and Financial Review and Prospects
 The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our consolidated financial statements (and the related notes) as
at December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007 included
elsewhere in this report. This discussion contains forward-looking statements that reflect our
current views with respect to future events and our future financial performance. These statements
involve risks and uncertainties, and our actual results may differ materially from those
anticipated in these forward-looking statements as a result of particular factors such as those set
forth under Forward-Looking Statements and Item 3. Key Information  Risk Factors and
elsewhere in this report. Our consolidated financial statements, and the financial information
discussed below, have been prepared in accordance with IFRS. For convenience, certain peso
financial information in the following discussions has been translated to U.S. dollars at the
exchange rate at December 31, 2009 of Php46.43 to US$1.00, as quoted through the Philippine Dealing
System.
 
 Overview
  
    
    Wireless wireless telecommunications services provided by Smart, Piltel (on
August 17, 2009, Smart acquired the cellular business of Piltel) and CURE, our cellular
service providers; SBI, BOW, Airborne Access and PDSI, our wireless broadband service
providers; Wolfpac and Chikka Group, our wireless content operator; Mabuhay Satellite
and ACeS Philippines, our satellite operators;
 
    
    Fixed Line fixed line telecommunications services primarily provided through
PLDT. We also provide fixed line services through PLDTs subsidiaries, namely,
ClarkTel, Subictel, Philcom, Maratel, SBI, PDSI, BCC and PLDT Global, all of which
account for approximately 4% of our consolidated fixed line subscribers; and
 
    
    Information and Communications Technology information and communications
infrastructure and services for internet applications, IP-based solutions and
multimedia content delivery provided by ePLDT and BayanTrade Group; knowledge
processing solutions provided by the SPi Group; customer interaction solutions provided
under the umbrella brand name ePLDT Ventus, through Ventus, Parlance and Vocativ;
internet access and online gaming services provided by Infocom, Digital Paradise,
netGames and Level Up!; and e-commerce, and IT-related services provided by other
investees of ePLDT, as discussed in Note 10  Investments in Associates and Joint
Venturesto the accompanying consolidated financial statements in Item 18.
     54




---



##### Table of Contents



Critical Accounting Policies
 Note 3  Managements Use of Judgments, Estimates and Assumptions
 Judgments
  Determination of functional currency
   Leases
 IAS 17, Leases, Note 20  Interest-bearing
Financial Liabilities, Note 26  Contractual Obligations and Commercial Commitments Note 28 
Financial Assets and Liabilities
  55




---



##### Table of Contents



Estimates and Assumptions
  Asset impairment
   Note 4  Operating Segment Information, Note 5  Income and Expenses Note 10  Investments in Associates and Joint Ventures
 Notes 9, 10, 14, 16, 17 18,
 Estimating useful lives of property, plant and equipment
  Note 4  Operating
Segment Information Note 9  Property, Plant and Equipment
 Determining the fair value of investment properties
   56




---



##### Table of Contents



Note 12  Investment
Properties
 Goodwill and intangible assets
   Note 13  Business Combinations and Acquisition
of Non-Controlling Interests Note 14  Goodwill and Intangible Assets
 Recognition of deferred income tax assets and liabilities
  Note 4  Operating
Segment Information Note 7  Income Tax
  57




---



##### Table of Contents



Estimating allowance for doubtful accounts
   Note 4  Operating Segment Information, Note 5  Income and
Expenses, Note 16  Trade and Other Receivables Note 28  Financial Assets and Liabilities
 Estimating net realizable value of inventories and supplies
  Note 4  Operating Segment Information, Note 5 
Income and Expenses Note 17  Inventories and Supplies
 Estimation of pension benefit costs and retirement benefits
  Note 5  Income and Expenses,
Note 18  Prepayments Note 25  Share-based Payments and Employee Benefits
  58




---



##### Table of Contents



Share-based payment transactions
 Note 25  Share-based Payments and Employee Benefits Note 5  Income and Expenses, Note 23  Accrued
Expenses and Other Current Liabilities Note 25  Share-based Payments and Employee Benefits
 Provision for asset retirement obligations
 Note 21  Deferred Credits and Other
Noncurrent Liabilities
 Provision for legal contingencies and tax assessments
 Note 27  Provisions and Contingencies
 Revenue recognition
     59




---



##### Table of Contents



Determination of fair values of financial assets and liabilities
  Note 28  Financial Assets and Liabilities
 
 New Accounting Standards, Interpretations and Amendments to Existing Standards Effective Subsequent
to December 31, 2009
 Note 2  Summary of Significant Accounting Policies
  60




---



##### Table of Contents



Results of Operations
  Inter-segmentWireless
    
    
    Fixed Line
    
    
    ICT
    
    
    Transactions
    
    
    Consolidated(in millions)For the year ended December 31, 2009Revenues
    
      Php
    97,524
    
    
      Php
    51,373
    
    
      Php
    11,549
    
    
    Php
    (12,453
    )
    
      Php
    147,993Expenses
    
    
    52,432
    
    
    
    39,081
    
    
    
    11,289
    
    
    
    (12,691
    )
    
    
    90,111Other income (expenses)
    
    
    1,149
    
    
    
    (4,170
    )
    
    
    216
    
    
    
    (238
    )
    
    
    (3,043
    )Income before income tax
    
    
    46,241
    
    
    
    8,122
    
    
    
    476
    
    
    
    
    
    
    
    54,839Net income
    
    
    33,727
    
    
    
    5,864
    
    
    
    504
    
    
    
    
    
    
    
    40,095Net income attributable to equity holders of PLDT
    
    
    33,394
    
    
    
    5,854
    
    
    
    533
    
    
    
    
    
    
    
    39,781For the year ended December 31, 2008Revenues
    
    
    95,852
    
    
    
    49,686
    
    
    
    10,983
    
    
    
    (10,684
    )
    
    
    145,837Expenses
    
    
    47,589
    
    
    
    35,733
    
    
    
    13,267
    
    
    
    (10,803
    )
    
    
    85,786Other expenses
    
    
    2,640
    
    
    
    3,173
    
    
    
    1
    
    
    
    188
    
    
    
    6,002Income (loss) before income tax
    
    
    45,623
    
    
    
    10,780
    
    
    
    (2,285
    )
    
    
    (69
    )
    
    
    54,049Net income (loss)
    
    
    29,499
    
    
    
    7,732
    
    
    
    (2,186
    )
    
    
    (69
    )
    
    
    34,976Net income (loss) attributable to equity holders of PLDT
    
    
    28,628
    
    
    
    7,727
    
    
    
    (1,969
    )
    
    
    (69
    )
    
    
    34,317For the year ended December 31, 2007Revenues
    
    
    89,299
    
    
    
    48,832
    
    
    
    10,322
    
    
    
    (9,749
    )
    
    
    138,704Expenses
    
    
    44,530
    
    
    
    37,891
    
    
    
    11,005
    
    
    
    (9,839
    )
    
    
    83,587Other income (expenses)
    
    
    2,577
    
    
    
    (64
    )
    
    
    472
    
    
    
    (21
    )
    
    
    2,964Income (loss) before income tax
    
    
    47,346
    
    
    
    10,877
    
    
    
    (211
    )
    
    
    69
    
    
    
    58,081Net income (loss)
    
    
    31,780
    
    
    
    7,519
    
    
    
    (94
    )
    
    
    69
    
    
    
    39,274Net income attributable to equity holders of PLDT
    
    
    31,674
    
    
    
    7,516
    
    
    
    30
    
    
    
    69
    
    
    
    39,289
 2009 Compared to 2008
 On a Consolidated Basis
 Revenues
   Change2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless
    

          Php
    97,524
    
    
    
    66
    
    
          Php
    95,852
    
    
    
    66
    
        
          Php
    1,672
    
    
    
    2Fixed line
    
    
    51,373
    
    
    
    34
    
    
    
    49,686
    
    
    
    34
    
    
    
    1,687
    
    
    
    3Information and communications technology
    
    
    11,549
    
    
    
    8
    
    
    
    10,983
    
    
    
    7
    
    
    
    566
    
    
    
    5Inter-segment transactions
    
    
    (12,453
    )
    
    
    (8
    )
    
    
    (10,684
    )
    
    
    (7
    )
    
    
    (1,769
    )
    
    
    17Consolidated
    

          Php
    147,993
        
    
    
    100
    
    

          Php
    145,837
        
    
    
    100
    
    

          Php
    2,156
        
    
    
    1
 Expenses
   61




---



##### Table of Contents



Change2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless
    
      Php
    52,432
    
    
    
    58
    
    
      Php
    47,589
    
    
    
    55
    
    
      Php
    4,843
    
    
    
    10Fixed line
    
    
    39,081
    
    
    
    43
    
    
    
    35,733
    
    
    
    42
    
    
    
    3,348
    
    
    
    9Information and communications technology
    
    
    11,289
    
    
    
    13
    
    
    
    13,267
    
    
    
    16
    
    
    
    (1,978
    )
    
    
    (15
    )Inter-segment transactions
    
    
    (12,691
    )
    
    
    (14
    )
    
    
    (10,803
    )
    
    
    (13
    )
    
    
    (1,888
    )
    
    
    17Consolidated
    
      Php
    90,111
    
    
    
    100
    
    
      Php
    85,786
    
    
    
    100
    
    
      Php
    4,325
    
    
    
    5
 Other Expenses
   Change2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless
    
      Php
    1,149
    
    
    
    38
    
    
    Php
    (2,640
    )
    
    
    44
    
    
      Php
    3,789
    
    
    
    144Fixed line
    
    
    (4,170
    )
    
    
    (137
    )
    
    
    (3,173
    )
    
    
    53
    
    
    
    (997
    )
    
    
    (31
    )Information and communications technology
    
    
    216
    
    
    
    7
    
    
    
    (1
    )
    
    
    
    
    
    
    217
    
    
    
    21,700Inter-segment transactions
    
    
    (238
    )
    
    
    (8
    )
    
    
    (188
    )
    
    
    3
    
    
    
    (50
    )
    
    
    27Consolidated
    
    Php
    (3,043
    )
    
    
    100
    
    
    Php
    (6,002
    )
    
    
    100
    
    
      Php
    2,959
    
    
    
    (49
    )
 Provision for Income Tax
   62




---



##### Table of Contents



Net Income
  Change2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless
    
        Php
    33,727
    
    
    
    84
    
    
        Php
    29,499
    
    
    
    84
    
    
        Php
    4,228
    
    
    
    14Fixed line
    
    
    5,864
    
    
    
    15
    
    
    
    7,732
    
    
    
    22
    
    
    
    (1,868
    )
    
    
    (24
    )Information and communications technology
    
    
    504
    
    
    
    1
    
    
    
    (2,186
    )
    
    
    (6
    )
    
    
    2,690
    
    
    
    123Inter-segment transactions
    
    
    
    
    
    
    
    
    
    
    (69
    )
    
    
    
    
    
    
    69
    
    
    
    100Consolidated
    
        Php
    40,095
    
    
    
    100
    
    
        Php
    34,976
    
    
    
    100
    
    
        Php
    5,119
    
    
    
    15
 On a Business Segment Basis
 Wireless
 Revenues
  Increase (Decrease)2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless Services:Service Revenues:Cellular
    
        Php
    88,410
    
    
    
    91
    
    
        Php
    87,518
    
    
    
    92
    
    
        Php
    892
    
    
    
    1Wireless broadband, satellite and others
    
    
    7,419
    
    
    
    7
    
    
    
    6,075
    
    
    
    6
    
    
    
    1,344
    
    
    
    2295,829
    
    
    
    98
    
    
    
    93,593
    
    
    
    98
    
    
    
    2,236
    
    
    
    2Non-Service Revenues:Sale of cellular handsets, cellular
SIM-packs and broadband data modems
    
    
    1,695
    
    
    
    2
    
    
    
    2,259
    
    
    
    2
    
    
    
    (564
    )
    
    
    (25
    )Total Wireless Revenues
    
        Php
    97,524
    
    
    
    100
    
    
        Php
    95,852
    
    
    
    100
    
    
        Php
    1,672
    
    
    
    2
 Service Revenues
  Cellular Service
   63




---



##### Table of Contents



Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    %(in millions)Cellular service revenues
    
        Php
    88,410
    
    
        Php
    87,518
    
    
        Php
    892
    
    
    
    1By service type
    
    
    85,922
    
    
    
    85,079
    
    
    
    843
    
    
    
    1Prepaid
    
    
    79,284
    
    
    
    78,743
    
    
    
    541
    
    
    
    1Postpaid
    
    
    6,638
    
    
    
    6,336
    
    
    
    302
    
    
    
    5By component
    
    
    85,922
    
    
    
    85,079
    
    
    
    843
    
    
    
    1Voice
    
    
    38,850
    
    
    
    37,275
    
    
    
    1,575
    
    
    
    4Data
    
    
    47,072
    
    
    
    47,804
    
    
    
    (732
    )
    
    
    (2
    )Others(1)
    
    
    2,488
    
    
    
    2,439
    
    
    
    49
    
    
    
    2
 
 (1)
    
    Refers to other non-subscriber-related revenues consisting primarily of inbound
international roaming fees, revenues from Smarts public calling offices and share in PLDTs
WeRoam and PLDT Landline Plus services, a small number of leased line contracts, revenues from
Wolfpac and other Smart subsidiaries. Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    %Cellular subscriber base
    
    
    41,328,641
    
    
    
    35,224,604
    
    
    
    6,104,037
    
    
    
    17Prepaid
    
    
    40,893,098
    
    
    
    34,826,468
    
    
    
    6,066,630
    
    
    
    17Smart Buddy
    
    
    23,762,814
    
    
    
    20,501,617
    
    
    
    3,261,197
    
    
    
    16Talk N Text(1)
    
    
    17,050,713
    
    
    
    14,308,493
    
    
    
    2,742,220
    
    
    
    19Red Mobile(2)
    
    
    79,571
    
    
    
    16,358
    
    
    
    63,213
    
    
    
    386Postpaid
    
    
    435,543
    
    
    
    398,136
    
    
    
    37,407
    
    
    
    9Systemwide traffic volumes (in millions)Calls (in minutes)
    
    
    13,327
    
    
    
    6,708
    
    
    
    6,619
    
    
    
    99Domestic  outbound
    
    
    10,404
    
    
    
    3,810
    
    
    
    6,594
    
    
    
    173International
    
    
    2,923
    
    
    
    2,898
    
    
    
    25
    
    
    
    1Inbound
    
    
    2,733
    
    
    
    2,677
    
    
    
    56
    
    
    
    2Outbound
    
    
    190
    
    
    
    221
    
    
    
    (31
    )
    
    
    (14
    )SMS count
    
    
    279,496
    
    
    
    249,691
    
    
    
    29,805
    
    
    
    12Text messages
    
    
    277,869
    
    
    
    248,051
    
    
    
    29,818
    
    
    
    12Domestic
    
    
    277,558
    
    
    
    247,751
    
    
    
    29,807
    
    
    
    12Bucket-Priced
    
    
    256,391
    
    
    
    223,373
    
    
    
    33,018
    
    
    
    15Standard
    
    
    21,167
    
    
    
    24,378
    
    
    
    (3,211
    )
    
    
    (13
    )International
    
    
    311
    
    
    
    300
    
    
    
    11
    
    
    
    4Value-Added Services
    
    
    1,608
    
    
    
    1,614
    
    
    
    (6
    )
    
    
    Financial Services
    
    
    19
    
    
    
    26
    
    
    
    (7
    )
    
    
    (27
    )
 
 (1)
    
    The transfer of Piltels cellular business to Smart was completed on August 17,
2009.(2)
    
    The Red Mobile brand was launched in November 2008 by CURE.  Voice Services
   64




---



##### Table of Contents



Smartalk Smart
Buddy Smart Gold Smart Buddy Smart Gold Smartalk 100 Smartalk 500
 Smartalk Plus Smartalk Plus
 Data Services
   Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    %(in millions)Text messagingDomestic
    
        Php
    42,905
    
    
        Php
    43,477
    
    
    Php
    (572
    )
    
    
    (1
    )Bucket-Priced
    
    
    26,797
    
    
    
    26,461
    
    
    
    336
    
    
    
    1Standard
    
    
    16,108
    
    
    
    17,016
    
    
    
    (908
    )
    
    
    (5
    )International
    
    
    1,668
    
    
    
    1,808
    
    
    
    (140
    )
    
    
    (8
    )44,573
    
    
    
    45,285
    
    
    
    (712
    )
    
    
    (2
    )Value-added servicesStandard(1)
    
    
    1,057
    
    
    
    1,325
    
    
    
    (268
    )
    
    
    (20
    )Rich Media(2)
    
    
    998
    
    
    
    679
    
    
    
    319
    
    
    
    47Pasa Load
    
    
    413
    
    
    
    470
    
    
    
    (57
    )
    
    
    (12
    )2,468
    
    
    
    2,474
    
    
    
    (6
    )
    
    
    Financial servicesSmart Money
    
    
    27
    
    
    
    41
    
    
    
    (14
    )
    
    
    (34
    )Mobile Banking
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    31
    
    
    
    45
    
    
    
    (14
    )
    
    
    (31
    )Total
    
        Php
    47,072
    
    
        Php
    47,804
    
    
    Php
    (732
    )
    
    
    (2
    )
 
 (1)
    
    Includes standard services such as info-on-demand, ringtone and logo download, etc.(2)
    
    Includes Multimedia Messaging System, or MMS, internet browsing, General Packet
Radio Service, or GPRS, etc.   65




---



##### Table of Contents



Pasa Load
 Subscriber Base, ARPU and Churn Rates
 Talk N Text
  Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    %Prepaid
    
    
    6,066,630
    
    
    
    5,127,318
    
    
    
    939,312
    
    
    
    18Smart Buddy
    
    
    3,261,197
    
    
    
    504,293
    
    
    
    2,756,904
    
    
    
    547Talk N Text(1)
    
    
    2,742,220
    
    
    
    4,606,667
    
    
    
    (1,864,447
    )
    
    
    (40
    )Red Mobile(2)
    
    
    63,213
    
    
    
    16,358
    
    
    
    46,855
    
    
    
    286Postpaid
    
    
    37,407
    
    
    
    56,256
    
    
    
    (18,849
    )
    
    
    (34
    )Total
    
    
    6,104,037
    
    
    
    5,183,574
    
    
    
    920,463
    
    
    
    18
 
 (1)
    
    The transfer of Piltels cellular business to Smart was completed on August 17,
2009.(2)
    
    The Red Mobile brand was launched in November 2008 by CURE.  2009
    
    
    20081Q
    
    
    2Q
    
    
    3Q
    
    
    4Q
    
    
    1Q
    
    
    2Q
    
    
    3Q
    
    
    4QPrepaid
    
    
    1,692,767
    
    
    
    1,575,585
    
    
    
    621,154
    
    
    
    2,177,124
    
    
    
    1,533,812
    
    
    
    1,660,040
    
    
    
    917,528
    
    
    
    1,015,938Smart Buddy
    
    
    419,821
    
    
    
    523,496
    
    
    
    644,932
    
    
    
    1,672,948
    
    
    
    282,044
    
    
    
    130,697
    
    
    
    111,487
    
    
    
    (19,935
    )Talk N Text
    
    
    1,256,907
    
    
    
    1,019,162
    
    
    
    (32,419
    )
    
    
    498,570
    
    
    
    1,251,768
    
    
    
    1,529,343
    
    
    
    806,041
    
    
    
    1,019,515Red Mobile
    
    
    16,039
    
    
    
    32,927
    
    
    
    8,641
    
    
    
    5,606
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,358Postpaid
    
    
    9,328
    
    
    
    17,746
    
    
    
    6,806
    
    
    
    3,527
    
    
    
    1,117
    
    
    
    5,027
    
    
    
    17,816
    
    
    
    32,296Total
    
    
    1,702,095
    
    
    
    1,593,331
    
    
    
    627,960
    
    
    
    2,180,651
    
    
    
    1,534,929
    
    
    
    1,665,067
    
    
    
    935,344
    
    
    
    1,048,234
  66




---



##### Table of Contents



Smart Buddy Talk N Text Red Mobile
   Gross(1)
    
    
    Decrease
    
    
    Net(2)
    
    
    Decrease2009
    
    
    2008
    
    
    Amount
    
    
    %
    
    
    2009
    
    
    2008
    
    
    Amount
    
    
    %PrepaidSmart Buddy
    
        Php
    261
    
    
        Php
    290
    
    
    Php
    (29
    )
    
    
    (10
    )
        
        Php
    207
    
        
        Php
    230
    
        
        Php
    (23
    )
    
    
    (10
    )Talk N Text
    
    
    161
    
    
    
    194
    
    
    
    (33
    )
    
    
    (17
    )
    
    
    133
    
    
    
    158
    
    
    
    (25
    )
    
    
    (16
    )Red Mobile
    
    
    20
    
    
    
    48
    
    
    
    (28
    )
    
    
    (58
    )
    
    
    13
    
    
    
    39
    
    
    
    (26
    )
    
    
    (67
    )Prepaid  Blended(3)
    
    
    218
    
    
    
    254
    
    
    
    (36
    )
    
    
    (14
    )
    
    
    175
    
    
    
    203
    
    
    
    (28
    )
    
    
    (14
    )Postpaid  Smart
    
    
    1,817
    
    
    
    2,065
    
    
    
    (248
    )
    
    
    (12
    )
    
    
    1,313
    
    
    
    1,483
    
    
    
    (170
    )
    
    
    (11
    )Prepaid and Postpaid Blended(4)
    
    
    235
    
    
    
    274
    
    
    
    (39
    )
    
    
    (14
    )
    
    
    188
    
    
    
    217
    
    
    
    (29
    )
    
    
    (13
    )
 
 (1)
    
    Gross monthly ARPU is calculated by dividing gross cellular service revenues for the
month, including discounts, allocated content-provider costs and interconnection income but
excluding inbound roaming revenues, by the average number of subscribers in the month.(2)
    
    Net monthly ARPU is calculated by dividing gross cellular service revenues for the
month, including interconnection income net of interconnection expense, but net of discounts
and content-provider costs, by the average number of subscribers in the month.(3)
    
    The average monthly ARPU of Smart Buddy, Talk N Text and Red Mobile.(4)
    
    The average monthly ARPU of all prepaid and postpaid cellular subscribers.    67




---



##### Table of Contents



Prepaid
    
    
    PostpaidSmart Buddy
    
    
    Talk N Text
    
    
    Red Mobile
    
    
    SmartGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)2009First Quarter
    
        Php
    272
    
    
        Php
    216
    
    
        Php
    176
    
    
        Php
    144
    
    
        Php
    25
    
    
        Php
    14
    
    
        Php
    1,863
    
    
        Php
    1,364Second Quarter
    
    
    269
    
    
    
    212
    
    
    
    168
    
    
    
    138
    
    
    
    16
    
    
    
    10
    
    
    
    1,816
    
    
    
    1,278Third Quarter
    
    
    249
    
    
    
    197
    
    
    
    148
    
    
    
    122
    
    
    
    19
    
    
    
    12
    
    
    
    1,801
    
    
    
    1,307Fourth Quarter
    
    
    252
    
    
    
    203
    
    
    
    152
    
    
    
    127
    
    
    
    18
    
    
    
    15
    
    
    
    1,791
    
    
    
    1,3042008First Quarter
    
    
    292
    
    
    
    230
    
    
    
    207
    
    
    
    163
    
    
    
    
    
    
    
    
    
    
    
    2,013
    
    
    
    1,472Second Quarter
    
    
    294
    
    
    
    232
    
    
    
    199
    
    
    
    159
    
    
    
    
    
    
    
    
    
    
    
    2,134
    
    
    
    1,510Third Quarter
    
    
    285
    
    
    
    223
    
    
    
    178
    
    
    
    148
    
    
    
    
    
    
    
    
    
    
    
    2,078
    
    
    
    1,505Fourth Quarter
    
    
    291
    
    
    
    234
    
    
    
    192
    
    
    
    162
    
    
    
    48
    
    
    
    39
    
    
    
    2,037
    
    
    
    1,445
 
 (1)
    
    Gross quarterly ARPU is calculated based on the average of the gross monthly ARPUs
for the quarter.(2)
    
    Net quarterly ARPU is calculated based on the average of the net monthly ARPUs for
the quarter. Wireless Broadband, Satellite and Other Services
   Non-Service Revenues
  Expenses
    68




---



##### Table of Contents



Increase (Decrease)2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless Services:Depreciation and amortization
    
        Php
    13,237
    
    
    
    25
    
    
        Php
    11,975
    
    
    
    25
    
    
        Php
    1,262
    
    
    
    11Rent
    
    
    10,553
    
    
    
    20
    
    
    
    9,267
    
    
    
    20
    
    
    
    1,286
    
    
    
    14Compensation and employee benefits(1)
    
    
    6,059
    
    
    
    12
    
    
    
    5,433
    
    
    
    11
    
    
    
    626
    
    
    
    12Cost of sales
    
    
    4,363
    
    
    
    8
    
    
    
    4,236
    
    
    
    9
    
    
    
    127
    
    
    
    3Repairs and maintenance
    
    
    4,340
    
    
    
    8
    
    
    
    4,230
    
    
    
    9
    
    
    
    110
    
    
    
    3Selling and promotions
    
    
    4,051
    
    
    
    8
    
    
    
    3,781
    
    
    
    8
    
    
    
    270
    
    
    
    7Professional and other contracted services
    
    
    2,904
    
    
    
    6
    
    
    
    2,529
    
    
    
    5
    
    
    
    375
    
    
    
    15Asset impairment
    
    
    2,026
    
    
    
    4
    
    
    
    1,006
    
    
    
    2
    
    
    
    1,020
    
    
    
    101Taxes and licenses
    
    
    2,022
    
    
    
    4
    
    
    
    1,872
    
    
    
    4
    
    
    
    150
    
    
    
    8Communication, training and travel
    
    
    972
    
    
    
    2
    
    
    
    1,091
    
    
    
    2
    
    
    
    (119
    )
    
    
    (11
    )Insurance and security services
    
    
    781
    
    
    
    1
    
    
    
    722
    
    
    
    2
    
    
    
    59
    
    
    
    8Amortization of intangible assets
    
    
    126
    
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    (7
    )
    
    
    (5
    )Provisions
    
    
    
    
    
    
    
    
    
    
    897
    
    
    
    2
    
    
    
    (897
    )
    
    
    (100
    )Other expenses
    
    
    998
    
    
    
    2
    
    
    
    417
    
    
    
    1
    
    
    
    581
    
    
    
    139Total
    
        Php
    52,432
    
    
    
    100
    
    
        Php
    47,589
    
    
    
    100
    
    
        Php
    4,843
    
    
    
    10
 
 (1)
    
    Includes salaries and employee benefits, long-term incentive plan, or LTIP, pension
and manpower rightsizing program, or MRP, costs.   Note 25  Share-based Payments and Employee Benefits
       69




---



##### Table of Contents



Note
27  Provisions and Contingencies
  Other Income (Expenses)
  Change2009
    
    
    2008
    
    
    Amount
    
    
    %(in millions)Other Income (Expenses):Gains (losses) on derivative financial instruments  net
    
        Php
    1,166
    
    
    Php
    (241
    )
    
        Php
    1,407
    
    
    
    584Interest income
    
    
    1,139
    
    
    
    1,197
    
    
    
    (58
    )
    
    
    (5
    )Foreign exchange gains (losses)  net
    
    
    387
    
    
    
    (1,771
    )
    
    
    2,158
    
    
    
    122Equity share in net losses of associates
    
    
    (68
    )
    
    
    (119
    )
    
    
    51
    
    
    
    (43
    )Financing costs  net
    
    
    (2,619
    )
    
    
    (2,029
    )
    
    
    (590
    )
    
    
    29Others
    
    
    1,144
    
    
    
    323
    
    
    
    821
    
    
    
    254Total
    
        Php
    1,149
    
    
    Php
    (2,640
    )
    
        Php
    3,789
    
    
    
    144
 Note 10  Investments in Associates and Joint Ventures
 Provision for Income Tax
   70




---



##### Table of Contents



Net Income
  Fixed Line
 Revenues
  Increase (Decrease)2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Fixed Line Services:Service Revenues:Local exchange
    
        Php
    15,681
    
    
    
    31
    
    
        Php
    15,923
    
    
    
    32
    
    
    Php
    (242
    )
    
    
    (2
    )International long distance
    
    
    6,255
    
    
    
    12
    
    
    
    7,063
    
    
    
    14
    
    
    
    (808
    )
    
    
    (11
    )National long distance
    
    
    5,969
    
    
    
    12
    
    
    
    6,207
    
    
    
    13
    
    
    
    (238
    )
    
    
    (4
    )Data and other network
    
    
    21,567
    
    
    
    42
    
    
    
    18,607
    
    
    
    37
    
    
    
    2,960
    
    
    
    16Miscellaneous
    
    
    1,668
    
    
    
    3
    
    
    
    1,466
    
    
    
    3
    
    
    
    202
    
    
    
    1451,140
    
    
    
    100
    
    
    
    49,266
    
    
    
    99
    
    
    
    1,874
    
    
    
    4Non-Service Revenues:Sale of computers
    
    
    233
    
    
    
    
    
    
    
    420
    
    
    
    1
    
    
    
    (187
    )
    
    
    (45
    )Total Fixed Line Revenues
    
        Php
    51,373
    
    
    
    100
    
    
        Php
    49,686
    
    
    
    100
    
    
        Php
    1,687
    
    
    
    3
 Service Revenues
   Local Exchange Service
  Increase (Decrease)2009
    
    
    2008
    
    
    Amount
    
    
    %Total local exchange service revenues (in millions)
    
        Php
    15,681
    
    
        Php
    15,923
    
    
    Php
    (242
    )
    
    
    (2
    )Number of fixed line subscribers
    
    
    1,816,541
    
    
    
    1,782,356
    
    
    
    34,185
    
    
    
    2Postpaid
    
    
    1,637,981
    
    
    
    1,533,687
    
    
    
    104,294
    
    
    
    7Prepaid
    
    
    178,560
    
    
    
    248,669
    
    
    
    (70,109
    )
    
    
    (28
    )Number of fixed line employees(1)
    
    
    7,947
    
    
    
    7,813
    
    
    
    134
    
    
    
    2Number of fixed line subscribers per employee
    
    
    229
    
    
    
    228
    
    
    
    1
    
    
    
    
 
 (1)
    
    Increase in headcount was primarily due to the acquisition of Philcom.  71




---



##### Table of Contents



PLDT Landline Plus
  Information on the Company  Business  Fixed Line  Local Exchange Service
 International Long Distance Service
  Decrease2009
    
    
    2008
    
    
    Amount
    
    
    %Total international long distance service revenues (in millions)
    
        Php
    6,255
    
    
        Php
    7,063
    
    
    Php
    (808
    )
    
    
    (11
    )Inbound
    
    
    5,198
    
    
    
    5,667
    
    
    
    (469
    )
    
    
    (8
    )Outbound
    
    
    1,057
    
    
    
    1,396
    
    
    
    (339
    )
    
    
    (24
    )International call volumes (in million minutes, except call ratio)
    
    
    1,863
    
    
    
    2,024
    
    
    
    (161
    )
    
    
    (8
    )Inbound
    
    
    1,653
    
    
    
    1,786
    
    
    
    (133
    )
    
    
    (7
    )Outbound
    
    
    210
    
    
    
    238
    
    
    
    (28
    )
    
    
    (12
    )Inbound-outbound call ratio
    
    
    7.9:1
    
    
    
    7.5:1
    
    
    
    
    
    
    
    
    National Long Distance Service
  Decrease2009
    
    
    2008
    
    
    Amount
    
    
    %Total national long distance service revenues (in millions)
    
        Php
    5,969
    
    
        Php
    6,207
    
    
    Php
    (238
    )
    
    
    (4
    )National long distance call volumes (in million minutes)
    
    
    1,822
    
    
    
    1,944
    
    
    
    (122
    )
    
    
    (6
    )
   72




---



##### Table of Contents



Data and Other Network Services
  Increase2009
    
    
    2008
    
    
    Amount
    
    
    %Data and other network service revenues (in millions)
    
        Php
    21,567
    
    
        Php
    18,607
    
    
        Php
    2,960
    
    
    
    16Number of DSLbroadband subscribers
    
    
    559,664
    
    
    
    432,583
    
    
    
    127,081
    
    
    
    29
 PLDT DSL PLDT Vibe
   PLDT WeRoam
    Miscellaneous
   73




---



##### Table of Contents



Non-service Revenues
  Expenses
   Increase (Decrease)2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Fixed Line Services:Depreciation and amortization
    
        Php
    11,619
    
    
    
    30
    
    
        Php
    11,901
    
    
    
    33
    
    
    Php
    (282
    )
    
    
    (2
    )Compensation and employee benefits(1)
    
    
    10,637
    
    
    
    27
    
    
    
    9,093
    
    
    
    25
    
    
    
    1,544
    
    
    
    17Repairs and maintenance
    
    
    4,345
    
    
    
    11
    
    
    
    4,634
    
    
    
    13
    
    
    
    (289
    )
    
    
    (6
    )Asset impairment
    
    
    2,901
    
    
    
    8
    
    
    
    888
    
    
    
    3
    
    
    
    2,013
    
    
    
    227Rent
    
    
    2,749
    
    
    
    7
    
    
    
    2,492
    
    
    
    7
    
    
    
    257
    
    
    
    10Professional and other contracted services
    
    
    2,485
    
    
    
    6
    
    
    
    2,143
    
    
    
    6
    
    
    
    342
    
    
    
    16Selling and promotions
    
    
    1,590
    
    
    
    4
    
    
    
    1,715
    
    
    
    5
    
    
    
    (125
    )
    
    
    (7
    )Taxes and licenses
    
    
    755
    
    
    
    2
    
    
    
    769
    
    
    
    2
    
    
    
    (14
    )
    
    
    (2
    )Communication, training and travel
    
    
    658
    
    
    
    2
    
    
    
    608
    
    
    
    2
    
    
    
    50
    
    
    
    8Insurance and security services
    
    
    488
    
    
    
    1
    
    
    
    487
    
    
    
    1
    
    
    
    1
    
    
    
    Cost of sales
    
    
    310
    
    
    
    1
    
    
    
    356
    
    
    
    1
    
    
    
    (46
    )
    
    
    (13
    )Provisions
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    (1
    )
    
    
    (100
    )Other expenses
    
    
    544
    
    
    
    1
    
    
    
    646
    
    
    
    2
    
    
    
    (102
    )
    
    
    (16
    )Total
    
        Php
    39,081
    
    
    
    100
    
    
        Php
    35,733
    
    
    
    100
    
    
        Php
    3,348
    
    
    
    9
 
 (1)
    
    Includes salaries and employee benefits, LTIP, pension and MRP costs.  Note 25  Share-based Payments and Employee Benefits
  Note 18  Prepayments Note 26  Contractual
Obligations and Commercial Commitments
  74




---



##### Table of Contents



WeRoam
  Other Expenses
  Change2009
    
    
    2008
    
    
    Amount
    
    
    %(in millions)Other Income (Expenses):Foreign exchange gains (losses)  net
    
        Php
    532
    
    
    Php
    (4,513
    )
    
        Php
    5,045
    
    
    
    112Interest income
    
    
    402
    
    
    
    448
    
    
    
    (46
    )
    
    
    (10
    )Equity share in net losses of joint ventures
    
    
    (98
    )
    
    
    (74
    )
    
    
    (24
    )
    
    
    32Gains (losses) on derivative financial instruments  net
    
    
    (2,180
    )
    
    
    3,444
    
    
    
    (5,624
    )
    
    
    (163
    )Financing costs  net
    
    
    (3,796
    )
    
    
    (3,903
    )
    
    
    107
    
    
    
    (3
    )Others
    
    
    970
    
    
    
    1,425
    
    
    
    (455
    )
    
    
    (32
    )Total
    
    Php
    (4,170
    )
    
    Php
    (3,173
    )
    
    Php
    (997
    )
    
    
    31
   75




---



##### Table of Contents



Provision for Income Tax
  Net Income
  Information and Communications Technology
 Revenues
    Increase (Decrease)2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)Service Revenues:Knowledge processing solutions
    
        Php
    5,215
    
    
    
    45
    
    
        Php
    5,272
    
    
    
    48
    
    
    Php
    (57
    )
    
    
    (1
    )Customer interaction solutions
    
    
    3,319
    
    
    
    29
    
    
    
    3,402
    
    
    
    31
    
    
    
    (83
    )
    
    
    (2
    )Internet and online gaming
    
    
    1,113
    
    
    
    10
    
    
    
    976
    
    
    
    9
    
    
    
    137
    
    
    
    14Data center and others
    
    
    1,284
    
    
    
    11
    
    
    
    767
    
    
    
    7
    
    
    
    517
    
    
    
    6710,931
    
    
    
    95
    
    
    
    10,417
    
    
    
    95
    
    
    
    514
    
    
    
    5Non-Service Revenues:Point-product sales
    
    
    618
    
    
    
    5
    
    
    
    566
    
    
    
    5
    
    
    
    52
    
    
    
    9Total ICT Revenues
    
        Php
    11,549
    
    
    
    100
    
    
        Php
    10,983
    
    
    
    100
    
    
        Php
    566
    
    
    
    5
 Service Revenues
   76




---



##### Table of Contents



Knowledge Processing Solutions
  Customer Interaction Solutions
 ePLDT Ventus ePLDT Ventus
 Internet and Online Gaming
  Data Center and Others
 Vitro ä
 Non-Service Revenues
   Expenses
   77




---



##### Table of Contents



Increase (Decrease)2009
    
    
    %
    
    
    2008
    
    
    %
    
    
    Amount
    
    
    %(in millions)ICT Services:Compensation and employee benefits(1)
    
        Php
    6,418
    
    
    
    57
    
    
        Php
    6,131
    
    
    
    46
    
    
        Php
    287
    
    
    
    5Cost of sales
    
    
    799
    
    
    
    7
    
    
    
    660
    
    
    
    5
    
    
    
    139
    
    
    
    21Depreciation and amortization
    
    
    751
    
    
    
    7
    
    
    
    833
    
    
    
    6
    
    
    
    (82
    )
    
    
    (10
    )Rent
    
    
    716
    
    
    
    6
    
    
    
    665
    
    
    
    5
    
    
    
    51
    
    
    
    8Repairs and maintenance
    
    
    669
    
    
    
    6
    
    
    
    573
    
    
    
    4
    
    
    
    96
    
    
    
    17Professional and other contracted services
    
    
    592
    
    
    
    5
    
    
    
    747
    
    
    
    6
    
    
    
    (155
    )
    
    
    (21
    )Communication, training and travel
    
    
    500
    
    
    
    4
    
    
    
    573
    
    
    
    4
    
    
    
    (73
    )
    
    
    (13
    )Amortization of intangible assets
    
    
    242
    
    
    
    2
    
    
    
    244
    
    
    
    2
    
    
    
    (2
    )
    
    
    (1
    )Asset impairment
    
    
    134
    
    
    
    1
    
    
    
    2,286
    
    
    
    17
    
    
    
    (2,152
    )
    
    
    (94
    )Selling and promotions
    
    
    113
    
    
    
    1
    
    
    
    203
    
    
    
    2
    
    
    
    (90
    )
    
    
    (44
    )Taxes and licenses
    
    
    104
    
    
    
    1
    
    
    
    98
    
    
    
    1
    
    
    
    6
    
    
    
    6Insurance and security services
    
    
    68
    
    
    
    1
    
    
    
    61
    
    
    
    
    
    
    
    7
    
    
    
    11Other expenses
    
    
    183
    
    
    
    2
    
    
    
    193
    
    
    
    2
    
    
    
    (10
    )
    
    
    (5
    )Total
    
        Php
    11,289
    
    
    
    100
    
    
        Php
    13,267
    
    
    
    100
    
    
    Php
    (1,978
    )
    
    
    (15
    )
 
 (1)
    
    Includes salaries and employee benefits, LTIP, pension and MRP costs.        Note 14  Goodwill and Intangible Assets
   78




---



##### Table of Contents



Other Income (Expense)
  Change2009
    
    
    2008
    
    
    Amount
    
    
    %(in millions)Other Income (Expenses):Equity share in net earnings of associates
    
        Php
    168
    
    
        Php
    17
    
    
        Php
    151
    
    
    
    888Interest income
    
    
    28
    
    
    
    22
    
    
    
    6
    
    
    
    27Gains (losses) on derivative financial instruments  net
    
    
    8
    
    
    
    (59
    )
    
    
    67
    
    
    
    114Foreign exchange gains (losses)  net
    
    
    (12
    )
    
    
    93
    
    
    
    (105
    )
    
    
    (113
    )Financing costs  net
    
    
    (171
    )
    
    
    (172
    )
    
    
    1
    
    
    
    (1
    )Others
    
    
    195
    
    
    
    98
    
    
    
    97
    
    
    
    99Total
    
        Php
    216
    
    
    Php
    (1
    )
    
        Php
    217
    
    
    
    21,700
  Benefit from Income Tax
  Net Income (Loss)
  2008 Compared to 2007
 On a Consolidated Basis
 Revenues
   79




---



##### Table of Contents



Change2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless
    
        Php
    95,852
    
    
    
    66
    
    
        Php
    89,299
    
    
    
    64
    
    
        Php
    6,553
    
    
    
    7Fixed line
    
    
    49,686
    
    
    
    34
    
    
    
    48,832
    
    
    
    35
    
    
    
    854
    
    
    
    2Information and communications technology
    
    
    10,983
    
    
    
    7
    
    
    
    10,322
    
    
    
    8
    
    
    
    661
    
    
    
    6Inter-segment transactions
    
    
    (10,684
    )
    
    
    (7
    )
    
    
    (9,749
    )
    
    
    (7
    )
    
    
    (935
    )
    
    
    10Consolidated
    
        Php
    145,837
    
    
    
    100
    
    
        Php
    138,704
    
    
    
    100
    
    
        Php
    7,133
    
    
    
    5
 Expenses
   Change2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless
    
        Php
    47,589
    
    
    
    55
    
    
        Php
    44,530
    
    
    
    53
    
    
        Php
    3,059
    
    
    
    7Fixed line
    
    
    35,733
    
    
    
    42
    
    
    
    37,891
    
    
    
    45
    
    
    
    (2,158
    )
    
    
    (6
    )Information and communications technology
    
    
    13,267
    
    
    
    16
    
    
    
    11,005
    
    
    
    13
    
    
    
    2,262
    
    
    
    21Inter-segment transactions
    
    
    (10,803
    )
    
    
    (13
    )
    
    
    (9,839
    )
    
    
    (11
    )
    
    
    (964
    )
    
    
    10Consolidated
    
        Php
    85,786
    
    
    
    100
    
    
        Php
    83,587
    
    
    
    100
    
    
        Php
    2,199
    
    
    
    3
 Other Income (Expenses)
   Change2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless
    
    Php
    (2,640
    )
    
    
    44
    
    
        Php
    2,577
    
    
    
    87
    
    
    Php
    (5,217
    )
    
    
    (202
    )Fixed line
    
    
    (3,173
    )
    
    
    53
    
    
    
    (64
    )
    
    
    (2
    )
    
    
    (3,109
    )
    
    
    4,857Information and communications technology
    
    
    (1
    )
    
    
    
    
    
    
    472
    
    
    
    16
    
    
    
    (473
    )
    
    
    (100
    )Inter-segment transactions
    
    
    (188
    )
    
    
    3
    
    
    
    (21
    )
    
    
    (1
    )
    
    
    (167
    )
    
    
    795Consolidated
    
    Php
    (6,002
    )
    
    
    100
    
    
        Php
    2,964
    
    
    
    100
    
    
    Php
    (8,966
    )
    
    
    (302
    )
 Provision for Income Tax
   80




---



##### Table of Contents



Net Income
  Change2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless
    
        Php
    29,499
    
    
    
    84
    
    
        Php
    31,780
    
    
    
    81
    
    
    Php
    (2,281
    )
    
    
    (7
    )Fixed line
    
    
    7,732
    
    
    
    22
    
    
    
    7,519
    
    
    
    19
    
    
    
    213
    
    
    
    3Information and communications technology
    
    
    (2,186
    )
    
    
    (6
    )
    
    
    (94
    )
    
    
    
    
    
    
    (2,092
    )
    
    
    2,226Inter-segment transactions
    
    
    (69
    )
    
    
    
    
    
    
    69
    
    
    
    
    
    
    
    (138
    )
    
    
    (200
    )Consolidated
    
        Php
    34,976
    
    
    
    100
    
    
        Php
    39,274
    
    
    
    100
    
    
    Php
    (4,298
    )
    
    
    (11
    )
 On A Business Segment Basis
 Wireless
 Revenues
  Increase (Decrease)2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless Services:Service RevenuesCellular
    
        Php
    87,518
    
    
    
    92
    
    
        Php
    82,334
    
    
    
    92
    
    
        Php
    5,184
    
    
    
    6Wireless broadband, satellite and others
    
    
    6,075
    
    
    
    6
    
    
    
    4,165
    
    
    
    5
    
    
    
    1,910
    
    
    
    4693,593
    
    
    
    98
    
    
    
    86,499
    
    
    
    97
    
    
    
    7,094
    
    
    
    8Non-Service Revenues:Sale of cellular handsets and SIM-packs
    
    
    2,259
    
    
    
    2
    
    
    
    2,800
    
    
    
    3
    
    
    
    (541
    )
    
    
    (19
    )Total Wireless Revenues
    
        Php
    95,852
    
    
    
    100
    
    
        Php
    89,299
    
    
    
    100
    
    
        Php
    6,553
    
    
    
    7
 Service Revenues
  Cellular Service
   81




---



##### Table of Contents



Increase2008
    
    
    2007
    
    
    Amount
    
    
    %(in millions)Cellular service revenues
    
        Php
    87,518
    
    
        Php
    82,334
    
    
        Php
    5,184
    
    
    
    6By service type
    
    
    85,079
    
    
    
    80,197
    
    
    
    4,882
    
    
    
    6Prepaid
    
    
    78,743
    
    
    
    74,284
    
    
    
    4,459
    
    
    
    6Postpaid
    
    
    6,336
    
    
    
    5,913
    
    
    
    423
    
    
    
    7By component
    
    
    85,079
    
    
    
    80,197
    
    
    
    4,882
    
    
    
    6Voice
    
    
    37,275
    
    
    
    36,105
    
    
    
    1,110
    
    
    
    3Data
    
    
    47,804
    
    
    
    44,092
    
    
    
    3,712
    
    
    
    8Others(1)
    
    
    2,439
    
    
    
    2,137
    
    
    
    302
    
    
    
    14
 
 (1)
    
    Refers to other non-subscriber-related revenues consisting primarily of inbound
international roaming fees, revenues from Smarts public calling offices and a small number
of leased line contracts, revenues from Wolfpac and other Smart subsidiaries and revenue
share in PLDTs WeRoam and PLDT Landline Plus services. Increase2008
    
    
    2007
    
    
    Amount
    
    
    %Cellular subscriber base
    
    
    35,224,604
    
    
    
    30,041,030
    
    
    
    5,183,574
    
    
    
    17Prepaid
    
    
    34,826,468
    
    
    
    29,699,150
    
    
    
    5,127,318
    
    
    
    17Smart Buddy
    
    
    20,501,617
    
    
    
    19,997,324
    
    
    
    504,293
    
    
    
    3Talk N Text
    
    
    14,308,493
    
    
    
    9,701,826
    
    
    
    4,606,667
    
    
    
    47Red Mobile (acquired on April 25, 2008)
    
    
    16,358
    
    
    
    
    
    
    
    16,358
    
    
    
    100Postpaid
    
    
    398,136
    
    
    
    341,880
    
    
    
    56,256
    
    
    
    16Systemwide traffic volumes (in millions)Calls (in minutes)
    
    
    6,708
    
    
    
    6,355
    
    
    
    353
    
    
    
    6Domestic  outbound
    
    
    3,810
    
    
    
    3,799
    
    
    
    11
    
    
    
    International
    
    
    2,898
    
    
    
    2,556
    
    
    
    342
    
    
    
    13Inbound
    
    
    2,677
    
    
    
    2,355
    
    
    
    322
    
    
    
    14Outbound
    
    
    221
    
    
    
    201
    
    
    
    20
    
    
    
    10SMS count
    
    
    249,691
    
    
    
    227,028
    
    
    
    22,663
    
    
    
    10Text messages
    
    
    248,051
    
    
    
    225,083
    
    
    
    22,968
    
    
    
    10Domestic
    
    
    247,751
    
    
    
    224,818
    
    
    
    22,933
    
    
    
    10Bucket-Priced
    
    
    223,373
    
    
    
    199,326
    
    
    
    24,047
    
    
    
    12Standard
    
    
    24,378
    
    
    
    25,492
    
    
    
    (1,114
    )
    
    
    (4
    )International
    
    
    300
    
    
    
    265
    
    
    
    35
    
    
    
    13Value-Added Services
    
    
    1,614
    
    
    
    1,903
    
    
    
    (289
    )
    
    
    (15
    )Financial Services
    
    
    26
    
    
    
    42
    
    
    
    (16
    )
    
    
    (38
    )
  Voice Services
   82




---



##### Table of Contents



Data Services
   Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    %(in millions)Text messagingDomestic
    
        Php
    43,477
    
    
        Php
    39,430
    
    
        Php
    4,047
    
    
    
    10Bucket-Priced
    
    
    26,461
    
    
    
    20,141
    
    
    
    6,320
    
    
    
    31Standard
    
    
    17,016
    
    
    
    19,289
    
    
    
    (2,273
    )
    
    
    (12
    )International
    
    
    1,808
    
    
    
    1,835
    
    
    
    (27
    )
    
    
    (1
    )45,285
    
    
    
    41,265
    
    
    
    4,020
    
    
    
    10Value-added servicesStandard(1)
    
    
    1,325
    
    
    
    1,802
    
    
    
    (477
    )
    
    
    (26
    )Rich Media(2)
    
    
    679
    
    
    
    352
    
    
    
    327
    
    
    
    93Pasa Load
    
    
    470
    
    
    
    594
    
    
    
    (124
    )
    
    
    (21
    )2,474
    
    
    
    2,748
    
    
    
    (274
    )
    
    
    (10
    )Financial servicesSmart Money
    
    
    41
    
    
    
    75
    
    
    
    (34
    )
    
    
    (45
    )Mobile Banking
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    45
    
    
    
    79
    
    
    
    (34
    )
    
    
    (43
    )Total
    
        Php
    47,804
    
    
        Php
    44,092
    
    
        Php
    3,712
    
    
    
    8
 
 (1)
    
    Includes standard services such as info-on demand, ringtone and logo download, etc.(2)
    
    Includes Multimedia Messaging System, or MMS, internet browsing, General Packet
Radio Service, or GPRS, etc.   Pasa Load
  83




---



##### Table of Contents



Subscriber Base, ARPU and Churn Rates
   Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    %Prepaid
    
    
    5,127,318
    
    
    
    5,842,329
    
    
    
    (715,011
    )
    
    
    (12
    )Smart Buddy
    
    
    504,293
    
    
    
    3,114,882
    
    
    
    (2,610,589
    )
    
    
    (84
    )Talk N Text
    
    
    4,606,667
    
    
    
    2,727,447
    
    
    
    1,879,220
    
    
    
    69Red Mobile
    
    
    16,358
    
    
    
    
    
    
    
    16,358
    
    
    
    100Postpaid
    
    
    56,256
    
    
    
    23,317
    
    
    
    32,939
    
    
    
    141Total
    
    
    5,183,574
    
    
    
    5,865,646
    
    
    
    (682,072
    )
    
    
    (12
    )
  2008
    
    
    20071Q
    
    
    2Q
    
    
    3Q
    
    
    4Q
    
    
    1Q
    
    
    2Q
    
    
    3Q
    
    
    4QPrepaid
    
    
    1,533,812
    
    
    
    1,660,040
    
    
    
    917,528
    
    
    
    1,015,938
    
    
    
    1,301,154
    
    
    
    1,615,246
    
    
    
    1,148,283
    
    
    
    1,777,646Smart Buddy
    
    
    282,044
    
    
    
    130,697
    
    
    
    111,487
    
    
    
    (3,577
    )
    
    
    880,281
    
    
    
    1,050,678
    
    
    
    763,257
    
    
    
    420,666Talk N Text
    
    
    1,251,768
    
    
    
    1,529,343
    
    
    
    806,041
    
    
    
    1,019,515
    
    
    
    420,873
    
    
    
    564,568
    
    
    
    385,026
    
    
    
    1,356,980Postpaid
    
    
    1,117
    
    
    
    5,027
    
    
    
    17,816
    
    
    
    32,296
    
    
    
    6,921
    
    
    
    7,403
    
    
    
    5,704
    
    
    
    3,289Total
    
    
    1,534,929
    
    
    
    1,665,067
    
    
    
    935,344
    
    
    
    1,048,234
    
    
    
    1,308,075
    
    
    
    1,622,649
    
    
    
    1,153,987
    
    
    
    1,780,935
    Gross(1)
    
    
    Decrease
    
    
    Net(2)
    
    
    Decrease2008
    
    
    2007
    
    
    Amount
    
    
    %
    
    
    2008
    
    
    2007
    
    
    Amount
    
    
    %PrepaidSmart Buddy
    
        Php
    290
    
    
        Php
    312
    
    
    Php
    (22
    )
    
    
    (7
    )
    
            Php
    230
    
    
            Php
    254
    
    
            Php
    (24
    )
    
    
    (9
    )Talk N Text
    
    
    194
    
    
    
    221
    
    
    
    (27
    )
    
    
    (12
    )
    
    
    158
    
    
    
    184
    
    
    
    (26
    )
    
    
    (14
    )Prepaid  Blended(3)
    
    
    254
    
    
    
    285
    
    
    
    (31
    )
    
    
    (11
    )
    
    
    203
    
    
    
    233
    
    
    
    (30
    )
    
    
    (13
    )Postpaid  Smart
    
    
    2,065
    
    
    
    2,091
    
    
    
    (26
    )
    
    
    (1
    )
    
    
    1,483
    
    
    
    1,485
    
    
    
    (2
    )
    
    
    Prepaid and Postpaid Blended(4)
    
    
    274
    
    
    
    307
    
    
    
    (33
    )
    
    
    (11
    )
    
    
    217
    
    
    
    248
    
    
    
    (31
    )
    
    
    (13
    )
 
 (1)
    
    Gross monthly ARPU is calculated by dividing gross cellular service revenues for the
month, including: (i) discounts; (ii) allocated content-provider costs; and (iii)
interconnection income but excluding inbound roaming revenues, by the average number of
subscribers in the month.(2)
    
    Net monthly ARPU is calculated by dividing gross cellular service revenues for the
month, net of: (i) discounts; (ii) allocated content-provider costs; and (iii) interconnection
income net of interconnection expense, by the average number of subscribers in the month.(3)
    
    The average monthly ARPU of Smart Buddy and Talk N Text.(4)
    
    The average monthly ARPU of all prepaid and postpaid cellular subscribers.  84




---



##### Table of Contents



Prepaid
    
    
    PostpaidSmart Buddy
    
    
    Talk N Text
    
    
    SmartGross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)
    
    
    Gross(1)
    
    
    Net(2)2008First Quarter
    
        Php
    292
    
    
        Php
    230
    
    
        Php
    207
    
    
        Php
    163
    
    
        Php
    2,013
    
    
        Php
    1,472Second Quarter
    
    
    294
    
    
    
    232
    
    
    
    199
    
    
    
    159
    
    
    
    2,134
    
    
    
    1,510Third Quarter
    
    
    285
    
    
    
    223
    
    
    
    178
    
    
    
    148
    
    
    
    2,078
    
    
    
    1,505Fourth Quarter
    
    
    291
    
    
    
    234
    
    
    
    192
    
    
    
    162
    
    
    
    2,037
    
    
    
    1,4452007First Quarter
    
        Php
    323
    
    
        Php
    267
    
    
        Php
    228
    
    
        Php
    187
    
    
        Php
    2,045
    
    
        Php
    1,483Second Quarter
    
    
    324
    
    
    
    265
    
    
    
    233
    
    
    
    198
    
    
    
    2,141
    
    
    
    1,526Third Quarter
    
    
    293
    
    
    
    239
    
    
    
    206
    
    
    
    173
    
    
    
    2,073
    
    
    
    1,464Fourth Quarter
    
    
    307
    
    
    
    244
    
    
    
    216
    
    
    
    177
    
    
    
    2,105
    
    
    
    1,467
 
 (1)
    
    Gross quarterly ARPU is calculated by dividing gross cellular service revenues for
the quarter, including: (i) discounts; (ii) allocated content-provider costs; and (iii)
interconnection income but excluding inbound roaming revenues for the quarter, by the average
number of subscribers in the quarter.(2)
    
    Net quarterly ARPU is calculated by dividing gross cellular service revenues, net
of: (i) discounts; (ii) allocated content-provider costs; and (iii) interconnection income net
of interconnection expense, by the average number of subscribers in the quarter. Wireless Broadband, Satellite and Other Services
   Non-service Revenues
    85




---



##### Table of Contents



Expenses
    Increase (Decrease)2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Wireless Services:Depreciation and amortization
    
        Php
    11,975
    
    
    
    25
    
    
        Php
    12,202
    
    
    
    27
    
    
    Php
    (227
    )
    
    
    (2
    )Rent
    
    
    9,267
    
    
    
    20
    
    
    
    8,751
    
    
    
    20
    
    
    
    516
    
    
    
    6Compensation and employee benefits(1)
    
    
    5,433
    
    
    
    11
    
    
    
    4,608
    
    
    
    10
    
    
    
    825
    
    
    
    18Cost of sales
    
    
    4,236
    
    
    
    9
    
    
    
    4,446
    
    
    
    10
    
    
    
    (210
    )
    
    
    (5
    )Repairs and maintenance
    
    
    4,230
    
    
    
    9
    
    
    
    3,634
    
    
    
    8
    
    
    
    596
    
    
    
    16Selling and promotions
    
    
    3,781
    
    
    
    8
    
    
    
    3,803
    
    
    
    9
    
    
    
    (22
    )
    
    
    (1
    )Professional and other contracted services
    
    
    2,529
    
    
    
    5
    
    
    
    2,369
    
    
    
    5
    
    
    
    160
    
    
    
    7Taxes and licenses
    
    
    1,872
    
    
    
    4
    
    
    
    1,348
    
    
    
    3
    
    
    
    524
    
    
    
    39Communication, training and travel
    
    
    1,091
    
    
    
    2
    
    
    
    1,083
    
    
    
    3
    
    
    
    8
    
    
    
    1Asset impairment
    
    
    1,006
    
    
    
    2
    
    
    
    563
    
    
    
    1
    
    
    
    443
    
    
    
    79Provisions
    
    
    897
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    897
    
    
    
    100Insurance and security services
    
    
    722
    
    
    
    2
    
    
    
    783
    
    
    
    2
    
    
    
    (61
    )
    
    
    (8
    )Amortization of intangible assets
    
    
    133
    
    
    
    
    
    
    
    158
    
    
    
    
    
    
    
    (25
    )
    
    
    (16
    )Other expenses
    
    
    417
    
    
    
    1
    
    
    
    782
    
    
    
    2
    
    
    
    (365
    )
    
    
    (47
    )Total
    
        Php
    47,589
    
    
    
    100
    
    
        Php
    44,530
    
    
    
    100
    
    
        Php
    3,059
    
    
    
    7
 
 (1)
    
    Includes salaries and employee benefits, incentive plan, pension and manpower
rightsizing program, or MRP, costs.   Note 25  Share-based Payments and
Employee Benefits
     86




---



##### Table of Contents



Note 14  Goodwill and
Intangible Assets
 Note 27 
Provisions and Contingencies
    Other Income (Expenses)
  Change2008
    
    
    2007
    
    
    Amount
    
    
    %(in millions)Other Income (Expenses):Interest income
    
        Php
    1,197
    
    
        Php
    1,186
    
    
        Php
    11
    
    
    
    1Equity share in net losses of associates
    
    
    (119
    )
    
    
    
    
    
    
    (119
    )
    
    
    (100
    )(Losses) gains on derivative transactions  net
    
    
    (241
    )
    
    
    278
    
    
    
    (519
    )
    
    
    (187
    )Foreign exchange (losses) gains  net
    
    
    (1,771
    )
    
    
    2,649
    
    
    
    (4,420
    )
    
    
    (167
    )Financing costs
    
    
    (2,029
    )
    
    
    (2,299
    )
    
    
    270
    
    
    
    (12
    )Others
    
    
    323
    
    
    
    763
    
    
    
    (440
    )
    
    
    (58
    )Total
    
    Php
    (2,640
    )
    
        Php
    2,577
    
    
    Php
    (5,217
    )
    
    
    (202
    )
  Provision for Income Tax
   87




---



##### Table of Contents



Net Income
  Fixed Line
 Revenues
   Increase (Decrease)2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Fixed Line Services:Service RevenuesLocal exchange
    
        Php
    15,923
    
    
    
    32
    
    
        Php
    16,205
    
    
    
    33
    
    
    Php
    (282
    )
    
    
    (2
    )International long distance
    
    
    7,063
    
    
    
    14
    
    
    
    8,674
    
    
    
    18
    
    
    
    (1,611
    )
    
    
    (19
    )National long distance
    
    
    6,207
    
    
    
    13
    
    
    
    6,338
    
    
    
    13
    
    
    
    (131
    )
    
    
    (2
    )Data and other network
    
    
    18,607
    
    
    
    37
    
    
    
    15,921
    
    
    
    32
    
    
    
    2,686
    
    
    
    17Miscellaneous
    
    
    1,466
    
    
    
    3
    
    
    
    1,413
    
    
    
    3
    
    
    
    53
    
    
    
    449,266
    
    
    
    99
    
    
    
    48,551
    
    
    
    99
    
    
    
    715
    
    
    
    1Non-Service Revenues:Sale of computers
    
    
    420
    
    
    
    1
    
    
    
    281
    
    
    
    1
    
    
    
    139
    
    
    
    49Total Fixed Line Revenues
    
        Php
    49,686
    
    
    
    100
    
    
        Php
    48,832
    
    
    
    100
    
    
        Php
    854
    
    
    
    2
 Service Revenues
  Local Exchange Service
   Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    %Total local exchange service revenues (in millions)
    
        Php
    15,923
    
    
        Php
    16,205
    
    
    Php
    (282
    )
    
    
    (2
    )Number of fixed line subscribers
    
    
    1,782,356
    
    
    
    1,724,702
    
    
    
    57,654
    
    
    
    3Postpaid
    
    
    1,533,687
    
    
    
    1,479,647
    
    
    
    54,040
    
    
    
    4Prepaid
    
    
    248,669
    
    
    
    245,055
    
    
    
    3,614
    
    
    
    1Number of fixed line employees
    
    
    7,813
    
    
    
    8,080
    
    
    
    (267
    )
    
    
    (3
    )Number of fixed line subscribers per employee
    
    
    228
    
    
    
    213
    
    
    
    15
    
    
    
    7
 PLDT Landline Plus
  88




---



##### Table of Contents



PLDT Landline Plus PLDT Landline Plus PLDT Landline Plus
 International Long Distance Service
  Decrease2008
    
    
    2007
    
    
    Amount
    
    
    %Total international long distance service revenues (in millions)
    
        Php
    7,063
    
    
        Php
    8,674
    
    
    Php
    (1,611
    )
    
    
    (19
    )Inbound
    
    
    5,667
    
    
    
    7,127
    
    
    
    (1,460
    )
    
    
    (20
    )Outbound
    
    
    1,396
    
    
    
    1,547
    
    
    
    (151
    )
    
    
    (10
    )International call volumes (in million minutes, except call ratio)
    
    
    2,024
    
    
    
    2,280
    
    
    
    (256
    )
    
    
    (11
    )Inbound
    
    
    1,786
    
    
    
    2,007
    
    
    
    (221
    )
    
    
    (11
    )Outbound
    
    
    238
    
    
    
    273
    
    
    
    (35
    )
    
    
    (13
    )Inbound-outbound call ratio
    
    
    7.5:1
    
    
    
    7.4:1
    
    
    
    
    
    
    
    
    National Long Distance Service
  Decrease2008
    
    
    2007
    
    
    Amount
    
    
    %Total national long distance service revenues (in millions)
    
        Php
    6,207
    
    
        Php
    6,338
    
    
    Php
    (131
    )
    
    
    (2
    )National long distance call volumes (in million minutes)
    
    
    1,944
    
    
    
    2,183
    
    
    
    (239
    )
    
    
    (11
    )
  89




---



##### Table of Contents



Data and Other Network Services
  Increase (Decrease)2008
    
    
    2007
    
    
    Amount
    
    
    %Data and other network service revenues (in millions)
    
        Php
    18,607
    
    
        Php
    15,921
    
    
        Php
    2,686
    
    
    
    17Number of DSLbroadband subscribers
    
    
    432,583
    
    
    
    264,291
    
    
    
    168,292
    
    
    
    64Number of PLDT Vibenarrowband subscribers
    
    
    101,411
    
    
    
    230,995
    
    
    
    (129,584
    )
    
    
    (56
    )
 PLDT Vibe
 PLDT DSL myDSL BizDSL PLDT Vibe PLDT DSL PLDT Vibe,
  PLDT Vibe Vibe PLDT Vibe Vibe Vibe Vibe
 Shops.work
  Miscellaneous
   90




---



##### Table of Contents



Non-service Revenues
  Expenses
   Increase (Decrease)2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Fixed Line Services:Depreciation and amortization
    
        Php
    11,901
    
    
    
    33
    
    
        Php
    15,477
    
    
    
    41
    
    
    Php
    (3,576
    )
    
    
    (23
    )Compensation and employee benefits(1)
    
    
    9,093
    
    
    
    25
    
    
    
    10,411
    
    
    
    27
    
    
    
    (1,318
    )
    
    
    (13
    )Repairs and maintenance
    
    
    4,634
    
    
    
    13
    
    
    
    3,772
    
    
    
    10
    
    
    
    862
    
    
    
    23Rent
    
    
    2,492
    
    
    
    7
    
    
    
    1,799
    
    
    
    5
    
    
    
    693
    
    
    
    39Professional and other contracted services
    
    
    2,143
    
    
    
    6
    
    
    
    1,727
    
    
    
    5
    
    
    
    416
    
    
    
    24Selling and promotions
    
    
    1,715
    
    
    
    5
    
    
    
    1,552
    
    
    
    4
    
    
    
    163
    
    
    
    11Asset impairment
    
    
    888
    
    
    
    3
    
    
    
    43
    
    
    
    
    
    
    
    845
    
    
    
    1,965Taxes and licenses
    
    
    769
    
    
    
    2
    
    
    
    877
    
    
    
    2
    
    
    
    (108
    )
    
    
    (12
    )Communication, training and travel
    
    
    608
    
    
    
    2
    
    
    
    466
    
    
    
    1
    
    
    
    142
    
    
    
    30Insurance and security services
    
    
    487
    
    
    
    1
    
    
    
    439
    
    
    
    1
    
    
    
    48
    
    
    
    11Cost of sales
    
    
    356
    
    
    
    1
    
    
    
    300
    
    
    
    1
    
    
    
    56
    
    
    
    19Provisions
    
    
    1
    
    
    
    
    
    
    
    666
    
    
    
    2
    
    
    
    (665
    )
    
    
    (100
    )Other expenses
    
    
    646
    
    
    
    2
    
    
    
    362
    
    
    
    1
    
    
    
    284
    
    
    
    78Total
    
        Php
    35,733
    
    
    
    100
    
    
        Php
    37,891
    
    
    
    100
    
    
    Php
    (2,158
    )
    
    
    (6
    )
 
 (1)
    
    Includes salaries and employee benefits, incentive plan, pension and MRP costs.  Note 25  Share-based Payments and Employee Benefits
    askPLDT
  91




---



##### Table of Contents



WeRoam
 Note 27  Provisions and Contingencies
  Other Income (Expenses)
  Change2008
    
    
    2007
    
    
    Amount
    
    
    %(in millions)Other Income (Expenses):Gains (losses) on derivative transactions  net
    
        Php
    3,444
    
    
    Php
    (3,335
    )
    
        Php
    6,779
    
    
    
    203Interest income
    
    
    448
    
    
    
    296
    
    
    
    152
    
    
    
    51Equity share in net losses of joint ventures
    
    
    (74
    )
    
    
    
    
    
    
    (74
    )
    
    
    (100
    )Financing costs
    
    
    (3,903
    )
    
    
    (4,657
    )
    
    
    754
    
    
    
    16Foreign exchange (losses) gains  net
    
    
    (4,513
    )
    
    
    5,479
    
    
    
    (9,992
    )
    
    
    (182
    )Others
    
    
    1,425
    
    
    
    2,153
    
    
    
    (728
    )
    
    
    (34
    )Php
    (3,173
    )
    
    Php
    (64
    )
    
        Php
    3,109
    
    
    
    4,858
  Provision for (Benefit from) Income Tax
  Net Income
   92




---



##### Table of Contents



Information and Communications Technology
 Revenues
    Increase2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)Service Revenues:Knowledge processing solutions
    
        Php
    5,272
    
    
    
    48
    
    
        Php
    5,261
    
    
    
    51
    
    
        Php
    11
    
    
    
    Customer interaction solutions
    
    
    3,402
    
    
    
    31
    
    
    
    3,262
    
    
    
    32
    
    
    
    140
    
    
    
    4Internet and online gaming
    
    
    976
    
    
    
    9
    
    
    
    937
    
    
    
    9
    
    
    
    39
    
    
    
    4Vitroä data center
    
    
    767
    
    
    
    7
    
    
    
    595
    
    
    
    6
    
    
    
    172
    
    
    
    2910,417
    
    
    
    95
    
    
    
    10,055
    
    
    
    98
    
    
    
    362
    
    
    
    4Non-Service Revenues:Point-product-sales
    
    
    566
    
    
    
    5
    
    
    
    267
    
    
    
    2
    
    
    
    299
    
    
    
    112Total ICT Revenues
    
        Php
    10,983
    
    
    
    100
    
    
        Php
    10,322
    
    
    
    100
    
    
        Php
    661
    
    
    
    6
 Service Revenues
  Knowledge Processing Solutions
  Customer Interaction Solutions
 ePLDT Ventus
 Internet and Online Gaming
   93




---



##### Table of Contents



Data Center
 Vitro ä
  Non-service Revenues
  Expenses
   Increase (Decrease)2008
    
    
    %
    
    
    2007
    
    
    %
    
    
    Amount
    
    
    %(in millions)ICT Services:Compensation and employee benefits(1)
    
        Php
    6,131
    
    
    
    46
    
    
        Php
    5,455
    
    
    
    50
    
    
        Php
    676
    
    
    
    12Asset impairment
    
    
    2,286
    
    
    
    17
    
    
    
    711
    
    
    
    6
    
    
    
    1,575
    
    
    
    222Depreciation and amortization
    
    
    833
    
    
    
    6
    
    
    
    934
    
    
    
    8
    
    
    
    (101
    )
    
    
    (11
    )Professional and other contracted services
    
    
    747
    
    
    
    6
    
    
    
    1,129
    
    
    
    10
    
    
    
    (382
    )
    
    
    (34
    )Rent
    
    
    665
    
    
    
    5
    
    
    
    620
    
    
    
    6
    
    
    
    45
    
    
    
    7Cost of sales
    
    
    660
    
    
    
    5
    
    
    
    381
    
    
    
    3
    
    
    
    279
    
    
    
    73Repairs and maintenance
    
    
    573
    
    
    
    4
    
    
    
    504
    
    
    
    5
    
    
    
    69
    
    
    
    14Communication, training and travel
    
    
    573
    
    
    
    4
    
    
    
    523
    
    
    
    5
    
    
    
    50
    
    
    
    10Amortization of intangible assets
    
    
    244
    
    
    
    2
    
    
    
    232
    
    
    
    2
    
    
    
    12
    
    
    
    5Selling and promotions
    
    
    203
    
    
    
    2
    
    
    
    194
    
    
    
    2
    
    
    
    9
    
    
    
    5Taxes and licenses
    
    
    98
    
    
    
    1
    
    
    
    94
    
    
    
    1
    
    
    
    4
    
    
    
    4Insurance and security services
    
    
    61
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    12
    
    
    
    24Other expenses
    
    
    193
    
    
    
    2
    
    
    
    179
    
    
    
    2
    
    
    
    14
    
    
    
    8Total
    
        Php
    13,267
    
    
    
    100
    
    
        Php
    11,005
    
    
    
    100
    
    
        Php
    2,262
    
    
    
    21
 
 (1)
    
    Includes salaries and employee benefits, incentive plan, pension and MRP costs.  Note 14  Goodwill and Intangible Assets
  94




---



##### Table of Contents



Note 14  Goodwill and
Intangible Assets
     Other Income (Expenses)
  Change2008
    
    
    2007
    
    
    Amount
    
    
    %(in millions)Other Income (Expenses):Foreign exchange gains (losses)  net
    
        Php
    93
    
    
    Php
    (138
    )
    
        Php
    231
    
    
    
    167Interest income
    
    
    22
    
    
    
    21
    
    
    
    1
    
    
    
    5Equity share in net earnings of associates
    
    
    17
    
    
    
    (11
    )
    
    
    28
    
    
    
    255(Loss) gains on derivative transactions  net
    
    
    (59
    )
    
    
    138
    
    
    
    (197
    )
    
    
    (143
    )Financing costs
    
    
    (172
    )
    
    
    (132
    )
    
    
    (40
    )
    
    
    30Others
    
    
    98
    
    
    
    594
    
    
    
    (496
    )
    
    
    (84
    )Total
    
    Php
    (1
    )
    
        Php
    472
    
    
    Php
    (473
    )
    
    
    (100
    )
  95




---



##### Table of Contents



Benefit from Income Tax
  Net Loss
  
 Plans and Prospects
    96




---



##### Table of Contents



Liquidity and Capital Resources
  2009
    
    
    2008
    
    
    2007(in millions)Cash FlowsNet cash provided by operating activities
    
        Php
    74,386
    
    
        Php
    78,302
    
    
        Php
    77,418Net cash used in investing activities
    
    
    49,132
    
    
    
    17,014
    
    
    
    31,319Capital expenditures
    
    
    28,069
    
    
    
    25,203
    
    
    
    24,824Net cash used in financing activities
    
    
    20,293
    
    
    
    45,464
    
    
    
    44,819Net increase in cash and cash equivalents
    
    
    4,635
    
    
    
    16,237
    
    
    
    577
 2009
    
    
    2008(in millions)CapitalizationInterest-bearing financial liabilities:Long-term portion of financial liabilities:Long-term debt
    
        Php
    86,066
    
    
        Php
    58,899Obligations under finance lease
    
    
    13
    
    
    
    1186,079
    
    
    
    58,910Current portion of interest-bearing financial liabilities:Notes payable
    
    
    2,279
    
    
    
    553Long-term debt maturing within one year
    
    
    10,384
    
    
    
    14,459Obligations under finance lease maturing within one year
    
    
    51
    
    
    
    59Preferred stock subject to mandatory redemption
    
    
    
    
    
    
    912,714
    
    
    
    15,080Total interest-bearing financial liabilities
    
    
    98,793
    
    
    
    73,990Total equity
    
    
    98,575
    
    
    
    105,531Php
    197,368
    
    
        Php
    179,521Other Selected Financial DataTotal assets
    
        Php
    280,148
    
    
        Php
    252,558Property, plant and equipment - net
    
    
    161,256
    
    
    
    160,326Cash and cash equivalents
    
    
    38,319
    
    
    
    33,684Short-term investments
    
    
    3,824
    
    
    
    6,670
    97




---



##### Table of Contents



Operating Activities
       Investing Activities
   98




---



##### Table of Contents



. Note 10 
Investments in Associates and Joint Ventures
 Note 2  Summary of Significant Accounting Policies Note 13  Business
Combinations and Acquisition of Non-Controlling Interest
 Financing Activities
   99




---



##### Table of Contents



Debt Financing
           100




---



##### Table of Contents



101




---



##### Table of Contents



Note 20  Interest-bearing Financial
Liabilities  Long-term Debt
 Debt Covenants
  Note 20  Interest-bearing Financial Liabilities  Debt Covenants
 Financing Requirements
        102




---



##### Table of Contents



Off-Statement of Financial Position Arrangements
  Equity Financing
  Note 8  Earnings Per
Common Share, Note 19  Equity Note 28  Financial Assets and Liabilities
 Contractual Obligations and Commercial Commitments
 Contractual Obligations
  Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years(in millions)December 31, 2009Debt(1):
    
    
    130,075
    
    
    
    5,241
    
    
    
    56,398
    
    
    
    38,073
    
    
    
    30,363Principal
    
    
    102,587
    
    
    
    4,876
    
    
    
    40,226
    
    
    
    31,953
    
    
    
    25,532Interest
    
    
    27,488
    
    
    
    365
    
    
    
    16,172
    
    
    
    6,120
    
    
    
    4,831Lease obligations:
    
    
    7,564
    
    
    
    3,778
    
    
    
    1,956
    
    
    
    994
    
    
    
    836Operating lease
    
    
    7,497
    
    
    
    3,730
    
    
    
    1,940
    
    
    
    991
    
    
    
    836Finance lease
    
    
    67
    
    
    
    48
    
    
    
    16
    
    
    
    3
    
    
    
    Unconditional purchase obligations(2)
    
    
    834
    
    
    
    137
    
    
    
    279
    
    
    
    279
    
    
    
    139Other obligations:
    
    
    64,456
    
    
    
    44,322
    
    
    
    15,528
    
    
    
    826
    
    
    
    3,780Derivative financial liabilities(3):
    
    
    4,759
    
    
    
    
    
    
    
    2,153
    
    
    
    789
    
    
    
    1,817Long-term currency swaps
    
    
    4,759
    
    
    
    
    
    
    
    2,153
    
    
    
    789
    
    
    
    1,817Various trade and other obligations:
    
    
    59,697
    
    
    
    44,322
    
    
    
    13,375
    
    
    
    37
    
    
    
    1,963Suppliers and contractors
    
    
    26,941
    
    
    
    14,975
    
    
    
    11,966
    
    
    
    
    
    
    
    Utilities and related expenses
    
    
    14,737
    
    
    
    14,687
    
    
    
    18
    
    
    
    5
    
    
    
    27Employee benefits
    
    
    8,082
    
    
    
    8,082
    
    
    
    
    
    
    
    
    
    
    
    Customers deposits
    
    
    2,166
    
    
    
    
    
    
    
    198
    
    
    
    32
    
    
    
    1,936Carriers
    
    
    1,937
    
    
    
    1,937
    
    
    
    
    
    
    
    
    
    
    
    Dividends
    
    
    1,749
    
    
    
    1,749
    
    
    
    
    
    
    
    
    
    
    
    Others
    
    
    4,085
    
    
    
    2,892
    
    
    
    1,193
    
    
    
    
    
    
    
    Total contractual obligations
    
    
    202,929
    
    
    
    53,478
    
    
    
    74,161
    
    
    
    40,172
    
    
    
    35,118
 
 (1)
    
    Consist of notes payable and long-term debt, including current portion; gross
of unamortized debt discount and debt issuance costs.(2)
    
    Based on the Amended ATPA with AIL.(3)
    
    Gross liabilities before any offsetting application.  103




---



##### Table of Contents



Note 26  Contractual
Obligations and Commercial Commitments
 Commercial Commitments
  
 Impact of Inflation and Changing Prices
   
 Item 6. Directors, Senior Management and Employees
 
 Directors, Key Officers and Advisors
  Name
    
    Age
    
    
    Period during which individual has served as suchManuel V. Pangilinan
    
    
    63
    
    
    November 24, 1998 to presentNapoleon L. Nazareno
    
    
    60
    
    
    November 24, 1998 to presentDonald G. Dee
    
    
    63
    
    
    September 30, 2008 to presentHelen Y. Dee
    
    
    66
    
    
    June 18, 1986 to presentRay C. Espinosa
    
    
    54
    
    
    November 24, 1998 to presentTatsu Kono
    
    
    57
    
    
    March 28, 2006 to presentRev. Fr. Bienvenido F. Nebres, S.J.*
    
    
    70
    
    
    November 24, 1998 to presentTakashi Ooi
    
    
    48
    
    
    November 6, 2007 to presentOscar S. Reyes*
    
    
    64
    
    
    April 5, 2005 to presentAlbert F. del Rosario
    
    
    70
    
    
    November 24, 1998 to presentPedro E. Roxas*
    
    
    54
    
    
    March 1, 2001 to presentTony Tan Caktiong
    
    
    57
    
    
    July 8, 2008 to presentAlfred V. Ty*
    
    
    42
    
    
    June 13, 2006 to present
 
 *
    
    Independent Director  Period during whichName
    
    Age
    
    Position(s)
    
    individual has served as suchManuel V. Pangilinan
    
    63
    
    Chairman of the Board
    
    February 19, 2004 to presentNapoleon L. Nazareno
    
    60
    
    President and Chief Executive Officer
    
    February 19, 2004 to presentPresident and Chief Executive Officer of Smart
    
    January 2000 to presentMa. Lourdes C. Rausa-Chan
    
    56
    
    Corporate Secretary
    
    November 24, 1998 to presentSenior Vice President
    
    January 5, 1999 to presentCorporate Affairs and Legal Services Head 
Chief Governance Officer
    
    March 4, 2008 to presentAnabelle L. Chua
    
    49
    
    Senior Vice President
    
    February 26, 2002 to presentCorporate Finance and Treasury Head
    
    March 1, 1998 to presentTreasurer
    
    February 1, 1999 to presentChief Financial Officer of Smart
    
    December 1, 2005 to presentErnesto R. Alberto
    
    49
    
    Senior Vice President 
Corporate Business Head 
Customer Sales and Marketing Head
    
    May 15, 2003 to present 
May 15, 2003 to January 31, 2008 
February 1, 2008 to present
  104




---



##### Table of Contents



Period during whichName
    
    Age
    
    Position(s)
    
    individual has served as suchRene G. Bañez
    
    54
    
    Senior Vice President
    
    January 25, 2005 to presentChief Governance Officer
    
    October 5, 2004 to March 3, 2008Administration and Materials Management Head
    
    January 1, 2008 to presentJun R. Florencio
    
    54
    
    Senior Vice President
    
    June 14, 2005 to presentAudit and Assurance Head
    
    September 1, 2000 to February 15, 2006Internal Audit and Fraud Risk Management Head
    
    February 16, 2006 to presentMenardo G. Jimenez, Jr.
    
    46
    
    Senior Vice President
    
    December 9, 2004 to presentCorporate Communications and Public Affairs Head
    
    December 1, 2001 to June 15, 2004Retail Business Head
    
    June 16, 2004 to December 31, 2007Business Transformation Office Revenue Team
    
    January 1, 2008 to presentGeorge N. Lim
    
    57
    
    Senior Vice President
    
    February 26, 1999 to presentNetwork Services Head
    
    February 1, 2003 to December 31, 2007Business Transformation Office Network Team
    
    January 1, 2008 to presentAlfredo S. Panlilio
    
    47
    
    Senior Vice President
    
    May 8, 2001 to presentInternational and Carrier Business Head
    
    February 1, 2003 to June 15, 2004PLDT Global Corp. President
    
    June 16, 2004 to presentClaro Carmelo P. Ramirez
    
    49
    
    Senior Vice President
    
    July 1, 1999 to presentRetail Business Head
    
    February 1, 2003 to June 15, 2004International and Carrier Business Head
    
    June 16, 2004 to December 4, 2005Consumer Affairs Head
    
    December 5, 2005 to December 31, 2007Office of the President and CEO
    
    January 1, 2008 to presentVictorico P. Vargas
    
    58
    
    Senior Vice President
    
    February 15, 2000 to presentHuman Resources Head
    
    February 15, 2000 to presentInternational and Carrier Business Head
    
    March 1, 2007 to December 31, 2007Business Transformation Office Head
    
    January 1, 2008 to presentJune Cheryl A. Cabal
    
    36
    
    First Vice President
    
    May 6, 2008 to presentFinancial Reporting and Planning Head
    
    May 1, 2002 to November 15, 2006Financial Reporting and Controllership Head
    
    November 15, 2006 to presentChristopher H. Young
    
    52
    
    Chief Financial Advisor
    
    November 24, 1998 to present
   105




---



##### Table of Contents



Mr. Manuel V. Pangilinan
     Mr. Napoleon L. Nazareno
  106




---



##### Table of Contents



Mr. Donald G. Dee
 Ms. Helen Y. Dee
 Atty. Ray C. Espinosa
  Mr. Tatsu Kono
  107




---



##### Table of Contents



Rev. Fr. Bienvenido F. Nebres, S.J.
 Mr. Takashi Ooi
 Mr. Oscar S. Reyes
 Amb. Albert F. del Rosario
  Mr. Pedro E. Roxas
  108




---



##### Table of Contents



Mr. Tony Tan Caktiong
 Mr. Alfred V. Ty
  Atty. Ma. Lourdes C. Rausa-Chan
 Ms. Anabelle L. Chua
 Mr. Ernesto R. Alberto
 Mr. Rene G. Bañez
  109




---



##### Table of Contents



Mr. Jun R. Florencio
 Mr. Menardo G. Jimenez, Jr.,
 Mr. George N. Lim,
 Mr. Alfredo S. Panlilio
 Mr. Claro Carmelo P. Ramirez
 Mr. Victorico P. Vargas
 Ms. June Cheryl A. Cabal
  110




---



##### Table of Contents



Mr. Christopher H. Young
  Atty. Ray C. Espinosa
 Mr. Rolando G. Peña
  Name of CompaniesName of Director
    
    Public
    
    PrivateHelen Y. Dee
    
    EEI Corporation
    
    AY Holdings, Inc.National Reinsurance Corporation of the Philippines
    
    Great Life Financial Assurance Corporation(Vice
Chairman)
    
    Great Pacific Life Assurance Corp.Petro Energy Resources Corporation
    
    Hi-Eisai Pharmaceuticals, Inc. (Chairman)Rizal Commercial Banking Corporation(Chairman)
    
    Honda Cars, KalookanSeafront Resources Corporation
    
    Honda Cars Philippines, Inc.Isuzu Philippines, Inc.La Funeraria Paz, Inc. (Chairman)Landev Corp. (Chairman)Malayan Insurance Company (Chairman)Manila Memorial Park Cemetery, Inc. (Chairman)Mapua Information Technology Center, Inc. (Chairman)Merchants Bank (Chairman)MICO Equities, Inc.Pan Malayan ExpressPan Malayan Management and Investment Corporation (Vice
Chairman)Pan Malayan Realty Corp. (Chairman)RCBC Forex Brokers Corp.RCBC Savings Bank (Chairman)South Western Cement CorporationXamdu Motors, Inc. (Chairman)Ray C. Espinosa
    
    Cyber Bay Corporation
    
    Bancholders, Inc.Lepanto Consolidated Mining Company (Independent Director)
    
    Bayantrade, Inc. (Chairman)Metro Pacific Investments Corporation
    
    Beacon Electric Asset Holdings, Inc.Manila Electric Company
    
    Bonifacio Communications CorporationDigital Paradise, Inc. (Chairman)Enterprise Investment Holdings, Inc.
  111




---



##### Table of Contents



Name of CompaniesName of Director
    
    Public
    
    PrivateePDS, Inc. (Chairman)ePLDT Ventus, Inc. (Chairman)Green Apple Business Ventures Corp.Green Apple Food Factory, Inc.Infocom Technologies, Inc. (Chairman)Intelligent Network Plus, Inc. (Chairman)Level Up! Games Philippines, Inc. (Chairman)Metro Pacific Assets Holdings, Inc.Metro Pacific Resources, Inc.mySecureSign, Inc. (Chairman)netGames Philippines, Inc. (Chairman)New Gallant LimitedPacific Space International Development Corporation (Chairman)Parlance Systems, Inc. (Chairman)Philippine Pacific First Transmission Management CorporationPhilippine Telecommunications Investment CorporationSidera Technologies, Inc. (Chairman)SPi Global Solutions, Inc. (Chairman)SPi Technologies, Inc. (Chairman)Tahanan Mutual Building and Loan Association, Inc.The Philippine Home Cable Holdings, Inc. (Chairman)Two Rivers Pacific Holdings CorporationUnilink Communications Corporation (Chairman)Vocativ Systems, Inc. (Chairman)Wolfpac Mobile, Inc.Albert F. del Rosario
    
    LMG Chemicals Corporation
    
    ABC Development Corporation (ABC 5)Metro Pacific Investments Corporation
    
    Bancholders, Inc.Metro Pacific Tollways Corporation
    
    Business World Publishing CorporationPhilex Mining Corporation
    
    Hastings Holdings, Inc.Landco Pacific CorporationManila North Tollways CorporationMetro Pacific Tollways Development CorporationMediaQuest Holdings, Inc.MediaScape, Inc.Nation Broadcasting CorporationSatventures, Inc.Six Harmonies Holdings, Inc.Smart Communications Philippine Holdings, Inc.International Graduate University (Washington D.C.)Oscar S. Reyes
    
    Alcorn Gold Resources, Inc. (Independent Director)
    
    Basic EcoMarket Farms, Inc. (Chairman)Ayala Land, Inc. (Independent Drector)
    
    CEOs Inc.Bank of the Philippine Islands
    
    First Philippine Electric Company (Independent Director)Basic Energy Corporation (Independent Director)
    
    Global Resources for Outsourced Workers, Inc.Manila Water Company, Inc. (Independent Director)
    
    In1 Archipelago Minerals, Inc.Pepsi Cola Products Philippines, Inc. (Independent
    
    Mindoro Resources Ltd.Director)
    
    Petrolift, Inc. (Independent Director)Sun Life Prosperity Dollar Abundance Fund, Inc. (Independent
Director)Sun Life Prosperity Dollar Advantage Fund, Inc. (Independent
Director)Sun Life Financial Plans, Inc. (Independent Director)Tower Club, Inc.
 
 Terms of Office
  
 Family Relationships
   112




---



##### Table of Contents



Compensation of Key Management Personnel
   2010
    
    
    2009
    
    
    2008Estimate
    
    
    Actual(in millions)President and CEO(1)and four most highly compensated key officers:Salary(2)
    
    Php
    53
    
    
    Php
    47
    
    
    Php
    41Bonus(3)
    
    
    12
    
    
    
    10
    
    
    
    8Other compensation(4)
    
    
    232
    
    
    
    52
    
    
    
    46297
    
    
    
    109
    
    
    
    95All other key officers, other officers and directors as a group
(excluding the President and CEO and four most highly compensated key officers):Salary(2)
    
    
    219
    
    
    
    204
    
    
    
    188Bonus(3)
    
    
    61
    
    
    
    54
    
    
    
    48Other compensation(4)
    
    
    886
    
    
    
    246
    
    
    
    266Php
    1,166
    
    
    Php
    504
    
    
    Php
    502
 
 (1)
    
    The President and CEO receives compensation from Smart but not from PLDT.(2)
    
    Basic monthly salary.(3)
    
    Includes longevity pay, mid-year bonus, 13thmonth and Christmas bonus.(4)
    
    Includes variable pay and other payments. Variable pay is based on an annual incentive
system that encourages and rewards both individual and group/team performance and is tied to
the achievement of Corporate/Unit/Customer Satisfaction Objectives. It covers regular
officers and executives of PLDT and is based on a percentage of their guaranteed annual cash
compensation. Includes LTIP costs to be paid in 2010.      113




---



##### Table of Contents



Long-Term Incentive Plan
    Note 25  Share-based Payments and Employee
Benefits
  
 Share Ownership
  Shares of
    
    
    Shares ofName of Owner
    
    Common Stock
    
    
    Preferred StockManuel V. Pangilinan
    
    
    225,450
    (1)
    
    
    360Napoleon L. Nazareno
    
    
    13,927
    (1)
    
    
    495Helen Y. Dee
    
    
    98
    
    
    
    180Ray C. Espinosa
    
    
    18,743
    (1)
    
    
    Takashi Ooi
    
    
    1
    
    
    
    Tatsu Kono
    
    
    100
    
    
    
    Rev. Fr. Bienvenido F. Nebres, S.J.
    
    
    2
    
    
    
    Donald G. Dee
    
    
    1
    
    
    
    640Oscar S. Reyes
    
    
    1
    
    
    
    360Albert F. del Rosario
    
    
    140,005
    (2)
    
    
    2,100Pedro E. Roxas
    
    
    1
    
    
    
    540Alfred V. Ty
    
    
    1
    
    
    
    Tony Tan Caktiong
    
    
    1
    
    
    
    50
  114




---



##### Table of Contents



Shares of
    
    
    Shares ofName of Owner
    
    Common Stock
    
    
    Preferred StockMa. Lourdes C. Rausa-Chan
    
    
    699
    (1)
    
    
    350Ernesto R. Alberto
    
    
    7,500
    (1)
    
    
    Rene G. Bañez
    
    
    1
    
    
    
    540Anabelle L. Chua
    
    
    13,878
    (1)
    
    
    Jun R. Florencio
    
    
    15
    
    
    
    530Menardo G. Jimenez, Jr.
    
    
    22
    
    
    
    George N. Lim
    
    
    5,356
    (1)
    
    
    360Alfredo S. Panlilio
    
    
    6,031
    (3)
    
    
    Claro Carmelo P. Ramirez
    
    
    11,500
    
    
    
    Victorico P. Vargas
    
    
    2,878
    
    
    
    180June Cheryl A. Cabal
    
    
    
    
    
    
    Christopher H. Young
    
    
    54,313
    (1)
    
    
    
 
 (1)
    
    Includes PLDT common shares that have been lodged with the Philippine Depository and
Trust Co., or PDTC.(2)
    
    Out of the 140,005 common shares, 15,000 common shares are under the name of Albert
F. del Rosario and/or Margaret Gretchen del Rosario.(3)
    
    Includes PLDT common shares that have been lodged with the PDTC and PLDT common
shares underlying ADSs held by JP Morgan Asset Holdings Limited.  
 Board of Directors  Independent Directors
  
 Audit, Governance and Nomination, Executive Compensation and Technology Strategy Committees
  Audit Committee
    115




---



##### Table of Contents




    
    to review and evaluate the qualifications, performance and independence of the
external auditors and the lead partner of the external auditors;
 
    
    to select and appoint the external auditors and to remove or replace the external
auditors;
 
    
    to review and approve in consultation with the head of the internal audit
organization and the chief financial advisor the fees charged by the external auditors
for audit and non-audit services;
 
    
    to pre-approve all audit and non-audit services to be provided by and all fees to be
paid to the external auditors;
 
    
    to ensure that the external auditors prepare and deliver annually the statement as
to independence, to discuss with the external auditors any relationships or services
disclosed in such statements that may impact the objectivity, independence or quality
of services of said external auditors and to take appropriate action in response to
such statement to satisfy itself of the external auditors independence;
 
    
    to ensure that the external auditors or the lead partner of the external auditors
having the primary responsibility for the audit of PLDTs accounts is rotated at least
once every five years;
 
    
    to advise the external auditors that they are expected to provide the committee a
timely analysis of significant/critical financial reporting issues and practices;
 
    
    to obtain assurance from the external auditors that the audit was conducted in a
manner consistent with the requirement under applicable rules; and
 
    
    to resolve disagreements between management and the external auditors regarding
financial reporting.
  Governance and Nomination Committee
   1.
    
    To develop and recommend to the board for approval and oversee the
implementation of corporate governance principles and policies;
 2.
    
    To review and evaluate the qualifications of the persons nominated for
election as directors (including independent directors) or other positions
requiring board appointment;
 3.
    
    To identify the qualified nominees and recommend that the board select
and recommend such qualified nominees for election as directors/independent
directors at the annual meeting of shareholders; and
 4.
    
    To provide an assessment on our boards effectiveness in the process of
replacing or appointing new directors or members of the board committees.
 Executive Compensation Committee
   116




---



##### Table of Contents



1.
    
    To provide guidance to and assist our board of directors in developing
a compensation philosophy or policy consistent with our culture, strategy and
control environment;2.
    
    To oversee the development and administration of our compensation programs; and
 3.
    
    To review and approve corporate goals and objectives relevant to the
compensation of our chief executive officer, evaluate the performance of our chief
executive officer in light of those goals and objectives, and set the compensation
level of our chief executive officer based on such evaluation.
 Technology Strategy Committee
   1.
    
    To review and approve our technology strategy and roadmap, and to
review and advise our board on major technology trends and strategies;
 2.
    
    To evaluate and advise our board on actual and proposed technology
investments and transactions;
 3.
    
    To review and submit to the board recommendations regarding
managements formulation and execution and overall performance in achieving
technology-related strategic goals and objectives; and
 4.
    
    To recommend to the board approaches to acquiring and maintaining
technology positions and maximizing our access to relevant technologies, and to
ensure optimized contribution of technology to our business strategy and growth
targets.
  
 Directors and Officers Involvement in Certain Legal Proceedings
  1.
    
    Mr. Manuel V. Pangilinan, in his capacity as Chairman of the Board of Metro
Pacific Corporation, a stockholder of Metro Tagaytay Land Company, Inc., or MTLCI,
and four other individuals were respondents in I.S. 04-A-1057 for alleged violation
of Article 315 (1)(b), or Estafa, of the Revised Penal Code filed by Mr. Vicente A.
Tuason on behalf of Universal Leisure Club, Inc. (ULCI) and Mr. Jose L. Merin in
behalf of Universal Rightfield Property Holdings, Inc. (URPHI).
    117




---



##### Table of Contents



2.
    
    Mr. Napoleon L. Nazareno, in his capacity as President and Chief Executive
Officer of Smart, is a respondent in a complaint docketed as I.S. 07-3216-F filed
with the Cebu City Prosecutors Office by Integrated Distribution Network, Inc., or
IDNI, for alleged estafa and violation of R.A. 8484 or the Access Devices Regulation
Act of 1988. IDNI alleged that Smart, through its directors and officers including
Mr. Nazareno (respondent in this complaint), perpetrated fraud by blocking the SIM
cards of its sub-dealers. The dispute arose from contracts executed between Smart and
IDNI on roving billboards. The parties entered into a settlement agreement allowing
IDNI to purchase electronic loads from Smart within a specific period and for a
specified amount. It is Smarts position that IDNIs cause of action, if any, is
purely civil in nature.
   3.
    
    Messrs. Napoleon L. Nazareno and Albert F. del Rosario and other directors
and officers of the former PDCP Bank and some officers of the Bangko Sentral ng
Pilipinas and Development Bank of the Philippines, are respondents in a complaint
docketed as I.S. No. 2004-631 filed by Chung Hing Wong/Unisteel/Unisco Metals, Inc.
with the DOJ, for alleged syndicated estafa, estafa through falsification of
documents, other deceits, malversation and robbery. In the complaint-affidavit, the
complainant alleged that the officers and directors of PDCP Bank deceived the
complainant to secure a loan from PDCP Bank through misrepresentation and with the
sinister purpose of taking over the complainants corporation. As stated in their
respective counter-affidavits, the charges against the PDCP directors including
Messrs. Nazareno and del Rosario are manifestly unmeritorious. These directors have
not personally met the complainant, nor are they parties to the questioned
transactions and, as such, could not have deceived the complainant in any manner.
The complaint was referred to the Office of the Ombudsman, or OMB, by the DOJ on
October 30, 2007 considering that some of the respondents are public officers and the
offenses charged were committed in the performance of their official functions.
   118




---



##### Table of Contents



4.
    
    Mr. Albert F. del Rosario and other former directors/officers, and Ms. Ma.
Lourdes C. Rausa-Chan and other former corporate secretaries/assistant corporate
secretaries of Steniel Cavite Packaging Corporation, Metro Paper and Packaging
Products, Inc., AR Packaging Corporation and Starpack Philippines Corporation, are
respondents in a case docketed as OMB C-C-04-0363-H (CPL No. C-04-1248), in the OMB.
The complaint is for alleged: (a) violation of R.A. 3019 (otherwise known as the
Anti-Graft and Corrupt Practices Act); (b) estafa thru falsification of public
documents; (c) falsification of public documents under Article 171, in relation to
Article 172, of the Revised Penal Code (RPC); (d) infidelity in the custody of public
documents under Article 226 of the RPC; and (e) grave misconduct. It relates to
various tax credit certificates (allegedly fraudulent, with spurious and fake
supporting documents) issued to Victory Textile Mills, Inc. (allegedly, a
non-existent corporation with fictitious incorporators and directors) and transferred
to several companies including the aforesaid companies. The complaints against Mr.
del Rosario and Ms. Rausa-Chan involve the first two offenses only and in their
capacity as director and corporate secretary, respectively, of Metro Paper and
Packaging Products, Inc. In the opinion of the legal counsels of Mr. del Rosario and
Ms. Rausa-Chan, there are no legal and factual bases for their inclusion as
respondents in this complaint. Mr. del Rosario and Ms. Rausa-Chan had no
participation or involvement in the alleged anomalous acquisition and transfer of the
subject tax credit certificates. As at the date of this annual report, the case is
still pending with the OMB.
 
 Employees and Labor Relations
   2009
    
    
    2008
    
    
    2007PLDT Group
    
    
    29,035
    
    
    
    29,904
    
    
    
    30,255Wireless
    
    
    5,507
    
    
    
    5,602
    
    
    
    5,415Fixed Line
    
    
    7,947
    
    
    
    7,813
    
    
    
    8,080ICT
    
    
    15,581
    
    
    
    16,489
    
    
    
    16,760PLDT Only
    
    
    7,543
    
    
    
    7,590
    
    
    
    7,909
  119




---



##### Table of Contents



Manggagawa ng Komunikasyon sa Pilipinas
  Gabay ng Unyon sa Telekomunikasyon ng mga
Superbisor
 
 Pension and Retirement Benefits
 Defined Benefit Pension Plans
     120




---



##### Table of Contents



Defined Contribution Plan
  Note 5  Income and Expenses and Note 25 
Share-based Payments and Employee Benefits
 
 Item 7. Major Shareholders and Related Party Transactions
  Name of BeneficialName and Address
    
    
    
    Owner and
    
    Number ofTitle
    
    of Record Owner and
    
    Place of
    
    Relationship with
    
    Shares Held of
    
    
    Percentageof Class
    
    Relationship With Issuer
    
    Incorporation
    
    Record Owner
    
    Record
    
    
    of ClassCommon
    
    Philippine Telecommunications Investment Corporation(1)12th Floor Ramon Cojuangco Bldg. Makati Avenue, Makati City
    
    Philippine Corporation
    
    Same as Record Owner
    
    26,034,263
    (2)
    
    
    13.94Common
    
    Metro Pacific Resources, Inc.(3)c/o Corporate Secretary 18th Floor, Liberty Center, 104 H. V. dela Costa St. Salcedo Village, Makati City
    
    Philippine Corporation
    
    Same as Record Owner
    
    15,745,172
    (2)
    
    
    8.43Common
    
    NTT Communications Corporation(4)1-1-6 Uchisaiwai-cho 1-Chome, Chiyoda-ku Tokyo 100-8019, Japan
    
    Japanese Corporation
    
    See Footnote (5)
    
    12,633,487
    (6)
    
    
    6.76Common
    
    NTT DoCoMo, Inc.(6)41st Floor, Sanno Park Tower 2-11-1 Nagata-cho, Chiyoda-ku Tokyo 100-6150, Japan
    
    Japanese Corporation
    
    See Footnote(5)
    
    18,234,821
    ((7)
    
    
    9.76Common
    
    Social Security System(8)SSS Building East Avenue, Quezon City
    
    Philippine Corporation
    
    Same as Record Owner
    
    5,024,788
    (9)
    
    
    2.69Common
    
    PCD Nominee Corporation(10)37/F Enterprise Building, Tower I Ayala Avenue cor. Paseo de Roxas St. Makati City
    
    Philippine Corporation
    
    See Footnote (10)
    
    
    58,972,458
    
    
    
    31.57
  121




---



##### Table of Contents



Name of BeneficialName and Address
    
    
    
    Owner and
    
    Number ofTitle
    
    of Record Owner and
    
    Place of
    
    Relationship with
    
    Shares Held of
    
    
    Percentageof Class
    
    Relationship With Issuer
    
    Incorporation
    
    Record Owner
    
    Record
    
    
    of ClassCommon
    
    J. P. Morgan Asset Holdings (HK) Limited(11)(various accounts) 20/F Chater House 8 Connaught Road Central, Hongkong
    
    HongKong Corporation
    
    See Footnote (11)
    
    
    45,098,829
    
    
    
    24.14Common
    
    Capital Research Global Investors(12)
    
    Delaware Corporation
    
    See Footnote (12)
    
    
    14,612,760
    
    
    
    7.82Common
    
    Lazard Asset Management LLC(13)
    
    Delaware Corporation
    
    See Footnote (13)
    
    
    11,276,352
    
    
    
    6.04
 
 (1)
    
    Based on a resolution adopted by the Board of Directors of PTIC, the Chairman of the
Board of PTIC, Mr. Manuel V. Pangilinan, has the continuing authority to represent PTIC at any
and all meetings of the stockholders of a corporation in which PTIC owns of record or
beneficially any shares of stock or other voting security, and to sign and deliver, in favor
of any person he may deem fit, a proxy or other power of attorney, with full power of
delegation and substitution, authorizing his designated proxy or attorney-in-fact to vote any
and all shares of stock and other voting securities owned of record or beneficially by PTIC at
any and all meetings of the stockholders of the corporation issuing such shares of stock or
voting securities.(2)
    
    First Pacific Group beneficially owned 26% of the outstanding common stock of PLDT
as at April 12, 2010 by virtue of PLDT common shareholdings by intermediate holding companies,
including PTIC and MPRI.(3)
    
    Based on a resolution adopted by the Board of Directors of MPRI, Mr. Manuel V.
Pangilinan has been appointed as proxy or duly authorized representative of MPRI to represent
and vote the PLDT shares of common stock of MPRI in the Annual Meeting of PLDT.(4)
    
    Based on publicly available information, NTT Communications is a wholly-owned
subsidiary of NTT. Based on a certification signed by a duly authorized officer of NTT
Communications, Mr. Jun Sawada is authorized to execute for and on behalf of NTT
Communications, endorsements, transfers and other matters relating to the PLDT shares of
common stock held by NTT Communications.(5)
    
    In publicly available reports filed by NTT Communications and NTT DoCoMo, it is
stated that because of NTTs ownership of all the outstanding capital stock of NTT
Communications and a majority of the common stock of NTT DoCoMo, NTT, NTT Communications and
NTT DoCoMo may be considered to constitute a group within the meaning of Section 13(d)(3) of
the U.S Securities Exchange Act of 1934, as amended. Therefore, each of them may be deemed to
have beneficial ownership of the 39,401,561 shares in aggregate held by NTT Communications and
NTT DoCoMo, representing approximately 21% of the outstanding common stock of PLDT as at April
12, 2010.(6)
    
    Based on publicly available information, NTT DoCoMo, is a majority-owned and
publicly traded subsidiary of NTT. Based on a certification signed by a duly authorized
officer of NTT DoCoMo, Mr. Toshinari Kunieda or Mr. Mutsuo Yamamoto, is authorized to execute
for and on behalf of NTT DoCoMo, endorsements, transfers and other matters relating to the
PLDT shares of common stock held by NTT DoCoMo.(7)
    
    The total PLDT shareholdings of NTT DoCoMo is 26,768,074 shares, of which 18,234,821
are owned on record by NTT DoCoMo, and 8,533,253 are shares underlying American Depository
Shares, collectively representing 14.33% of the outstanding common stock of PLDT as at April
12, 2010.(8)
    
    Based on a resolution adopted by the Board of Directors of the SSS, Mr. Thelmo Y.
Cunanan, as Chairman of the SSS, has been authorized to sign the proxy constituting the lawful
attorney/proxy of SSS with power to represent and vote the PLDT shares of common stock of SSS
in the Annual Meeting of PLDT.(9)
    
    The total PLDT shareholdings of SSS is 10,696,990 shares of PLDT of which 5,024,788
are owned on record by SSS and 5,672,202 shares are held on record by PCD, representing 5.73%
of the outstanding common stock of PLDT as at April 12, 2010.(10)
    
    PCD is the registered owner of shares held by participants in the Philippine
Depository and Trust Co., or PDTC, a private company organized to implement an automated book
entry system of handling securities transactions in the Philippines. Under the PDTC
procedures, when an issuer of a PDTC-eligible issue will hold a stockholders meeting, the
PDTC will execute a pro-forma proxy in favor of its participants for the total number of
shares in their respective principal securities account as well as for the total number of
shares in their client securities account. For the shares held in the principal securities
account, the participant concerned is appointed as proxy with full voting rights and powers as
registered owner of such shares. For the shares held in the client securities account, the
participant concerned is appointed as proxy, with the obligation to constitute a sub-proxy in
favor of its clients with full voting and other rights for the number of shares beneficially
owned by such clients. Based on available information, none of the owners of the PLDT common
shares registered under the name of PCD, owned more than 5% of PLDTs outstanding common stock
as at April 12, 2010, except The Hongkong and Shanghai Banking Corp. Ltd.Clients, which owned
approximately 18.27% of PLDTs outstanding common stock as of such date. PLDT has no
knowledge if any beneficial owner of the shares under The Hongkong and Shanghai Banking Corp.
Ltd.Clients owned more than 5% of PLDTs outstanding common stock as at April 12, 2010.The PCD account also includes 5,672,202 shares of PLDT common stock beneficially owned by the
SSS.  122




---



##### Table of Contents



(11)
    
    Holds shares as nominee of JPMorgan Chase Bank, successor depositary under the
Common Stock Deposit Agreement, dated October 14, 1994, as amended on February 10, 2003,
between JPMorgan Chase Bank and the holders of ADRs evidencing ADSs, representing shares of
common stock of PLDT (the Deposit Agreement). Under the Deposit Agreement, if the
depositary does not receive voting instructions from a holder of ADRs, such holder will be
deemed to have instructed the depositary to provide a discretionary proxy to a person
designated by PLDT for the purpose of exercising the voting rights pertaining to the shares of
common stock represented by such holder of ADRs, except that no discretionary proxy will be
given with respect to any matter as to which substantial opposition exists or which materially
and adversely affects the rights of the holders of such ADRs.This account also includes 2,249,100 shares of PLDT common stock underlying ADSs beneficially
owned by Capital Research Global Investors, 8,533,253 shares of PLDT common stock underlying ADS
beneficially owned by NTT DoCoMo, and 11,276,352 shares of PLDT common stock underlying ADSs
beneficially owned by Lazard Asset Management LLC, or LAMLLC.(12)
    
    According to the Schedule 13G/A of Capital Research Global Investors, or CRGI,
filed with the U.S. Securities and Exchange Commission on February 12, 2010, CRGI, as an
investment adviser, beneficially owned 14,944,540 shares of PLDT common stock out of which
2,249,100 shares are underlying ADSs. In an email to PLDT dated April 21, 2010, Mr.
Christopher Aquino of CRGI confirmed that as of April 12, 2010, CRGI beneficially owned
14,612,760 shares of PLDT common stock, of which 2,249,100 shares are underlying ADSs.(13)
    
    According to the Schedule 13G of LAMLLC filed with the U.S. Securities and Exchange
Commission on February 5, 2010, LAMLLC, as an investment adviser, beneficially owned
11,276,352 shares of PLDT common stock.  
 Related Party Transactions
 Note 24  Related
Party Transactions
 Note 24  Related Party Transactions
  
 Item 8. Financial Information
 
 Consolidated Financial Statements and Other Financial Information
  
 Legal Proceedings
  NTC supervision and regulation fees, or SRF
   123




---



##### Table of Contents



Matters Relating to a Third Party Aggregator
     124




---



##### Table of Contents



Taxation
 National Internal Revenue Taxes
   Local Business and Franchise Taxes
   Note 27  Provisions and Contingencies
 Arbitration with Eastern Telecommunications Philippines, Inc., or ETPI
  IAS 37, Provisions, Contingent Liabilities and Contingent Assets
 Note 27  Provisions and Contingencies
 
 Dividend Distribution Policy
 Note 19  Equity
  125




---



##### Table of Contents



Item 9. The Offer and Listing
 
 Common Capital Stock and ADS
     Philippine Stock
    
    
    New York StockExchange
    
    
    ExchangeHigh
    
    
    Low
    
    
    High
    
    
    Low2010First Quarter
    
    Php
    2,775.00
    
    
    Php
    2,420.00
    
    
    US$
    60.65
    
    
    US$
    53.05January
    
    
    2,775.00
    
    
    
    2,600.00
    
    
    
    60.65
    
    
    
    55.97February
    
    
    2,665.00
    
    
    
    2,500.00
    
    
    
    56.44
    
    
    
    53.09March
    
    
    2,695.00
    
    
    
    2,420.00
    
    
    
    58.80
    
    
    
    53.05Second QuarterApril
    
    
    2,540.00
    
    
    
    2,425.00
    
    
    
    57.49
    
    
    
    53.01May (until May 12, 2010)
    
    
    2,530.00
    
    
    
    2,440.00
    
    
    
    56.38
    
    
    
    53.072009
    
    
    2,670.00
    
    
    
    1,830.00
    
    
    
    58.17
    
    
    
    38.43First Quarter
    
    
    2,310.00
    
    
    
    1,830.00
    
    
    
    49.80
    
    
    
    38.43Second Quarter
    
    
    2,620.00
    
    
    
    2,125.00
    
    
    
    52.16
    
    
    
    43.01Third Quarter
    
    
    2,625.00
    
    
    
    2,300.00
    
    
    
    54.50
    
    
    
    48.12Fourth Quarter
    
    
    2,670.00
    
    
    
    2,405.00
    
    
    
    58.17
    
    
    
    51.12November
    
    
    2,625.00
    
    
    
    2,450.00
    
    
    
    57.00
    
    
    
    51.12December
    
    
    2,645.00
    
    
    
    2,570.00
    
    
    
    58.17
    
    
    
    54.702008
    
    
    3,175.00
    
    
    
    1,810.00
    
    
    
    76.72
    
    
    
    36.05First Quarter
    
    
    3,175.00
    
    
    
    2,520.00
    
    
    
    76.72
    
    
    
    61.49Second Quarter
    
    
    2,820.00
    
    
    
    2,285.00
    
    
    
    68.96
    
    
    
    50.95Third Quarter
    
    
    2,795.00
    
    
    
    2,240.00
    
    
    
    62.97
    
    
    
    51.10Fourth Quarter
    
    
    2,725.00
    
    
    
    1,810.00
    
    
    
    57.38
    
    
    
    36.052007
    
    
    3,285.00
    
    
    
    2,250.00
    
    
    
    76.30
    
    
    
    45.252006
    
    
    2,610.00
    
    
    
    1,675.00
    
    
    
    51.90
    
    
    
    32.152005
    
    
    1,860.00
    
    
    
    1,310.00
    
    
    
    34.35
    
    
    
    23.50
 
 Item 10. Additional Information
 
 Articles of Incorporation and By-Laws
   126




---



##### Table of Contents



Purpose of PLDT
  Directors
  Description of PLDT Capital Stock
 Authorized Capital Stock
  Common Stock
  (a)
    
    After the requirements with respect to preferential dividends on the serial
Preferred Stock shall have been met and after PLDT shall have complied with all the
requirements, if any, with respect to the setting aside of sums as purchase, retirement
or sinking funds, the holders of the Common Stock shall be entitled to receive such
dividends as may be declared from time to time by the board of directors out of funds
legally available therefor.
 (b)
    
    After distribution in full of the preferential amounts to be distributed to the
holders of serial Preferred Stock in the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding up of PLDT, the holders of
Common Stock shall be entitled to receive all the remaining assets of PLDT of whatever
kind available for distribution to stockholders ratably in proportion to the number of
Common Stock held by them, respectively.
 (c)
    
    Except as may be otherwise required by law, or by the Articles of Incorporation
of PLDT, each holder of Common Stock shall have one vote in respect of each share of
such stock held by him on all matters to be voted upon by the stockholders, and the
holders of Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes. At every election of directors, a holder of
Common Stock is entitled to vote such shares of Common Stock held by him for as many
persons as there are directors to be elected, or to cumulate said shares and give one
candidate as many votes as the number of directors to be elected multiplied by the
number of his shares shall equal, or to distribute such votes on the same principle
among as many candidates as he shall think fit.
  127




---



##### Table of Contents



(a)
    
    Appraisal right or the right of a dissenting stockholder to demand payment of
the fair value of his shares of stock in the following instances: (i) in case any
amendment to the articles of incorporation has the effect of changing or restricting
the rights of any stockholders or class of shares, or of authorizing preferences in any
respect superior to those of outstanding shares of any class, or of extending or
shortening the term of corporate existence; (ii) in case of sale, lease, exchange,
transfer, mortgage, pledge or other disposition of all or substantially all of the
corporate property and assets of the corporation; (iii) in case of merger or
consolidation; and (iv) in case of investment of funds of the corporation in any other
corporation or business or for any purpose other than the primary purpose for which it
was organized, except where the investment by the corporation is reasonably necessary
to accomplish its primary purpose as stated in its articles of incorporation.
 (b)
    
    The right to approve certain corporate acts, such as: (i) election of
directors; (ii) removal of directors; (iii) extension or shortening of the corporate term; (iv) increase or decrease of
capital stock, and incurring, creating or increasing bonded indebtedness; (v) sale or
other disposition of all or substantially all of the corporate assets; (vi) investment
of corporate funds in any other corporation or business or for any purpose other than
the primary purpose for which it was organized except where the investment is reasonably
necessary to accomplish its primary purpose as stated in the corporations articles of
incorporation; (vii) declaration of stock dividend; (viii) entering into a management
contract with another corporation; (ix) plan of merger or consolidation; and (x)
voluntary dissolution of the corporation by shortening the corporate term.
 (c)
    
    The right to inspect at reasonable hours on business days the records of all
business transactions of the corporation and the minutes of any meeting; however, the
stockholders right to inspect corporate records and books is not an absolute right so
that the corporation may deny said right on the basis of impropriety of the purpose or
motive of the stockholder.
 (d)
    
    The right to be furnished the most recent financial statements of the
corporation, within ten (10) days from receipt by the corporation of a written request
from a stockholder. The same right exists at the annual meeting of stockholders at
which the board of directors must present to the stockholders a financial report of the
operations of the corporation for the preceding year which shall include financial
statements duly signed and certified by an independent certified public accountant.
 Restrictions on Foreign Ownership
   Meetings
   128




---



##### Table of Contents



Issues of Shares
   Transfer of Shares
   Share Certificates
  Dividends
   129




---



##### Table of Contents



Preferred Stock
  Issued and Outstanding Preferred Stock
  No. of SharesSeries
    
    April 12, 2010
    
    
    December 31, 2009Series A to EE 10% Cumulative Convertible
    
    
    405,697,562
    
    
    
    405,631,062Series IV Cumulative Non-Convertible Redeemable
    
    
    36,000,000
    *
    
    
    36,000,000
    *
 
 *
    
    Total subscribed shares is 300 million with a total subscription price of Php3 billion, out of
which amount Php360 million has been paid.    130




---



##### Table of Contents



Change in Control
   
 Material Contracts
  
 Exchange Controls and Other Limitations Affecting Securities Holders
  Note 19 Equity Note 20  Interest-bearing Financial Liabilities
  131




---



##### Table of Contents



Taxation
     Philippine Taxation
 Taxes on Exchange of ADSs for Common Stock
  Taxation of Dividends
   132




---



##### Table of Contents



Capital Gains Tax and Stock Transaction Tax
    Documentary Stamp Taxes
   133




---



##### Table of Contents



Estate and Donors Taxes
  
    
    if the deceased at the time of death, or the donor at the time of donation, was a
citizen and resident of a foreign country which at the time of his death or donation
did not impose a transfer tax of any character in respect of intangible personal
property of citizens of the Philippines not residing in that foreign country, or
 
    
    if the laws of the foreign country of which the deceased or the donor was a citizen
and resident at the time of his death or donation allow a similar exemption from
transfer or death taxes of every character or description in respect of intangible
personal property owned by citizens of the Philippines not residing in that foreign
country.
  United States Federal Taxation
  Taxation of Dividends
    134




---



##### Table of Contents



Sale or Other Disposition of Equity Securities
   Passive Foreign Investment Company Rules
  
 Documents on Display
   135




---



##### Table of Contents



Item 11. Quantitative and Qualitative Disclosures About Market Risks
  
 Liquidity Risk
    Note 26  Contractual Obligations and
Commercial Commitments .
 
 Foreign Currency Exchange Risk
    136




---



##### Table of Contents



2009
    
    
    2008U.S. Dollar
    
    
    Php(1)
    
    
    U.S. Dollar
    
    
    Php(2)(in millions)Noncurrent Financial AssetsNote receivable
    
    
    2
    
    
    
    81
    
    
    
    
    
    
    
    Advances and refundable deposits
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    Total noncurrent financial assets
    
    
    2
    
    
    
    88
    
    
    
    
    
    
    
    Current Financial AssetsCash and cash equivalents
    
    
    140
    
    
    
    6,496
    
    
    
    101
    
    
    
    4,794Short-term investments
    
    
    47
    
    
    
    2,164
    
    
    
    21
    
    
    
    986Trade and other receivables  net
    
    
    206
    
    
    
    9,573
    
    
    
    207
    
    
    
    9,880Derivative financial assets
    
    
    
    
    
    
    6
    
    
    
    1
    
    
    
    56Total current financial assets
    
    
    393
    
    
    
    18,239
    
    
    
    330
    
    
    
    15,716Total Financial Assets
    
    
    395
    
    
    
    18,327
    
    
    
    330
    
    
    
    15,716Noncurrent Financial LiabilitiesInterest-bearing financial liabilities  net of current portion
    
    
    837
    
    
    
    38,871
    
    
    
    925
    
    
    
    44,064Derivative financial liabilities
    
    
    59
    
    
    
    2,751
    
    
    
    37
    
    
    
    1,761Total noncurrent financial liabilities
    
    
    896
    
    
    
    41,622
    
    
    
    962
    
    
    
    45,825Current Financial LiabilitiesAccounts payable
    
    
    155
    
    
    
    7,180
    
    
    
    143
    
    
    
    6,820Accrued expenses and other current liabilities
    
    
    95
    
    
    
    4,409
    
    
    
    93
    
    
    
    4,447Derivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    87Current portion of interest-bearing financial liabilities
    
    
    155
    
    
    
    7,220
    
    
    
    301
    
    
    
    14,331Total current financial liabilities
    
    
    405
    
    
    
    18,809
    
    
    
    539
    
    
    
    25,685Total Financial Liabilities
    
    
    1,301
    
    
    
    60,431
    
    
    
    1,501
    
    
    
    71,510
 (1)
    
    The exchange rate used to translate the U.S. dollar amounts into Philippine peso was
Php46.43 to US$1.00, the peso-dollar exchange rate as quoted through the Philippine Dealing
System as at December 31, 2009.(2)
    
    The exchange rate used to translate the U.S. dollar amounts into Philippine peso was
47.65 to US$1.00, the peso-dollar exchange rate as quoted through the Philippine Dealing
System as at December 31, 2008.    Note 4  Operating Segment Information
  137




---



##### Table of Contents



Interest Rate Risk
     138




---



##### Table of Contents



As at December 31, 2009
 Discount/DebtIssuance
    
    
    Carrying
    
    
    Fair ValueIn U.S. Dollar
    
    
    
    
    
    
    Cost
    
    
    Value
    
    
    In U.S.Below 1 year
    
    
    1-2 years
    
    
    2-3 years
    
    
    3-5 years
    
    
    Over 5 years
    
    
    Total
    
    
    In Php
    
    
    In Php
    
    
    In Php
    
    
    Dollar
    
    
    In Php(in millions)Assets:Cash in BankU.S. Dollar
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    540
    
    
    
    
    
    
    
    540
    
    
    
    11
    
    
    
    540Interest rate
    
    0.0025% to 0.88%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    1,673
    
    
    
    
    
    
    
    1,673
    
    
    
    36
    
    
    
    1,673Interest rate
    
    0.625% to 2.90%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Currencies
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    31
    
    
    
    
    
    
    
    31
    
    
    
    1
    
    
    
    31Interest rate
    
    
    0.0014 to 2.40%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Temporary Cash InvestmentsU.S. Dollar
    
    384
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384
    
    
    
    17,870
    
    
    
    
    
    
    
    17,870
    
    
    
    384
    
    
    
    17,870Interest rate
    
    0.50% to 1.75%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    369
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    369
    
    
    
    17,149
    
    
    
    
    
    
    
    17,149
    
    
    
    369
    
    
    
    17,149Interest rate
    
    1.25% to 5.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term InvestmentsU.S. Dollar
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    2,132
    
    
    
    
    
    
    
    2,132
    
    
    
    46
    
    
    
    2,132Interest rate
    
    4.25% to 7.006%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    1,692
    
    
    
    
    
    
    
    1,692
    
    
    
    36
    
    
    
    1,692Interest rate
    
    
    4.40%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment in Debt SecuritiesPhilippine Peso
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    10
    
    
    
    462
    
    
    
    
    
    
    
    462
    
    
    
    10
    
    
    
    474Interest rate
    
    
    
    
    
    
    
    
    
    
6.92%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    883
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    893
    
    
    
    41,549
    
    
    
    
    
    
    
    41,549
    
    
    
    893
    
    
    
    41,561Liabilities:Long-term DebtFixed RateU.S. Dollar Notes
    
    
    
    
    
    
    
    146
    
    
    
    
    
    245
    
    
    
    391
    
    
    
    18,161
    
    
    
    285
    
    
    
    17,876
    
    
    
    449
    
    
    
    20,837Interest rate
    
    
    
    
    
    
    
11.375%
    
    
    
    
    
8.350%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    U.S. Dollar Fixed Loans
    
    14
    
    
    27
    
    
    5
    
    
    285
    
    
    
    
    
    
    331
    
    
    
    15,397
    
    
    
    3,338
    
    
    
    12,059
    
    
    
    229
    
    
    
    10,654Interest rate
    
4.515%
    
    
    3.79% to 4.70%
    
    
    3.79%
    
    
    2.25% to 3.79%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    
    
    
    63
    
    
    126
    
    
    236
    
    
    305
    
    
    
    730
    
    
    
    33,858
    
    
    
    84
    
    
    
    33,774
    
    
    
    744
    
    
    
    34,535Interest rate
    
    
    
    
    6.0323% to 8.4346%
    
    
    5.625% to 8.4346%
    
    
    6.125% to 9.1038%
    
    
    6.50% to 9.1038%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Variable RateU.S. Dollar
    
    41
    
    
    160
    
    
    74
    
    
    60
    
    
    
    
    
    
    335
    
    
    
    15,543
    
    
    
    124
    
    
    
    15,419
    
    
    
    332
    
    
    
    15,419Interest rate
    
    US$LIBOR + 0.05% to 2.5%
    
    
    US$LIBOR + 0.42% to 1.85%;swap rate + 2.79%
    
    
    US$LIBOR + 0.42% to 1.85%;swap rate + 2.79%
    
    
    US$LIBOR + 0.42% to 1.85%;swap rate + 2.79%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    
    
    
    185
    
    
    81
    
    
    107
    
    
    
    
    
    
    373
    
    
    
    17,349
    
    
    
    27
    
    
    
    17,322
    
    
    
    373
    
    
    
    17,322Interest rate
    
    
    
    
    MART 1 + 0.75%; PDST-F + 1.0% to 1.5%; AUBs prime rate
    
    
    PDST-F + 1.0% to 1.50%; AUBs prime rate
    
    
    PDST-F + 1.0% to 1.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term DebtNotes PayableU.S. Dollar
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    279
    
    
    
    
    
    
    
    279
    
    
    
    6
    
    
    
    279Interest rate
    
3.25%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    2,000
    
    
    
    
    
    
    
    2,000
    
    
    
    43
    
    
    
    2,000Interest rate
    
    PDST-F + 1.5%; 6.0896%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104
    
    
    435
    
    
    432
    
    
    688
    
    
    550
    
    
    
    2,209
    
    
    
    102,587
    
    
    
    3,858
    
    
    
    98,729
    
    
    
    2,176
    
    
    
    101,046
  139




---



##### Table of Contents



As at December 31, 2008
 Discount/DebtIssuance
    
    
    Carrying
    
    
    Fair ValueIn U.S. Dollar
    
    
    
    
    
    
    Cost
    
    
    Value
    
    
    In U.S.Below 1 year
    
    
    1-2 years
    
    
    2-3 years
    
    
    3-5 years
    
    
    Over 5 years
    
    
    Total
    
    
    In Php
    
    
    In Php
    
    
    In Php
    
    
    Dollar
    
    
    In Php(in millions)Assets:Cash in BankU.S. Dollar
    
    26
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    1,258
    
    
    
    
    
    
    
    1,258
    
    
    
    26
    
    
    
    1,258Interest rate
    
    0.10% to 4.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    2,682
    
    
    
    
    
    
    
    2,682
    
    
    
    56
    
    
    
    2,682Interest rate
    
    0.25% to 3.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Temporary Cash InvestmentsU.S. Dollar
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    3,400
    
    
    
    
    
    
    
    3,400
    
    
    
    74
    
    
    
    3,400Interest rate
    
    0.30% to 7.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    567
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    567
    
    
    
    26,120
    
    
    
    
    
    
    
    26,120
    
    
    
    567
    
    
    
    26,120Interest rate
    
    2% to 7.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term InvestmentsU.S. Dollar
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    985
    
    
    
    
    
    
    
    985
    
    
    
    21
    
    
    
    985Interest rate
    
    3.29%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    119
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119
    
    
    
    5,685
    
    
    
    
    
    
    
    5,685
    
    
    
    119
    
    
    
    5,685Interest rate
    
    6.69%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment in Debt SecuritiesPhilippine Peso
    
    35
    
    
    
    
    
    4
    
    
    9
    
    
    
    
    
    
    48
    
    
    
    2,291
    
    
    
    
    
    
    
    2,291
    
    
    
    48
    
    
    
    2,285Interest rate
    
    6.3194%
    
    
    
    
    
    6.125%
    
    
    6.875% to 7%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    898
    
    
    
    
    
    4
    
    
    9
    
    
    
    
    
    
    911
    
    
    
    42,421
    
    
    
    
    
    
    
    42,421
    
    
    
    911
    
    
    
    42,415Liabilities:Long-term DebtFixed RateU.S. Dollar Notes
    
    114
    
    
    
    
    
    
    
    
    159
    
    
    295
    
    
    
    568
    
    
    
    27,061
    
    
    
    368
    
    
    
    26,693
    
    
    
    559
    
    
    
    26,607Interest rate
    
    10.50%
    
    
    
    
    
    
    
    
    11.375%
    
    
    8.35%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    U.S. Dollar Fixed Loans
    
    22
    
    
    50
    
    
    11
    
    
    3
    
    
    280
    
    
    
    366
    
    
    
    17,444
    
    
    
    4,046
    
    
    
    13,398
    
    
    
    252
    
    
    
    12,030Interest rate
    
    4.49% to 6%
    
    
    3.79% to 4.70%
    
    
    3.79% to 4.70%
    
    
    3.79%
    
    
    2.25%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    
    
    
    3
    
    
    1
    
    
    182
    
    
    33
    
    
    
    219
    
    
    
    10,420
    
    
    
    79
    
    
    
    10,341
    
    
    
    209
    
    
    
    9,955Interest rate
    
    
    
    
    6.50% to 8.4346%
    
    
    5.625% to 8.4346%
    
    
    5.625% to 8.4346%
    
    
    6.125% to 6.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Variable RateU.S. Dollar
    
    13
    
    
    215
    
    
    59
    
    
    77
    
    
    
    
    
    
    364
    
    
    
    17,339
    
    
    
    67
    
    
    
    17,272
    
    
    
    363
    
    
    
    17,272Interest rate
    
    US$LIBOR +1.75% to 2.75%
    
    
    US$LIBOR + 0.42% to 2.50%
    
    
    US$LIBOR + 0.42% to 0.815%
    
    
    US$LIBOR + 0.42% to 0.75%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    
    
    
    
    
    47
    
    
    
    32
    
    
    
    40
    
    
    
    
    
    
    
    119
    
    
    
    5,670
    
    
    
    16
    
    
    
    5,654
    
    
    
    119
    
    
    
    5,653Interest rate
    
    
    
    
    
    MART 1 + 0.75% to 5.70%;PDST-F + 1.0% to 1.50%
    
    
    MART 1 + 0.75%; PDST-F + 1.0% to 1.50%
    
    
    PDST-F + 1.0% to 1.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term DebtNotes PayableU.S. Dollar
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    553
    
    
    
    
    
    
    
    553
    
    
    
    12
    
    
    
    553Interest rate
    
    5.25% to 5.30%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161
    
    
    
    315
    
    
    
    103
    
    
    
    461
    
    
    
    608
    
    
    
    1,648
    
    
    
    78,487
    
    
    
    4,576
    
    
    
    73,911
    
    
    
    1,514
    
    
    
    72,070
     140




---



##### Table of Contents



Credit Risk
     Gross Maximum
Exposure(1)
    
    
    Net Maximum Exposure(2)2009
    
    
    2008
    
    
    2009
    
    
    2008(in million pesos)Loans and receivables:Advances and refundable deposits
    
    
    849
    
    
    
    840
    
    
    
    848
    
    
    
    840Cash and cash equivalents
    
    
    38,319
    
    
    
    33,684
    
    
    
    38,101
    
    
    
    33,621Short-term investments
    
    
    3,338
    
    
    
    5,964
    
    
    
    3,338
    
    
    
    5,963Foreign administrations
    
    
    4,064
    
    
    
    5,477
    
    
    
    4,011
    
    
    
    5,477Retail subscribers
    
    
    3,546
    
    
    
    3,904
    
    
    
    3,505
    
    
    
    3,877Corporate subscribers
    
    
    2,429
    
    
    
    2,865
    
    
    
    2,328
    
    
    
    2,709Domestic carriers
    
    
    1,184
    
    
    
    703
    
    
    
    1,184
    
    
    
    703Dealers, agents and others
    
    
    3,506
    
    
    
    2,960
    
    
    
    3,506
    
    
    
    2,958Held-to-maturity investments:Investment in debt securities
    
    
    462
    
    
    
    2,098
    
    
    
    462
    
    
    
    2,098Designated at fair value through profit or loss:Investment in debt securities
    
    
    
    
    
    
    193
    
    
    
    
    
    
    
    193Available-for-sale financial assets
    
    
    134
    
    
    
    131
    
    
    
    134
    
    
    
    131Held-for-trading:Short-term investments
    
    
    486
    
    
    
    706
    
    
    
    486
    
    
    
    706Bifurcated embedded derivatives
    
    
    6
    
    
    
    2
    
    
    
    6
    
    
    
    2Foreign currency options
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    38Forward foreign exchange contracts
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    16Total
    
    
    58,323
    
    
    
    59,581
    
    
    
    57,909
    
    
    
    59,332
 (1)
    
    Gross financial assets before taking into account any collateral held or other
credit enhancements or offsetting arrangements.(2)
    
    Gross financial assets after taking into account any collateral or other credit
enhancements or offsetting arrangements or deposit insurance.  141




---



##### Table of Contents



Neither past due
    
    
    Past due butnor impaired
    
    
    notTotal
    
    
    Class A(1)
    
    
    Class B(2)
    
    
    impaired
    
    
    Impaired(in million pesos)December 31, 2009Loans and receivables:Advances and refundable deposits
    
    
    849
    
    
    
    790
    
    
    
    59
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    38,319
    
    
    
    37,767
    
    
    
    552
    
    
    
    
    
    
    
    Short-term investments
    
    
    3,338
    
    
    
    2,971
    
    
    
    367
    
    
    
    
    
    
    
    Corporate subscribers
    
    
    9,106
    
    
    
    1,078
    
    
    
    283
    
    
    
    1,068
    
    
    
    6,677Retail subscribers
    
    
    8,026
    
    
    
    1,236
    
    
    
    518
    
    
    
    1,792
    
    
    
    4,480Foreign administrations
    
    
    4,353
    
    
    
    1,261
    
    
    
    451
    
    
    
    2,352
    
    
    
    289Domestic carriers
    
    
    1,267
    
    
    
    157
    
    
    
    8
    
    
    
    1,019
    
    
    
    83Dealers, agents and others
    
    
    3,927
    
    
    
    2,068
    
    
    
    1,022
    
    
    
    416
    
    
    
    421Held-to-maturity investments:Investment in debt securities
    
    
    462
    
    
    
    462
    
    
    
    
    
    
    
    
    
    
    
    Available-for-sale financial assets
    
    
    134
    
    
    
    103
    
    
    
    31
    
    
    
    
    
    
    
    Held-for-trading(3):Short-term investments
    
    
    486
    
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    Bifurcated embedded derivatives
    
    
    6
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    70,273
    
    
    
    48,385
    
    
    
    3,291
    
    
    
    6,647
    
    
    
    11,950December 31, 2008Loans and receivables:Advances and refundable deposits
    
    
    840
    
    
    
    703
    
    
    
    137
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    33,684
    
    
    
    32,979
    
    
    
    705
    
    
    
    
    
    
    
    Short-term investments
    
    
    5,964
    
    
    
    5,680
    
    
    
    284
    
    
    
    
    
    
    
    Corporate subscribers
    
    
    9,188
    
    
    
    858
    
    
    
    272
    
    
    
    1,663
    
    
    
    6,395Retail subscribers
    
    
    8,993
    
    
    
    1,457
    
    
    
    550
    
    
    
    1,897
    
    
    
    5,089Foreign administrations
    
    
    5,916
    
    
    
    2,602
    
    
    
    956
    
    
    
    1,919
    
    
    
    439Domestic carriers
    
    
    877
    
    
    
    84
    
    
    
    3
    
    
    
    616
    
    
    
    174Dealers, agents and others
    
    
    3,271
    
    
    
    2,114
    
    
    
    444
    
    
    
    402
    
    
    
    311Held-to-maturity investments:Investment in debt securities
    
    
    2,098
    
    
    
    2,098
    
    
    
    
    
    
    
    
    
    
    
    Designated at fair value through profit or loss:Investment in debt securities
    
    
    193
    
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    Available-for-sale financial assets
    
    
    131
    
    
    
    103
    
    
    
    28
    
    
    
    
    
    
    
    Held-for-trading(3):Short-term investments
    
    
    706
    
    
    
    706
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign currency options
    
    
    38
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign exchange contracts
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    Bifurcated embedded derivatives
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    71,917
    
    
    
    49,633
    
    
    
    3,379
    
    
    
    6,497
    
    
    
    12,408
 (1)
    
    This includes low risk and good paying customer accounts with no history of
account treatment for a defined period and no overdue accounts as at report date; and
deposits or placements to counterparties with good credit rating or bank standing financial
review.(2)
    
    This includes medium risk and average paying customer accounts with no overdue
accounts as at report date, and new customer accounts for which sufficient credit history
has not been established; and deposits or placements to counterparties not classified as
Class A.(3)
    
    Gross receivables from counterparties, before any offsetting arrangements.
  142




---



##### Table of Contents



Neither past due
    
    
    Past due but not impairedTotal
    
    
    nor impaired
    
    
    1-60 days
    
    
    61-90 days
    
    
    Over 91 days
    
    
    Impaired(in million pesos)December 31, 2009Loans and receivables:Advances and refundable deposits
    
    
    849
    
    
    
    849
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    38,319
    
    
    
    38,319
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term investments
    
    
    3,338
    
    
    
    3,338
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate subscribers
    
    
    9,106
    
    
    
    1,361
    
    
    
    433
    
    
    
    198
    
    
    
    437
    
    
    
    6,677Retail subscribers
    
    
    8,026
    
    
    
    1,754
    
    
    
    1,362
    
    
    
    184
    
    
    
    246
    
    
    
    4,480Foreign administrations
    
    
    4,353
    
    
    
    1,712
    
    
    
    1,320
    
    
    
    405
    
    
    
    627
    
    
    
    289Domestic carriers
    
    
    1,267
    
    
    
    165
    
    
    
    283
    
    
    
    293
    
    
    
    443
    
    
    
    83Dealers, agents and others
    
    
    3,927
    
    
    
    3,090
    
    
    
    332
    
    
    
    21
    
    
    
    63
    
    
    
    421Held-to-maturity investments:Investment in debt securities
    
    
    462
    
    
    
    462
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Available-for-sale financial assets
    
    
    134
    
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Held-for-trading:Short-term investments
    
    
    486
    
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bifurcated embedded derivatives
    
    
    6
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    70,273
    
    
    
    51,676
    
    
    
    3,730
    
    
    
    1,101
    
    
    
    1,816
    
    
    
    11,950December 31, 2008Loans and receivables:Advances and refundable deposits
    
    
    840
    
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    33,684
    
    
    
    33,684
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term investments
    
    
    5,964
    
    
    
    5,964
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate subscribers
    
    
    9,188
    
    
    
    1,130
    
    
    
    1,024
    
    
    
    313
    
    
    
    326
    
    
    
    6,395Retail subscribers
    
    
    8,993
    
    
    
    2,007
    
    
    
    1,338
    
    
    
    266
    
    
    
    293
    
    
    
    5,089Foreign administrations
    
    
    5,916
    
    
    
    3,558
    
    
    
    1,043
    
    
    
    550
    
    
    
    326
    
    
    
    439Domestic carriers
    
    
    877
    
    
    
    87
    
    
    
    80
    
    
    
    87
    
    
    
    449
    
    
    
    174Dealers, agents and others
    
    
    3,271
    
    
    
    2,558
    
    
    
    48
    
    
    
    9
    
    
    
    345
    
    
    
    311Held-to-maturity investments:Investment in debt securities
    
    
    2,098
    
    
    
    2,098
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Designated at fair value through profit or loss:Investment in debt securities
    
    
    193
    
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Available-for-sale financial assets
    
    
    131
    
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Held-for-trading:Short-term investments
    
    
    706
    
    
    
    706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign currency options
    
    
    38
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign exchange contracts
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bifurcated embedded derivatives
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    71,917
    
    
    
    53,012
    
    
    
    3,533
    
    
    
    1,225
    
    
    
    1,739
    
    
    
    12,408
 
 Impairment Assessments
  Individually assessed allowance
   143




---



##### Table of Contents



Collectively assessed allowance
   Capital Management
    Note 8  Earnings Per Common Share Note 19  Equity Note 28  Financial Assets and Liabilities
   2009
    
    
    2008(in million pesos)Long-term debt, including current portion
    
    
    96,450
    
    
    
    73,358Notes payable
    
    
    2,279
    
    
    
    553Total debt
    
    
    98,729
    
    
    
    73,911Cash and cash equivalents
    
    
    (38,319
    )
    
    
    (33,684
    )Short-term investments
    
    
    (3,824
    )
    
    
    (6,670
    )Net debt
    
    
    56,586
    
    
    
    33,557Equity attributable to equity holders of PLDT
    
    
    98,575
    
    
    
    105,531Net consolidated debt to equity ratio
    
    
    57
    %
    
    
    32
    %
  144




---



##### Table of Contents



Item 12. Description of Securities Other than Equity Securities
 Item 12.D.3  Fees and Charges for Holders of American Depositary Receipts
   
    
    US$0.02 or less per ADS (or portion thereof) for any cash distribution made;
 
    
    US$1.50 per ADR for transfer made (to the extent such fee is not prohibited by the rules
of the primary stock exchange upon which the ADSs are listed);
 
    
    a fee in an amount equal to the fee for the execution and delivery of ADSs for the
distribution or sale of securities, which would have been charged as a result of the
deposit of such securities but which securities or the net proceeds from the sale thereof
are instead distributed by the depositary to the holders entitled thereto;
 
    
    US$0.02 per ADS (or a portion thereof) per year for the services rendered by the
depositary for administering the ADR program (which fee shall be assessed as of the record
date or dates set by the depositary not more than once each calendar year and shall be
payable at the sole discretion of the depositary by billing such holders or by deducting
such charge from one or more cash dividends or other cash distribution);
 
    
    such fees and expenses as are incurred by the depositary (including without limitation
expenses incurred on behalf of holders in compliance with foreign exchange control
regulations or any law or regulation relating to foreign investment) in the delivery of the
common stock or otherwise in connection with the depositarys or its custodians compliance
with applicable laws, rules or regulations;
 
    
    stock transfer and other taxes and governmental charges (which are payable by the holder
or person depositing the common stock), cable, telex and facsimile transmission and
delivery charges incurred at the request of the person depositing the common stock or
holder delivering the common stock, ADRs or deposited common stock (which are payable by
such person or holder), transfer or registration fees for the registration or transfer of
deposited common stock in connection with the deposit or withdrawal of the deposited common
stock (which are payable by the person depositing or withdrawing deposited common stock,
expense by the depositary in the conversion of foreign currency into U.S. dollars; and
 
    
    any other charge payable by the depositary or its agents in connection with its service
as depositary in implementation of the Companys ADR Program pursuant to Section 4.02,
4.03, 4.04, or 4.05 of the Deposit Agreement, as amended.
 Item 12.D.4  Fees and Other Payments Made by the Depositary to Us
  Category of Expenses
    
    Amount Reimbursed forInvestor relations and investor event fees
    
    US$
    322,075Legal and accounting fees incurred in
connection with the preparation of Form 20-F,
ongoing SEC compliance and listing requirements
    
    
    296,345Listing fees
    
    
    55,513Total
    
    US$
    673,933
   145




---



##### Table of Contents



PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
 Disclosure Controls and Procedures.
 Managements Annual Report on Internal Control Over Financial Reporting.
    Changes in Internal Control Over Financial Reporting.
  146




---



##### Table of Contents



Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Business Conduct and Ethics
   A. Code of Ethics and Other Policies
   1.
    
    The qualifications and grounds for disqualification for directorship;
 2.
    
    The requirement that at least two or 20% of the members of our board of directors,
whichever is lesser, must be independent directors and the standards/criteria for the
determination of independent directors;
 3.
    
    The duties and responsibilities of our board of directors and the individual
directors;
 4.
    
    Our board committees, specifically, the governance and nomination committee, audit
committee and executive compensation committee, the composition and the principal duties
and responsibilities of such committees;
 5.
    
    The role of our chairman in ensuring compliance with the corporate governance
principles;
 6.
    
    The role of our president/chief executive officer in ensuring that our organizational
and procedural controls are adequate and effective to ensure reliability and integrity of
financial and operational information, effectiveness and efficiency of operations,
safeguarding of assets and compliance with laws, rules, regulations and contracts;
 7.
    
    The duties and responsibilities of our corporate secretary/assistant corporate
secretary in terms of the support services that they need to provide our board in
upholding sound corporate governance;
  147




---



##### Table of Contents



8.
    
    The duties and responsibilities of the head of our internal audit organization that
would provide our board of directors, management and shareholders with reasonable
assurance that our key organizational and procedural controls are appropriate, adequate,
effective and reasonably complied with;
 9.
    
    The functions of our independent auditors that would reasonably ensure an environment
of sound corporate governance as reflected in our financial records and reports; the
requirement that non-audit work of the independent auditors should not conflict with their
function as independent auditors; the requirement to rotate, at least once every five
years, the independent auditors or the lead partner assigned to handle the independent
audit of our financial statements;
 10.
    
    Our commitment to respect and promote shareholders rights such as voting right,
pre-emptive right, inspection right, dividend right, appraisal right, and right to receive
information about the background, business experience, compensation and shareholdings of
our directors and officers and their transactions with us;
 11.
    
    The requirement to appoint a compliance officer and the duties and responsibilities of
such compliance officer including the establishment of an evaluation system to determine
and measure compliance with the provisions of our Governance Manual; and
 12.
    
    The penalties for violations of our Governance Manual.
  (a) Conflict of Interest Policy approved on October 24, 2005
 (b) Policy on Gifts, Entertainment and Sponsored Travel approved on January 31, 2006
 (c) Supplier/Contractor Relations Policy approved on January 31, 2006
 (d) Policy on Employee Disclosure on Violations of the Corporate Governance Rules, Questionable
Accounting or Auditing Matters, and Offenses covered by PLDTs Table of Penalties (Expanded
Whistleblowing Policy) approved on May 9, 2006
  148




---



##### Table of Contents



B. Enhancements and Education
   C. Performance Evaluation
   149




---



##### Table of Contents



Chief Governance Officer
  Board and Board Committees
   Internal Audit Organization
  1.
    
    Risks are appropriately identified and managed;
 2.
    
    Significant financial, managerial, and operating information are accurate,
reliable and timely;
 3.
    
    Employees actions are in compliance with policies, standards, procedures, and
applicable laws and regulations;
 4.
    
    Resources are acquired economically, used efficiently and adequately protected;
 5.
    
    Programs, plans and objectives are achieved;
 6.
    
    Quality and continuous improvement are fostered in our control process;
 7.
    
    Significant legislative or regulatory issues impacting us are recognized and
addressed appropriately; and
 8.
    
    Interaction with various governance groups occurs as needed.
  1.
    
    Provide annually an assessment on the adequacy and effectiveness of our
processes for controlling our activities and managing our risks;
 2.
    
    Report significant issues related to the processes of controlling our
activities, including potential improvements to those processes, and provide
information concerning such issues;
 3.
    
    Periodically provide information on the status and results of the annual audit
plan and the sufficiency of our internal audit organizations resources; and
 4.
    
    Coordinate with and provide oversight of other control and monitoring functions
(risk management, compliance, security, legal, ethics, environmental, external audit).
  150




---



##### Table of Contents



, lrchan@pldt.com.ph www.pldt.com.ph
 
 Item 16C. Principal Accountant Fees and Services
  2009
    
    
    2008(in millions)Audit Fees
    
    Php
    46
    
    
    Php
    45All Other Fees
    
    
    19
    
    
    
    19Total
    
    Php
    65
    
    
    Php
    64
 Audit Fees
 All Other Fees
   
 Item 16D. Exemption from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchaser
  Total Number of SharesAverage Price
    
    
    Purchased as Part of
    
    
    Maximum Number of SharesTotal Number of
    
    
    Paid per
    
    
    Publicly Announced
    
    
    that May Yet Be PurchasedPeriod
    
    Shares Purchased(1)
    
    
    Share
    
    
    Plans or Programs
    
    
    Under the ProgramsMarch 17-19, 2008
    
    
    60,000
    
    
    
    2,635
    
    
    
    60,000
    
    
    
    1,940,000
    (2)March 24-27, 2008
    
    
    92,440
    
    
    
    2,708
    
    
    
    152,440
    
    
    
    1,847,560April 4, 2008
    
    
    30,000
    
    
    
    2,782
    
    
    
    182,440
    
    
    
    1,817,560April 8-11, 2008
    
    
    62,000
    
    
    
    2,777
    
    
    
    244,440
    
    
    
    1,755,560April 14-18, 2008
    
    
    101,820
    
    
    
    2,727
    
    
    
    346,260
    
    
    
    1,653,740May 9, 2008
    
    
    25,000
    
    
    
    2,588
    
    
    
    371,260
    
    
    
    1,628,740May 12-16, 2008
    
    
    144,810
    
    
    
    2,658
    
    
    
    516,070
    
    
    
    1,483,930May 19-23, 2008
    
    
    115,920
    
    
    
    2,660
    
    
    
    631,990
    
    
    
    1,368,010May 26-30, 2008
    
    
    83,050
    
    
    
    2,618
    
    
    
    715,040
    
    
    
    1,284,960June 2-6, 2008
    
    
    137,710
    
    
    
    2,556
    
    
    
    852,750
    
    
    
    1,147,250June 10-13, 2008
    
    
    138,280
    
    
    
    2,361
    
    
    
    991,030
    
    
    
    1,008,970
  151




---



##### Table of Contents



Total Number of SharesAverage Price
    
    
    Purchased as Part of
    
    
    Maximum Number of SharesTotal Number of
    
    
    Paid per
    
    
    Publicly Announced
    
    
    that May Yet Be PurchasedPeriod
    
    Shares Purchased(1)
    
    
    Share
    
    
    Plans or Programs
    
    
    Under the ProgramsJune 16-20, 2008
    
    
    168,030
    
    
    
    2,449
    
    
    
    1,159,060
    
    
    
    840,940June 23-27, 2008
    
    
    182,630
    
    
    
    2,416
    
    
    
    1,341,690
    
    
    
    658,310June 30, 2008
    
    
    41,720
    
    
    
    2,394
    
    
    
    1,383,410
    
    
    
    616,590July 1-4, 2008
    
    
    150,440
    
    
    
    2,344
    
    
    
    1,533,850
    
    
    
    466,150July 7-10, 2008
    
    
    121,890
    
    
    
    2,430
    
    
    
    1,655,740
    
    
    
    344,260July 14-16, 2008
    
    
    83,890
    
    
    
    2,413
    
    
    
    1,739,630
    
    
    
    260,370September 15-16, 2008
    
    
    16,410
    
    
    
    2,571
    
    
    
    1,756,040
    
    
    
    2,243,960
    (2)September 18, 2008
    
    
    4,000
    
    
    
    2,465
    
    
    
    1,760,040
    
    
    
    2,239,960September 23, 2008
    
    
    3,100
    
    
    
    2,595
    
    
    
    1,763,140
    
    
    
    2,236,860September 30, 2008
    
    
    10,440
    
    
    
    2,646
    
    
    
    1,773,580
    
    
    
    2,226,420October 3, 2008
    
    
    20,000
    
    
    
    2,695
    
    
    
    1,793,580
    
    
    
    2,206,420October 6-10, 2008
    
    
    76,150
    
    
    
    2,502
    
    
    
    1,869,730
    
    
    
    2,130,270October 13-17, 2008
    
    
    90,160
    
    
    
    2,328
    
    
    
    1,959,890
    
    
    
    2,040,110November 7, 2008
    
    
    12,400
    
    
    
    1,983
    
    
    
    1,972,290
    
    
    
    3,027,710
    (2)March 17-18, 2009
    
    
    39,060
    
    
    
    1,876
    
    
    
    2,011,350
    
    
    
    2,988,650March 20, 2009
    
    
    130,000
    
    
    
    1,980
    
    
    
    2,141,350
    
    
    
    2,858,650March 23, 2009
    
    
    523,226
    
    
    
    2,020
    
    
    
    2,664,576
    
    
    
    2,335,424September 18, 2009
    
    
    13,210
    
    
    
    2,306
    
    
    
    2,677,786
    
    
    
    2,322,214September 22, 2009
    
    
    5,170
    
    
    
    2,330
    
    
    
    2,682,956
    
    
    
    2,317,044Total
    
    
    2,682,956
 
 (1)
    
    Outside the share buyback program, we did not repurchase any of our shares in the
year ended December 31, 2009.(2)
    
    The Board of Directors approved the initial share buyback program of up to two
million shares of PLDTs common stock on January 29, 2008, authorized the repurchase of up to
another two million shares on August 5, 2008, and approved the repurchase of an additional one
million shares on December 9, 2008. 
 Item 16F. Change in Registrants Certifying Accountant
  
 Item 16G. Corporate Governance
  
    
    Number of Independent Directors.The NYSE listing standards require a majority of the
board of directors to be independent. We have four independent directors out of 13 directors,
which exceeds the requirements under the Philippine SEC Governance Code that at least two
members or 20% of the board of directors must be independent.
 
    
    Director Independence Tests.There are differences between the director independence tests
applied in PLDTs corporate governance practice and those under the NYSE listing standards.
In some cases, the independence tests set forth in the NYSE listing standards are more
stringent than those under PLDTs corporate governance practice and vice versa.
 
    
    Examples where the NYSE listing standards impose more stringent standards than PLDTs
corporate governance practices include the auditor affiliation test. In contrast to the
NYSE listing standards, under PLDTs By-Laws and Board Committee charters, present or
previous affiliation or employment of a directors immediate family member with the
external auditors, or a directors past or present affiliation with a firm that is PLDTs
internal auditor do not preclude a determination that such director is independent.
 
    
    Examples where PLDTs corporate governance practices impose more stringent standards
than NYSE listing standards include the look back periods for the independence tests and
the material relationship with the listed company test. The look back period for each of
the past employment and the auditor affiliation tests under PLDTs corporate governance
practices is five years compared to three years under the NYSE listing standards.
Furthermore, in respect of material relationships that preclude an independence finding,
PLDTs Corporate Governance Manual provides that a director who is, or whose relative is, a
substantial shareholder of PLDT, any of its related companies or any of its substantial
shareholders cannot be considered as independent.
  152




---



##### Table of Contents




    
    Meetings of non-management/independent directors.The NYSE listing standards require
regularly scheduled executive sessions consisting of non-management directors without
management present or regularly scheduled executive sessions consisting of only independent
directors. As part of the Board assessment process formally adopted by the Governance and
Nomination Committee, PLDTs independent directors and/or non-management directors hold
meetings at least once a year to, among other things, discuss and evaluate the results of the
Boards annual self-assessment. In addition, while PLDTs Corporate Governance Manual does
not mandate the holding of regularly scheduled executive sessions with non-management
directors nor executive sessions with only independent directors, PLDTs independent and/or
non-management directors, through the Audit Committee and the Governance and Nomination
Committee, in either or both of which all independent directors and most non-management
directors are serving as members or advisors, are provided the opportunity to have open
discussions, whether individually or as a group, without the presence of management/executive
directors.
 
    
    Nominating/Corporate Governance Committee and Compensation Committee.The NYSE listing
standards require a listed company to maintain a nominating/corporate governance committee and
a compensation committee, both composed entirely of independent directors. Our Governance and
Nomination Committee and our Executive Compensation Committee is each composed of five voting
members, a majority of whom are independent directors, which exceeds the requirements under
the Philippine SEC Governance Code that one of the at least three voting members of the
nominating/corporate governance committee and one of the at least three members of the
compensation committee must be independent.
 
    
    Audit Committee.As required by NYSE listing standards, PLDT maintains an audit committee
in full compliance with Rule 10A-3 promulgated under the U.S. Securities Exchange Act of 1934,
as amended, and Section 303A.06 of the NYSE Listed Company Manual. All of the members of
PLDTs Audit Committee are independent directors meeting the independence requirements of Rule
10A-3 as well as those under Section 303A.07 of the NYSE Listed Company Manual, except in
those areas where our independence tests under the Philippine SEC Governance Code differ from
those under the NYSE listing standards, as discussed above.
  
 PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
  PagePHILIPPINE LONG DISTANCE TELEPHONE COMPANY ANNUAL FINANCIAL STATEMENTSAttestation Report of the Independent Registered Public Accounting Firm
    
    
    154Report of Independent Registered Public Accounting Firm
    
    
    155Consolidated Statements of Financial Position as at December 31, 2009 and 2008
    
    
    F-1Consolidated Income Statements for the Years Ended December 31, 2009 and 2008
    
    
    F-3Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2009 and 2008
    
    
    F-4Consolidated Statements of Changes in Equity for the Years Ended December 31, 2009 and 2008
    
    
    F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2009 and 2008
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-8
  153




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
       
  154




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
  155




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 December 31, 2009 and 2008
 (in million pesos, except par value and number of shares)
 2009
    
    
    2008ASSETSNoncurrent AssetsProperty, plant and equipment (Notes 3, 9, 20 and 28)
    
    
    161,256
    
    
    
    160,326Investments in associates and joint ventures (Notes 3, 4, 5, 10, 28 and 30)
    
    
    22,233
    
    
    
    1,174Available-for-sale financial assets (Notes 6 and 28)
    
    
    134
    
    
    
    131Investment in debt securities  net of current portion (Notes 11 and 28)
    
    
    462
    
    
    
    635Investment properties (Notes 3, 9, 12 and 28)
    
    
    1,210
    
    
    
    617Goodwill and intangible assets (Notes 3, 13, 14, 21 and 28)
    
    
    13,024
    
    
    
    10,450Deferred income tax assets  net (Notes 3, 4, 7 and 28)
    
    
    7,721
    
    
    
    9,605Prepayments  net of current portion (Notes 3, 5, 18, 26 and 28)
    
    
    8,663
    
    
    
    2,501Advances and refundable deposits  net of current portion (Note 28)
    
    
    1,102
    
    
    
    1,086Total Noncurrent Assets
    
    
    215,805
    
    
    
    186,525Current AssetsCash and cash equivalents (Notes 15 and 28)
    
    
    38,319
    
    
    
    33,684Short-term investments (Note 28)
    
    
    3,824
    
    
    
    6,670Current portion of investment in debt securities (Notes 11 and 28)
    
    
    
    
    
    
    1,656Trade and other receivables  net (Notes 3, 16, 24 and 28)
    
    
    14,729
    
    
    
    15,909Inventories and supplies (Notes 3, 4, 5, 17 and 28)
    
    
    2,165
    
    
    
    2,069Derivative financial assets (Note 28)
    
    
    6
    
    
    
    56Current portion of prepayments (Notes 18 and 28)
    
    
    5,098
    
    
    
    4,164Current portion of advances and refundable deposits (Note 28)
    
    
    202
    
    
    
    1,825Total Current Assets
    
    
    64,343
    
    
    
    66,033TOTAL ASSETS
    
    
    280,148
    
    
    
    252,558EQUITY AND LIABILITIESEquityPreferred stock, Php10 par value per share, authorized - 822,500,000 shares;
issued and outstanding - 441,631,062 shares as at December 31, 2009 and
441,480,512 shares as at December 31, 2008 (Notes 8 and 19)
    
    
    4,416
    
    
    
    4,415Common stock, Php5 par value per share, authorized  234,000,000 shares;
issued  189,480,260 shares and outstanding  186,797,304 shares as at
December 31, 2009; and issued  189,456,127 shares and outstanding 187,483,837
shares as at December 31, 2008 (Notes 8 and 19)
    
    
    947
    
    
    
    947Treasury stock  2,682,956 shares as at December 31, 2009 and 1,972,290 shares
as at December 31, 2008 (Notes 8, 19 and 28)
    
    
    (6,405
    )
    
    
    (4,973
    )Stock options issued (Note 25)
    
    
    
    
    
    
    6Capital in excess of par value
    
    
    62,890
    
    
    
    68,337Retained earnings (Notes 8 and 19)
    
    
    37,744
    
    
    
    37,177Other comprehensive income (Note 6)
    
    
    (1,017
    )
    
    
    (378
    )Total Equity Attributable to Equity Holders of PLDT
    
    
    98,575
    
    
    
    105,531Non-controlling Interests
    
    
    550
    
    
    
    1,438TOTAL EQUITY
    
    
    99,125
    
    
    
    106,969
  F-1




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)  December 31, 2009 and 2008
(in million pesos, except par value and number of shares)
 2009
    
    
    2008Noncurrent LiabilitiesInterest-bearing financial liabilities  net of current portion (Notes 4, 5, 9, 20, 23, 26
and 28)
    
    
    86,079
    
    
    
    58,910Deferred income tax liabilities  net (Notes 3, 4, 7 and 28)
    
    
    1,321
    
    
    
    1,288Derivative financial liabilities (Notes 26 and 28)
    
    
    2,751
    
    
    
    1,761Pension and other employee benefits (Notes 3, 5, 23, 25, 26 and 28)
    
    
    374
    
    
    
    5,467Customers deposits (Notes 26 and 28)
    
    
    2,166
    
    
    
    2,251Deferred credits and other noncurrent liabilities (Notes 3, 9, 13, 14, 21, 23 and 28)
    
    
    14,438
    
    
    
    10,582Total Noncurrent Liabilities
    
    
    107,129
    
    
    
    80,259Current LiabilitiesAccounts payable (Notes 22, 24, 26 and 28)
    
    
    19,601
    
    
    
    18,268Accrued expenses and other current liabilities
(Notes 3, 10, 13, 20, 21, 23, 24, 25, 26, 27 and 28)
    
    
    35,446
    
    
    
    24,381Derivative financial liabilities (Notes 26 and 28)
    
    
    
    
    
    
    87Provision for assessments (Notes 3, 26, 27 and 28)
    
    
    1,555
    
    
    
    1,555Current portion of interest-bearing financial liabilities (Notes 4, 5, 9, 20, 23, 26 and 28)
    
    
    12,714
    
    
    
    15,080Dividends payable (Notes 19, 26 and 28)
    
    
    1,749
    
    
    
    1,379Income tax payable (Notes 7 and 28)
    
    
    2,829
    
    
    
    4,580Total Current Liabilities
    
    
    73,894
    
    
    
    65,330TOTAL LIABILITIES
    
    
    181,023
    
    
    
    145,589TOTAL EQUITY AND LIABILITIES
    
    
    280,148
    
    
    
    252,558
 See accompanying Notes to Consolidated Financial Statements.
  F-2




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED INCOME STATEMENTS
 For the Years Ended December 31, 2009, 2008 and 2007
 (in million pesos, except earnings per common share amounts)
 2009
    
    
    2008
    
    
    2007REVENUESService revenues (Notes 3 and 4)
    
    
    145,647
    
    
    
    142,873
    
    
    
    135,478Non-service revenues (Notes 3, 4 and 5)
    
    
    2,346
    
    
    
    2,964
    
    
    
    3,226147,993
    
    
    
    145,837
    
    
    
    138,704EXPENSESDepreciation and amortization (Notes 3, 4 and 9)
    
    
    25,607
    
    
    
    24,709
    
    
    
    28,613Compensation and employee benefits (Notes 3, 5 and 25)
    
    
    23,100
    
    
    
    20,709
    
    
    
    20,470Repairs and maintenance (Notes 12, 17 and 24)
    
    
    8,631
    
    
    
    8,569
    
    
    
    7,310Selling and promotions
    
    
    5,749
    
    
    
    5,695
    
    
    
    5,541Cost of sales (Notes 5, 17, 24 and 26)
    
    
    5,432
    
    
    
    5,252
    
    
    
    5,127Asset impairment (Notes 3, 4, 5, 9, 10, 14, 16, 17, 18, 26 and 28)
    
    
    5,061
    
    
    
    4,180
    
    
    
    1,317Professional and other contracted services (Note 24)
    
    
    4,361
    
    
    
    4,591
    
    
    
    4,719Rent (Notes 3 and 26)
    
    
    4,055
    
    
    
    3,656
    
    
    
    2,762Taxes and licenses (Note 27)
    
    
    2,881
    
    
    
    2,736
    
    
    
    2,319Communication, training and travel
    
    
    1,902
    
    
    
    1,993
    
    
    
    1,850Insurance and security services (Note 24)
    
    
    1,264
    
    
    
    1,196
    
    
    
    1,197Amortization of intangible assets (Notes 3 and 14)
    
    
    368
    
    
    
    377
    
    
    
    390Provisions (Notes 3, 4, 26 and 27)
    
    
    
    
    
    
    898
    
    
    
    666Other expenses (Note 24)
    
    
    1,700
    
    
    
    1,225
    
    
    
    1,30690,111
    
    
    
    85,786
    
    
    
    83,58757,882
    
    
    
    60,051
    
    
    
    55,117OTHER INCOME (EXPENSES)Interest income (Notes 4 and 5)
    
    
    1,539
    
    
    
    1,668
    
    
    
    1,503Foreign exchange gains (losses)  net (Notes 4, 9 and 28)
    
    
    909
    
    
    
    (6,170
    )
    
    
    7,990Equity share in net earnings (losses) of associates and joint ventures
(Notes 4 and 10)
    
    
    2
    
    
    
    (176
    )
    
    
    (11
    )Gains (losses) on derivative financial instruments  net (Notes 4 and 28)
    
    
    (1,006
    )
    
    
    3,115
    
    
    
    (2,849
    )Financing costs  net (Notes 4, 5, 9, 20 and 28)
    
    
    (6,556
    )
    
    
    (6,104
    )
    
    
    (7,088
    )Other income
    
    
    2,069
    
    
    
    1,665
    
    
    
    3,419(3,043
    )
    
    
    (6,002
    )
    
    
    2,964INCOME BEFORE INCOME TAX(Note 4)
    
    
    54,839
    
    
    
    54,049
    
    
    
    58,081PROVISION FOR INCOME TAX(Notes 3, 4 and 7)
    
    
    14,744
    
    
    
    19,073
    
    
    
    18,807NET INCOME FOR THE YEAR(Note 4)
    
    
    40,095
    
    
    
    34,976
    
    
    
    39,274ATTRIBUTABLE TO:Equity holders of PLDT (Notes 4, 6 and 8)
    
    
    39,781
    
    
    
    34,317
    
    
    
    39,289Non-controlling interests (Note 4)
    
    
    314
    
    
    
    659
    
    
    
    (15
    )40,095
    
    
    
    34,976
    
    
    
    39,274Earnings Per Share For The Year Attributable to
Common Equity Holders of PLDT(Note 8)Basic
    
    
    210.38
    
    
    
    179.96
    
    
    
    205.84Diluted
    
    
    210.36
    
    
    
    179.95
    
    
    
    204.88
 See accompanying Notes to Consolidated Financial Statements.
  F-3




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 For the Years Ended December 31, 2009, 2008 and 2007
 (in million pesos)
 2009
    
    
    2008
    
    
    2007NET INCOME FOR THE YEAR(Note 4)
    
    
    40,095
    
    
    
    34,976
    
    
    
    39,274OTHER COMPREHENSIVE INCOME(Note 6)Net gains (losses) on available-for-sale financial assets:
    
    
    3
    
    
    
    (9
    )
    
    
    30Gains (losses) recognized during the year
    
    
    3
    
    
    
    (9
    )
    
    
    32Gains removed from other comprehensive income taken to income
    
    
    
    
    
    
    
    
    
    
    (2
    )Foreign currency translation differences of subsidiaries
    
    
    (657
    )
    
    
    1,490
    
    
    
    (1,849
    )Net transactions on cash flow hedges  net of tax:
    
    
    
    
    
    
    (411
    )
    
    
    406Net (gains) losses on cash flow hedges
    
    
    
    
    
    
    (662
    )
    
    
    662Income tax related to cash flow hedges
    
    
    
    
    
    
    251
    
    
    
    (256
    )Total Other Comprehensive Income  Net of Tax
    
    
    (654
    )
    
    
    1,070
    
    
    
    (1,413
    )TOTAL COMPREHENSIVE INCOME FOR THE YEAR
    
    
    39,441
    
    
    
    36,046
    
    
    
    37,861ATTRIBUTABLE TO:Equity holders of PLDT
    
    
    39,142
    
    
    
    35,322
    
    
    
    37,943Non-controlling interests
    
    
    299
    
    
    
    724
    
    
    
    (82
    )39,441
    
    
    
    36,046
    
    
    
    37,861
 See accompanying Notes to Consolidated Financial Statements.
  F-4




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 For the Years Ended December 31, 2009, 2008 and 2007
 (in million pesos)
 Equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalPortion of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    EquityStock
    
    
    Convertible
    
    
    Capital in
    
    
    
    
    
    
    Other
    
    
    Attributable to
    
    
    Non-Preferred
    
    
    Common
    
    
    Treasury
    
    
    Options
    
    
    Preferred
    
    
    Excess of
    
    
    Retained
    
    
    Comprehensive
    
    
    Equity Holders
    
    
    controllingStock
    
    
    Stock
    
    
    Stock
    
    
    Issued
    
    
    Stock
    
    
    Par Value
    
    
    Earnings
    
    
    Income
    
    
    of PLDT
    
    
    Interests
    
    
    TotalBalances as at January 1, 2007
    
    
    4,424
    
    
    
    942
    
    
    
    
    
    
    
    40
    
    
    
    9
    
    
    
    66,574
    
    
    
    29,361
    
    
    
    (37
    )
    
    
    101,313
    
    
    
    1,540
    
    
    
    102,853Total comprehensive income for the year
(Notes 4, 6 and 8):
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,289
    
    
    
    (1,346
    )
    
    
    37,943
    
    
    
    (82
    )
    
    
    37,861Net income for the year (Notes 4 and 8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,289
    
    
    
    
    
    
    
    39,289
    
    
    
    (15
    )
    
    
    39,274Foreign currency translation differences
of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,782
    )
    
    
    (1,782
    )
    
    
    (67
    )
    
    
    (1,849
    )Net gains on available-for-sale financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    30
    
    
    
    
    
    
    
    30Net transactions on cash flow hedges 
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    406
    
    
    
    406
    
    
    
    
    
    
    
    406Cash dividends (Note 19)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,756
    )
    
    
    
    
    
    
    (28,756
    )
    
    
    (12
    )
    
    
    (28,768
    )Issuance of capital stock  net of conversion
(Note 19)
    
    
    (7
    )
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    379
    
    
    
    
    
    
    
    
    
    
    
    370
    
    
    
    
    
    
    
    370Exercised option shares (Note 25)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31
    )
    
    
    
    
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    73Business combinations and others (Note 13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44
    )
    
    
    (44
    )Balances as at December 31, 2007
    
    
    4,417
    
    
    
    943
    
    
    
    
    
    
    
    9
    
    
    
    6
    
    
    
    67,057
    
    
    
    39,894
    
    
    
    (1,383
    )
    
    
    110,943
    
    
    
    1,402
    
    
    
    112,345Balances as at January 1, 2008
    
    
    4,417
    
    
    
    943
    
    
    
    
    
    
    
    9
    
    
    
    6
    
    
    
    67,057
    
    
    
    39,894
    
    
    
    (1,383
    )
    
    
    110,943
    
    
    
    1,402
    
    
    
    112,345Total comprehensive income for the year
(Notes 4, 6 and 8):
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,317
    
    
    
    1,005
    
    
    
    35,322
    
    
    
    724
    
    
    
    36,046Net income for the year (Notes 4 and 8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,317
    
    
    
    
    
    
    
    34,317
    
    
    
    659
    
    
    
    34,976Foreign currency translation differences
of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,425
    
    
    
    1,425
    
    
    
    65
    
    
    
    1,490Net losses on available-for-sale financial
assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Net transactions on cash flow hedges 
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (411
    )
    
    
    (411
    )
    
    
    
    
    
    
    (411
    )Cash dividends (Note 19)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,034
    )
    
    
    
    
    
    
    (37,034
    )
    
    
    (398
    )
    
    
    (37,432
    )Issuance of capital stock  net of conversion
(Note 19)
    
    
    (2
    )
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    1,270
    
    
    
    
    
    
    
    
    
    
    
    1,266
    
    
    
    
    
    
    
    1,266Exercised option shares (Note 25)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Redemption of shares (Notes 8, 19 and 25)
    
    
    
    
    
    
    
    
    
    
    (4,973
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,973
    )
    
    
    (308
    )
    
    
    (5,281
    )Business combinations and others (Note 13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    18Balances as at December 31, 2008
    
    
    4,415
    
    
    
    947
    
    
    
    (4,973
    )
    
    
    6
    
    
    
    
    
    
    
    68,337
    
    
    
    37,177
    
    
    
    (378
    )
    
    
    105,531
    
    
    
    1,438
    
    
    
    106,969Balances as at January 1, 2009
    
    
    4,415
    
    
    
    947
    
    
    
    (4,973
    )
    
    
    6
    
    
    
    
    
    
    
    68,337
    
    
    
    37,177
    
    
    
    (378
    )
    
    
    105,531
    
    
    
    1,438
    
    
    
    106,969Total comprehensive income for the year
(Notes 4, 6 and 8):
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,781
    
    
    
    (639
    )
    
    
    39,142
    
    
    
    299
    
    
    
    39,441Net income for the year (Notes 4 and 8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,781
    
    
    
    
    
    
    
    39,781
    
    
    
    314
    
    
    
    40,095Foreign currency translation differences
on subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (642
    )
    
    
    (642
    )
    
    
    (15
    )
    
    
    (657
    )Net gains on available-for-sale financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    3Cash dividends (Note 19)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,214
    )
    
    
    
    
    
    
    (39,214
    )
    
    
    (436
    )
    
    
    (39,650
    )Issuance of capital stock  net of conversion
(Note 19)
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12Exercised option shares (Note 25)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Redemption of shares (Notes 8, 19 and 25)
    
    
    
    
    
    
    
    
    
    
    (1,432
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,432
    )
    
    
    (320
    )
    
    
    (1,752
    )Acquisition of non-controlling interests
(Notes 2 and 13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,479
    )
    
    
    
    
    
    
    
    
    
    
    (5,479
    )
    
    
    (1,139
    )
    
    
    (6,618
    )Business combinations and others (Note 13)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    708
    
    
    
    708Balances as at December 31, 2009
    
    
    4,416
    
    
    
    947
    
    
    
    (6,405
    )
    
    
    
    
    
    
    
    
    
    
    62,890
    
    
    
    37,744
    
    
    
    (1,017
    )
    
    
    98,575
    
    
    
    550
    
    
    
    99,125
 See accompanying Notes to Consolidated Financial Statements.
  F-5




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years Ended December 31, 2009, 2008 and 2007
 (in million pesos)
 2009
    
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESIncome before income tax (Note 4)
    
    
    54,839
    
    
    
    54,049
    
    
    
    58,081Adjustments for:Depreciation and amortization (Notes 3, 4 and 9)
    
    
    25,607
    
    
    
    24,709
    
    
    
    28,613Interest on loans and other related items  net (Notes 4, 5, 9, 20 and 28)
    
    
    5,317
    
    
    
    5,083
    
    
    
    5,714Asset impairment (Notes 3, 4, 5, 9, 10, 14, 16, 17, 18, 26 and 28)
    
    
    5,061
    
    
    
    4,180
    
    
    
    1,317Incentive plans (Notes 3, 5 and 25)
    
    
    1,833
    
    
    
    1,281
    
    
    
    1,448Pension benefit costs (Notes 3, 5 and 25)
    
    
    1,306
    
    
    
    725
    
    
    
    1,773Accretion on financial liabilities  net (Notes 5, 20 and 28)
    
    
    1,062
    
    
    
    956
    
    
    
    1,161Losses (gains) on derivative financial instruments  net (Notes 4 and 28)
    
    
    1,006
    
    
    
    (3,115
    )
    
    
    2,849Amortization of intangible assets (Notes 3 and 14)
    
    
    368
    
    
    
    377
    
    
    
    390Equity share in net losses (earnings) of associates and joint ventures (Notes 4 and 10)
    
    
    (2
    )
    
    
    176
    
    
    
    11Gains on disposal of property, plant and equipment (Note 9)
    
    
    (127
    )
    
    
    (534
    )
    
    
    (527
    )Foreign exchange losses (gains)  net (Notes 4, 9 and 28)
    
    
    (909
    )
    
    
    6,170
    
    
    
    (7,990
    )Interest income (Notes 4 and 5)
    
    
    (1,539
    )
    
    
    (1,668
    )
    
    
    (1,503
    )Dividends on preferred stock subject to mandatory redemption (Notes 5, 8 and 20)
    
    
    
    
    
    
    4
    
    
    
    17Others
    
    
    (802
    )
    
    
    830
    
    
    
    (1,242
    )Operating income before changes in assets and liabilities
    
    
    93,020
    
    
    
    93,223
    
    
    
    90,112Decrease (increase) in:Trade and other receivables
    
    
    (1,324
    )
    
    
    (3,003
    )
    
    
    (3,266
    )Inventories and supplies
    
    
    (305
    )
    
    
    (913
    )
    
    
    (76
    )Prepayments
    
    
    (1,333
    )
    
    
    (877
    )
    
    
    1,862Advances and refundable deposits
    
    
    271
    
    
    
    (1,338
    )
    
    
    (307
    )Increase (decrease) in:Accounts payable
    
    
    130
    
    
    
    5,244
    
    
    
    4,763Accrued expenses and other current liabilities
    
    
    8,227
    
    
    
    2,084
    
    
    
    3,558Pension and other employee benefits
    
    
    (9,071
    )
    
    
    (1,125
    )
    
    
    (6,649
    )Customers deposits
    
    
    32
    
    
    
    27
    
    
    
    12Other noncurrent liabilities
    
    
    (46
    )
    
    
    1
    
    
    
    (1,167
    )Net cash generated from operations
    
    
    89,601
    
    
    
    93,323
    
    
    
    88,842Income taxes paid
    
    
    (15,215
    )
    
    
    (15,021
    )
    
    
    (11,424
    )Net cash provided by operating activities
    
    
    74,386
    
    
    
    78,302
    
    
    
    77,418CASH FLOWS FROM INVESTING ACTIVITIESProceeds from:Maturity of short-term investments
    
    
    9,728
    
    
    
    28,476
    
    
    
    15,935Redemption of investment in debt securities
    
    
    4,005
    
    
    
    2,676
    
    
    
    Disposal of property, plant and equipment (Note 9)
    
    
    932
    
    
    
    1,015
    
    
    
    953Disposal of investment properties
    
    
    18
    
    
    
    9
    
    
    
    10Disposal of investments in associates
    
    
    
    
    
    
    3
    
    
    
    Disposal of available-for-sale financial assets
    
    
    
    
    
    
    174
    
    
    
    7Payments for:Acquisition of intangibles (Notes 13 and 14)
    
    
    (21
    )
    
    
    (69
    )
    
    
    (213
    )Notes receivable
    
    
    (80
    )
    
    
    
    
    
    
    Purchase of investment in debt securities (Note 10)
    
    
    (3,572
    )
    
    
    (3,457
    )
    
    
    (264
    )Short-term investments
    
    
    (6,838
    )
    
    
    (21,072
    )
    
    
    (21,429
    )Purchase of subsidiaries and non-controlling interests  net of cash acquired (Note 13)
    
    
    (8,989
    )
    
    
    (743
    )
    
    
    (1,687
    )Purchase of investments in associates (Note 10)
    
    
    (18,070
    )
    
    
    
    
    
    
    (601
    )Available-for-sale financial assets
    
    
    
    
    
    
    (206
    )
    
    
    Interest received
    
    
    1,352
    
    
    
    1,461
    
    
    
    1,218Decrease (increase) in advances and refundable deposits
    
    
    472
    
    
    
    (78
    )
    
    
    (424
    )Interest paid  capitalized to property, plant and equipment (Notes 4, 5, 9, 20 and 28)
    
    
    (691
    )
    
    
    (778
    )
    
    
    (542
    )Additions to property, plant and equipment (Notes 4 and 9)
    
    
    (27,378
    )
    
    
    (24,425
    )
    
    
    (24,282
    )Net cash used in investing activities
    
    
    (49,132
    )
    
    
    (17,014
    )
    
    
    (31,319
    )
  F-6




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS ( continued)  For the Years Ended December 31, 2009, 2008 and 2007
(in million pesos)
 2009
    
    
    2008
    
    
    2007CASH FLOWS FROM FINANCING ACTIVITIESProceeds from availment of long-term debt (Note 20)
    
    
    41,989
    
    
    
    17,912
    
    
    
    7,647Availment of long-term financing for capital expenditures
    
    
    7,993
    
    
    
    6,614
    
    
    
    8,746Proceeds from notes payable (Note 20)
    
    
    2,000
    
    
    
    660
    
    
    
    502Proceeds from issuance of capital stock
    
    
    18
    
    
    
    8
    
    
    
    76Payments of obligations under finance lease
    
    
    (24
    )
    
    
    (474
    )
    
    
    (199
    )Payments of debt issuance costs (Note 20)
    
    
    (173
    )
    
    
    (149
    )
    
    
    (54
    )Payments of notes payable (Note 20)
    
    
    (270
    )
    
    
    (678
    )
    
    
    (193
    )Payments for redemption of shares (Notes 8, 19 and 28)
    
    
    (1,752
    )
    
    
    (5,281
    )
    
    
    (15
    )Settlements of derivative financial instruments (Note 28)
    
    
    (1,913
    )
    
    
    (2,891
    )
    
    
    (2,066
    )Interest paid  net of capitalized portion (Notes 5, 20 and 28)
    
    
    (5,239
    )
    
    
    (5,167
    )
    
    
    (5,891
    )Settlement of long-term financing for capital expenditures
    
    
    (4,678
    )
    
    
    (5,519
    )
    
    
    (6,837
    )Payments of long-term debt (Note 20)
    
    
    (18,958
    )
    
    
    (13,375
    )
    
    
    (18,065
    )Cash dividends paid (Note 19)
    
    
    (39,286
    )
    
    
    (37,124
    )
    
    
    (28,470
    )Net cash used in financing activities
    
    
    (20,293
    )
    
    
    (45,464
    )
    
    
    (44,819
    )EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
    
    
    (326
    )
    
    
    413
    
    
    
    (703
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    4,635
    
    
    
    16,237
    
    
    
    577CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    33,684
    
    
    
    17,447
    
    
    
    16,870CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    
    38,319
    
    
    
    33,684
    
    
    
    17,447
 See accompanying Notes to Consolidated Financial Statements.
  F-7




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    Corporate Information
        F-8




---



##### Table of Contents



2.
    
    Summary of Significant Accounting Policies
 Basis of Preparation
   Basis of Consolidation
  2009
    
    
    2008Place of
    
    
    
    Percentage of OwnershipName of Subsidiary
    
    Incorporation
    
    Principal Business Activity
    
    Direct
    
    
    Indirect
    
    
    Direct
    
    
    IndirectWirelessSmart:
    
    Philippines
    
    Cellular mobile services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    Smart Broadband, Inc., or SBI, and Subsidiaries, or SBI Group
    
    Philippines
    
    Internet broadband distribution
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Primeworld Digital System, Inc., or PDSI
    
    Philippines
    
    Cellular and internet broadband distribution services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    I-Contacts Corporation, or I-Contacts
    
    Philippines
    
    Customer interaction solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Wolfpac Mobile, Inc., or Wolfpac
    
    Philippines
    
    Mobile applications development and services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Wireless Card, Inc., or WCI
    
    Philippines
    
    Promotion of the sale and/or patronage of debit and/or charge cards
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Smarthub, Inc., or SHI
    
    Philippines
    
    Development and sale of software, maintenance and support services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Smart Money Holdings Corporation, or SMHC:
    
    Cayman Islands
    
    Investment company
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Smart Money, Inc., or SMI
    
    Cayman Islands
    
    Mobile commerce solutions marketing
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Telecoms Solutions, Inc., or TSI
    
    Mauritius
    
    Mobile commerce platforms
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Far East Capital Limited and Subsidiary
    
    Cayman Islands
    
    Cost effective offshore financing and risk management activities for Smart
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0PH Communications Holdings Corporation, or PHC
    
    Philippines
    
    Investment company
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Francom Holdings, Inc., or FHI:
    
    Philippines
    
    Investment company
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Connectivity Unlimited Resource Enterprise, Inc., or CURE
    
    Philippines
    
    Cellular mobile services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Chikka Holdings Limited, or Chikka, and Subsidiaries, or Chikka Group
    
    British Virgin Islands
    
    Mobile applications development and services
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    Pilipino Telephone Corporation, or Piltel, and Subsidiaries, or Piltel Group*
    
    Philippines
    
    Investment company
    
    
    
    
    
    
    99.5
    
    
    
    
    
    
    
    92.5SmartConnect Holdings Pte. Ltd., or SCH:
    
    Singapore
    
    Investment company
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0SmartConnect Global Pte. Ltd., or SGP
    
    Singapore
    
    International trade of satellites and Global System for Mobile Communication, or GSM, enabled global telecommunications
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.03rd Brand Pte. Ltd., or 3rd Brand
    
    Singapore
    
    Solutions and systems integration services
    
    
    
    
    
    
    85.0
    
    
    
    
    
    
    
    85.0Blue Ocean Wireless, or BOW
    
    Isle of Man
    
    Delivery of GSM communication capability for the maritime sector
    
    
    
    
    
    
    51.0
    
    
    
    
    
    
    
    28.3Telesat, Inc., or Telesat
    
    Philippines
    
    Satellite communications services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    ACeS Philippines Cellular Satellite Corporation, or ACeS Philippines
    
    Philippines
    
    Satellite information and messaging services
    
    
    88.5
    
    
    
    11.5
    
    
    
    88.5
    
    
    
    11.5Mabuhay Satellite Corporation, or Mabuhay Satellite
    
    Philippines
    
    Satellite communications services
    
    
    67.0
    
    
    
    
    
    
    
    67.0
    
    
    
    
  F-9




---



##### Table of Contents



2009
    
    
    2008Place of
    
    
    
    Percentage of OwnershipName of Subsidiary
    
    Incorporation
    
    Principal Business Activity
    
    Direct
    
    
    Indirect
    
    
    Direct
    
    
    IndirectFixed LinePLDT Clark Telecom, Inc., or ClarkTel
    
    Philippines
    
    Telecommunications services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    PLDT Subic Telecom, Inc., or SubicTel
    
    Philippines
    
    Telecommunications services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    PLDT Global Corporation, or PLDT Global, and Subsidiaries, or PLDT Global Group
    
    British Virgin Islands
    
    Telecommunications services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    Smart-NTT Multimedia, Inc., or SNMI
    
    Philippines
    
    Data and network services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    PLDT-Philcom, Inc. (formerly known as Philcom Corporation), or Philcom, and Subsidiaries, or Philcom Group
    
    Philippines
    
    Telecommunications services
    
    
    100.0
    
    
    
    
    
    
    
    
    
    
    
    PLDT-Maratel, Inc., or Maratel
    
    Philippines
    
    Telecommunications services
    
    
    97.8
    
    
    
    
    
    
    
    97.5
    
    
    
    Bonifacio Communications Corporation, or BCC
    
    Philippines
    
    Telecommunications, infrastructure and related value-added services
    
    
    75.0
    
    
    
    
    
    
    
    75.0
    
    
    
    Information and Communications Technology, or ICTePLDT, Inc., or ePLDT:
    
    Philippines
    
    Information and communications infrastructure for Internet-based services, e-commerce, customer interaction solutions
and IT-related services
    
    
    100.0
    
    
    
    
    
    
    
    100.0
    
    
    
    SPi Technologies, Inc., or SPi, and Subsidiaries, or SPi Group
    
    Philippines
    
    Knowledge processing solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0ePLDT Ventus, Inc., or Ventus
    
    Philippines
    
    Customer interaction solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Vocativ Systems, Inc., or Vocativ
    
    Philippines
    
    Customer interaction solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Parlance Systems, Inc., or Parlance
    
    Philippines
    
    Customer interaction solutions
    
    
    
    
    
    
    100.0
    
    
    
    
    
    
    
    100.0Infocom Technologies, Inc., or Infocom
    
    Philippines
    
    Internet access services
    
    
    
    
    
    
    99.6
    
    
    
    
    
    
    
    99.6BayanTrade, Inc. (formerly BayanTrade Dotcom, Inc.), or BayanTrade, and Subsidiaries, or BayanTrade Group
    
    Philippines
    
    Internet-based purchasing, IT consulting  and professional services
    
    
    
    
    
    
    93.5
    
    
    
    
    
    
    
    10.8Digital Paradise Thailand, or DigiPar Thailand
    
    Thailand
    
    Internet access services
    
    
    
    
    
    
    87.5
    
    
    
    
    
    
    
    87.5netGames, Inc., or netGames
    
    Philippines
    
    Publisher of online games
    
    
    
    
    
    
    80.0
    
    
    
    
    
    
    
    80.0Digital Paradise, Inc., or Digital Paradise
    
    Philippines
    
    Internet access services
    
    
    
    
    
    
    75.0
    
    
    
    
    
    
    
    75.0Level Up! (Philippines), Inc., or Level Up!
    
    Philippines
    
    Publisher of online games
    
    
    
    
    
    
    60.0
    
    
    
    
    
    
    
    60.0
 
 *
    
    On August 17, 2009, Smart acquired the cellular mobile telephone business of Piltel. Basis of Consolidation from January 1, 2009
      Basis of Consolidation prior to January 1, 2009
   F-10




---



##### Table of Contents



Piltels Share Buyback Program
    Acquisition of Debt and Equity of Philcom
  Note 13  Business Combinations and Acquisition of Non-Controlling Interests
   F-11




---



##### Table of Contents



Sale/Transfer of Piltels Cellular Mobile Telephone Business/Assets to Smart
and Smarts Tender Offer to Piltels Non-controlling Interest
 Talk N Text Talk N Text Smart Buddy
 Note 13  Business Combinations and Acquisition of Non-Controlling Interests
 Additional Investment of ePLDT in BayanTrade
 Note 13  Business
Combinations and Acquisition of Non-Controlling Interests
   F-12




---



##### Table of Contents



Additional Investment of Smart in BOW
 Note 10  Investments in Associates and Joint Ventures Note 13  Business Combinations and Acquisition of Non-Controlling Interests
 SPis Acquisition of Laguna Medical Systems, Inc., or Laguna Medical
 Note 13  Business Combinations and
Acquisition of Non-Controlling Interests, Note 21  Deferred Credits and Other Noncurrent
Liabilities Note 23  Accrued Expenses and Other Current Liabilities
  Smarts Acquisition of PDSI
 Note 13  Business Combinations and
Acquisition of Non-Controlling Interests
  F-13




---



##### Table of Contents



Smarts Acquisition of Chikka
 Note 13  Business Combinations and Acquisition of Non-Controlling Interests
 Statement of Compliance
  Changes in Accounting Policy and Disclosures
  
    
    IFRS 2, Share-based Payment  Vesting Condition and Cancellations;
 
    
    Revised IFRS 3, Business Combinations and International Accounting Standards, or
IAS, 27, Consolidated and Separate Financial Statements (effective July 1, 2009 but
early adopted by the PLDT Group effective January 1, 2009) including consequential
amendments to IFRS 7, Financial Instruments: Disclosures, IAS 21, The Effects of
Changes in Foreign Exchange Rates, IAS 28, Investments in Associates, IAS 31, Interests
in Joint Venturesand IAS 39, Financial Instruments: Recognition and Measurement;
 
    
    Amendments to IFRS 7, Financial Instruments: Disclosures  Improving Disclosures
about Financial Instruments;
 
    
    IFRS 8, Operating Segments;
 
    
    Amendments to IAS 1, Presentation of Financial Statements;
 
    
    Revised IAS 23, Borrowing Costs;
 
    
    Amendments to IAS 27, Consolidated and Separate Financial Statements  Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or Associate;
 
    
    Amendments to IAS 32, Financial Instruments: Presentationand IAS 1, Presentation of
Financial Statements  Puttable Financial Instruments and Obligations Arising on
Liquidation;
 
    
    IFRIC 13, Customer Loyalty Programmes;
 
    
    IFRIC 15, Agreement for Construction of Real Estate;
 
    
    IFRIC 16, Hedges of a Net Investment in a Foreign Operation;
 
    
    IFRIC 18, Transfer of Assets from Customers;and
 
    
    Improvements to IFRSs (2008).
  
    
    IFRS 2, Share-based Payment  Vesting Condition and Cancellations.The standard has
been revised to clarify the definition of a vesting condition and prescribes the
treatment of an award that is effectively cancelled. It defines a vesting condition as
a condition that includes an explicit or implicit requirement to provide services. It
further requires non-vesting conditions to be treated in a similar fashion to market
conditions. Failure to satisfy a non-vesting condition that is within the control of
either the entity or the counterparty is accounted for as cancellation. However,
failure to satisfy a non-vesting condition that is beyond the control of either party
does not give rise to a cancellation. The adoption of IFRS 2revisions did not have
any impact on our consolidated financial position and performance.
  F-14




---



##### Table of Contents




    
    Revised IFRS 3, Business CombinationsandIAS 27, Consolidated and Separate
Financial Statements.The revised IFRS 3was adopted on January 1, 2009. It
introduces significant changes in the accounting for business combinations occurring
after January 1, 2009. Changes affect the valuation of non-controlling interests, the
accounting for transaction costs, the initial recognition and subsequent measurement of
a contingent consideration and business combination achieved in stages. These changes
impact the amount of goodwill recognized, the reported results in the year that an
acquisition occurs, and future reported results.
 IAS 27 IAS 27
 Note 13  Business
Combinations and Acquisition of Non-Controlling Interests
 
    
    Amendments to IFRS 7, Financial Instruments: Disclosures  Improving Disclosures
about Financial Instruments.These amendments to IFRS 7introduce enhanced disclosures
about fair value measurement and liquidity risk. The amendments to IFRS 7require fair
value measurements for each class of financial instruments recorded and measured at
fair value are to be disclosed by the source of inputs, using the following three-level
hierarchy: (a) quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1); (b) inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (as prices) or indirectly
(derived from prices) (Level 2); and (c) inputs for the asset or liability that are not
based on observable market data (unobservable inputs) (Level 3). The level within
which the fair value measurement is categorized must be based on the lowest level of
input to the instruments valuation that is significant to the fair value measurement
in its entirety. In addition, a reconciliation between the beginning and ending
balance for Level 3 fair value measurements is now required, as well as significant
transfers between levels in the fair value hierarchy.
 IFRS 7
 IFRS 7 Note 28  Financial
Assets and Liabilities
 
    
    IFRS 8, Operating Segments.IFRS 8replaces IAS 14, Segment Reportingand adopts a
full management approach in identifying, measuring and disclosing the results of an
entitys operating segments. The information required to report is similar to what
management uses internally for evaluating the performance of operating segments and
allocating resources to those segments. In cases where such information is different
from those required to be reported in the consolidated statement of financial position
and consolidated income statement, the entity needs to provide explanations and
reconciliations of the differences. The PLDT Group concluded that the operating
segments determined in accordance with IFRS 8are the same as the business segments
previously identified under IAS 14. Additional disclosures required by the new
standard are shown in Note 4  Operating Segment Information.
  F-15




---



##### Table of Contents




    
    Amendments to IAS 1, Presentation of Financial Statements.The revised standard
separates owner and non-owner changes in equity. The statement of changes in equity
includes only details of transactions with owner, while non-owner changes in equity are
presented with a reconciliation for each component of equity. In addition, these
amendments introduce a new statement of comprehensive income that combines all items of
income and expenses recognized in the profit or loss together with other comprehensive
income. Entities may choose to present all items in one statement, or to present two
linked statements, a separate income statement and a statement of comprehensive income.
These amendments also prescribe additional requirements in the presentation of the
statement of financial position and owners equity as well as additional disclosures.
The PLDT Group has elected to present two linked statements together with additional
presentation and disclosures provided on the face of the financial statements or notes,
where applicable. In addition, we also changed the caption consolidated balance sheet
to consolidated statement of financial position.
 
    
    Revised IAS 23, Borrowing Costs.The standard has been revised to require
capitalization of borrowing costs when such costs relate to construction or production
of a qualifying asset. A qualifying asset is an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale. The adoption of
revised IAS 23did not have any impact in our consolidated financial statements as we
previously capitalized borrowing costs eligible for capitalization.
 
    
    Amendments to IAS 27, Consolidated and Separate Financial Statements  Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or Associate.These amendments
prescribe changes in respect of the holding companies separate financial statements
including: (a) the deletion of cost method, making the distinction between pre- and
post-acquisition profits no longer required; and (b) in cases of reorganizations where
a new parent is inserted above an existing parent of the group (subject to meeting
specific requirements), the cost of the subsidiary is the previous carrying amount of
its share of equity items in the subsidiary rather than its fair value. All dividends
will be recognized in profit or loss. However, the payment of such dividends requires
the entity to consider whether there is an indicator of impairment. The adoption of
these amendments to IAS 27is applicable only to PLDTs separate financial statements
and did not have any impact in our consolidated financial statements.
 
    
    Amendments to IAS 32, Financial Instruments: PresentationandIAS 1, Presentation of
Financial Statements  Puttable Financial Instruments and Obligations Arising on
Liquidation.These amendments specify, among others, that puttable financial
instruments will be classified as equity if they have all of the following specified
features: (a) the instrument entitles the holder to require the entity to repurchase or
redeem the instrument (either on an ongoing basis or on liquidation) for a pro rata
share of the entitys net assets; (b) the instrument is in the most subordinate class
of instruments, with no priority over other claims to the assets of the entity on
liquidation; (c) all instruments in the subordinate class have identical features; (d)
the instrument does not include any contractual obligation to pay cash or financial
assets other than the holders right to a pro rata share of the entitys net assets;
and (e) the total expected cash flows attributable to the instrument over its life are
based substantially on the profit or loss, a change in recognized net assets, or a
change in the fair value of the recognized and unrecognized net assets of the entity
over the life of the instrument. The adoption of these amendments to IAS 32and IAS 1
did not have any impact in our consolidated financial statements.
 
    
    IFRIC 13, Customer Loyalty Programmes.This interpretation requires customer
loyalty award credits to be accounted for as a separate component of the sales
transaction in which they are granted and therefore part of the fair value of the
consideration received is allocated to the award credits and realized as income over
the period that the award credits are redeemed or expired. The adoption of this new
interpretation did not have significant impact on our financial position and financial
performance. Our accounting policies were updated to conform with the requirements of
IFRIC 13.
  F-16




---



##### Table of Contents




    
    IFRIC 15, Agreements for Construction of Real Estate.This interpretation covers
accounting for revenue and associated expenses by entities that undertake the
construction of real estate directly or through subcontractors. This interpretation
requires that revenue on construction of real estate be recognized only upon
completion, except when such contract qualifies as construction contract to be
accounted for under IAS 11, Construction Contracts, or involves rendering of services
in which case revenue is recognized based on stage of completion. Contracts involving
provision of services with the construction materials and where the risks and reward of
ownership are transferred to the buyer on a continuous basis will also be accounted for
based on stage of completion. The adoption of this new interpretation did not have any
impact in our consolidated financial statements as we are not engaged in construction
of real estate.
 
    
    IFRIC 16, Hedges of a Net Investment in a Foreign Operation.This interpretation
provides guidance on identifying foreign currency risks that qualify for hedge
accounting in the hedge of net investment, where within the group the hedging
instrument can be held in the hedge of a net investment; and how an entity should
determine the amount of foreign currency gains or losses, relating to both the net
investment and the hedging instrument, to be reclassified to profit or loss from the
foreign currency translation reserve on disposal of the net investment. The adoption
of this new interpretation did not have any impact in our consolidated financial
statements as we do not enter in such type of hedge accounting transactions.
 
    
    IFRIC 18, Transfer of Assets from Customers.IFRIC 18provides guidance to all
entities that receive from customers an item of property, plant and equipment or cash
for the acquisition or construction of such item and such item is used to connect the
customer to a network or to provide ongoing access to a supply of goods or services, or
both. The interpretation requires an assessment of whether an item of property, plant
and equipment or cash for the acquisition or construction of such item meets the
definition of an asset. If the terms of the agreement are within the scope of this
interpretation, a transfer of an item of property, plant and equipment would be an
exchange for dissimilar goods or services. Consequently, the exchange is regarded as a
transaction which generates revenue. This interpretation is applied prospectively to
transfer of assets from customers received in periods beginning on or after July 1,
2009. Entities may however choose to apply this interpretation to earlier periods,
provided valuations can be obtained at the time the transfer occurred. The adoption of
this interpretation did not have any impact in our consolidated financial statements.
 Improvements to IFRSs
  
    
    IAS 1, Presentation of Financial Statements.Assets and liabilities classified as
held-for-trading are not automatically classified as current in the statement of
financial position.
 
    
    IAS 16, Property, Plant and Equipment.The amendment replaces the term net selling
price with fair value less costs to sell, to be consistent with IFRS 5, Noncurrent
Assets Held-for-Sale and Discontinued Operationsand IAS 36, Impairment of Asset.
Items of property, plant and equipment held for rental that are routinely sold in the
ordinary course of business after rental, are transferred to inventory when rental
ceases and they are held for sale. Proceeds of such sales are subsequently shown as
revenue. Cash payments on initial recognition of such items, the cash receipts from
rents and subsequent sales are all shown as cash flows from operating activities.
 
    
    IAS 18, Revenue.The amendment provides additional guidance (which accompanies the
standard) to determine whether an entity is acting as a principal or as agent. The
features indicating an entity is acting as a principal are whether the entity: (a) has
primary responsibility for providing the goods or services; (b) has inventory risk; (c) has discretion in establishing prices; and (d) bears the
credit risk.
  F-17




---



##### Table of Contents




    
    IAS 19, Employee Benefits.Revises the definition of past service costs to
include reductions in benefits related to past services (negative past service costs)
and to exclude reductions in benefits related to future services that arise from plan
amendments. Amendments to plans that result in a reduction in benefits related to
future services are accounted for as a curtailment. Revises the definition of return
on plan assets to exclude plan administration costs if they have already been included
in the actuarial assumptions used to measure the defined benefit obligation. Revises
the definition of short-term and other long-term employee benefits to focus on the
point in time at which the liability is due to be settled. Deletes the reference to
the recognition of contingent liabilities to ensure consistency with IAS 37,
Provisions, Contingent Liabilities and Contingent Assets.
 
    
    IAS 23, Borrowing Costs.Revises the definition of borrowing costs to consolidate
the types of items that are considered components of borrowing costs, i.e.,
components of the interest expense calculated using the effective interest rate method.
 
    
    IAS 28, Investments in Associates.If an associate is accounted for at fair value
in accordance with IAS 39,only the requirement of IAS 28to disclose the nature and extent of any
significant restrictions on the ability of the associate to transfer funds to the entity
in the form of cash or repayment of loans will apply. An investment in an associate is
a single asset for the purpose of conducting the impairment test. Therefore, any
impairment test is not separately allocated to the goodwill included in the investment
balance.
 
    
    IAS 31, Interests in Joint Ventures.If a joint venture is accounted for at fair
value, in accordance with IAS 39, only the requirements of IAS 31to disclose the
commitments of the venture and the joint venture, as well as summary financial
information about the assets, liabilities, income and expense will apply.
 
    
    IAS 36, Impairment of Assets.When discounted cash flows are used to estimate fair
value less cost to sell, additional disclosure is required about the discount rate,
consistent with disclosures required when the discounted cash flows are used to
estimate value in use.
 
    
    IAS 38, Intangible Assets.Expenditure on advertising and promotional activities is
recognized as an expense when the entity either has the right to access the goods or
has received the services. Advertising and promotional activities now specifically
include mail order catalogues. Deletes references to there being rarely, if ever,
persuasive evidence to support an amortization method for finite life intangible assets
that results in a lower amount of accumulated amortization than under the straight-line
method, thereby effectively allowing the use of the unit of production method.
 
    
    IAS 39, Financial Instruments: Recognition and Measurement.Changes in
circumstances relating to derivatives  specifically derivatives designated or
de-designated as hedging instruments after initial recognition are not
reclassifications. Removes the reference to a segment when determining whether an
instrument qualifies as a hedge. Requires the use of the revised effective interest
rate (rather than the original effective interest rate) when remeasuring a debt
instrument on the cessation of fair value hedge accounting.
 
    
    IAS 40, Investment Property.Revises the scope (and the scope of IAS 16) to include
property that is being constructed or developed for future use as an investment
property. Where an entity is unable to determine the fair value of an investment
property under construction, but expects to be able to determine its fair value on
completion, the investment under construction will be measured at cost until such time
as fair value can be determined or construction is complete.
   F-18




---



##### Table of Contents



Significant Accounting Policies
 Business Combinations and Goodwill
 Business combinations from January 1, 2009
    IAS 39
    Business combinations prior to January 1, 2009
       F-19




---



##### Table of Contents



Investments in Associates
       Investments in Joint Ventures
    Foreign Currency Transactions and Translations
   F-20




---



##### Table of Contents



Financial Assets
 Initial recognition
      F-21




---



##### Table of Contents



Subsequent measurement
  Financial assets at fair value through profit or loss
    Loans and receivables
  Held-to-maturity investments
   F-22




---



##### Table of Contents



Available-for-sale financial assets
  Financial Liabilities
 Initial recognition
    Subsequent measurement
  Financial liabilities at fair value through profit or loss
   Other financial liabilities
   F-23




---



##### Table of Contents



Offsetting of financial instruments
  Fair value of financial instruments
  Amortized cost of financial instruments
  Day 1 profit or loss
  Impairment of Financial Assets
  Financial assets carried at amortized cost
   F-24




---



##### Table of Contents



Available-for-sale financial assets
    Derecognition of Financial Assets and Liabilities
 Financial assets
    F-25




---



##### Table of Contents



Financial liabilities
   Derivative Financial Instruments and Hedging
 Initial recognition and subsequent measurement
   Note 28  Financial Assets and Liabilities
    F-26




---



##### Table of Contents



Fair value hedges
    Cash flow hedges
    Hedges of a net investment in a foreign operation
  Convertible Preferred Stock
 Philippine peso-denominated
   F-27




---



##### Table of Contents



Foreign currency-denominated
  Property, Plant and Equipment
   Note 9  Property, Plant and Equipment
   Borrowing Costs
    F-28




---



##### Table of Contents



Asset Retirement Obligations
  Investment Properties
     Intangible Assets
       F-29




---



##### Table of Contents



Research and Development Costs
   Inventories and Supplies
   Impairment of Non-Financial Assets
 Property, plant and equipment
    F-30




---



##### Table of Contents



Goodwill
   Intangible assets
  Investments in associates and joint ventures
  Cash and Cash Equivalents
  Short-term Investments
  Trade and Other Receivables
     F-31




---



##### Table of Contents



Revenue Recognition
  Service Revenues
 Subscriptions
  Air time, traffic and value-added services
  Knowledge processing solutions and customer interaction solutions
  Incentives
  Smart Money Smart Gold, Smart Buddy SmartBro Smart Money Smart Load Smart Money
  F-32




---



##### Table of Contents



IFRIC 13
 Non-service Revenues
 Handset and equipment sales
  Interest income
  Expenses
  Provisions
  Retirement Benefits
 Defined benefit pension plans
    F-33




---



##### Table of Contents



Defined contribution plans
  Share-Based Payment Transactions
  Equity-settled transactions
 Note 25  Share-based
Payments and Employee Benefits
     Note 8  Earnings Per Common Share
  F-34




---



##### Table of Contents



Cash-settled transactions
  Leases
     Income Taxes
 Current income tax
  Deferred income tax
     F-35




---



##### Table of Contents



Contingencies
  Events After the End of the Reporting Period
  Equity
      F-36




---



##### Table of Contents



New Accounting Standards, Interpretations and Amendments to Existing Standards Effective
Subsequent to December 31, 2009
  Effective 2010
 Amendment to IFRS 2, Share-based Payment.
 IFRS 5, Noncurrent Assets Held-for-Sale and Discontinued Operations. IFRS 5
 Amendment to IAS 39, Financial Instruments: Recognition and Measurement  Eligible Hedged Items. IAS 39
 IFRIC 17, Distributions of Non-Cash Assets to Owners.
 Improvements to IFRSs
  
    
    IFRS 2, Share-based Payment.The amendment clarifies that the contribution of a
business on formation of a joint venture and combinations under common control are not
within the scope of IFRS 2even though they are out of scope of Revised IFRS 3.
 
    
    IFRS 5, Noncurrent Assets Held-for-Sale and Discontinued Operations.The amendment
clarifies that the disclosures required in respect of noncurrent assets or disposal
groups classified as held for sale or discontinued operations are only those set out in
IFRS 5. The disclosure requirements of other IFRSs only apply if specifically required
for such noncurrent assets or discontinued operations.
  F-37




---



##### Table of Contents



IAS 1 IAS 1
 
    
    IFRS 8, Operating Segments.The amendment clarifies that segment assets and
liabilities need only be reported when those assets and liabilities are included in
measures that are used by the chief operating decision maker.
 
    
    IAS 1, Presentation of Financial Statements.The terms of a liability that could
result, at anytime, in its settlement by the issuance of equity instruments at the
option of the counterparty do not affect its classification.
 
    
    IAS 7, Statement of Cash Flows.The amendment explicitly states that only
expenditure that results in a recognized asset can be classified as a cash flow from
investing activities.
 
    
    IAS 17, Leases.The amendment removes the specific guidance on classifying land as
lease so that only the general guidance remains.
 
    
    IAS 36, Impairment of Assets.The amendment clarifies that the largest unit
permitted for allocating goodwill acquired in a business combination is the operating
segment, as defined in IFRS 8, before aggregation for reporting purposes.
 
    
    IAS 38, Intangible Assets.The amendment clarifies that if an intangible asset
acquired in a business combination is identifiable only with another intangible asset,
the acquirer may recognize the group of intangible assets as a single asset provided
the individual assets have similar useful lives. It also clarifies that the valuation
techniques presented for determining the fair value of intangible assets acquired in a
business combination that are not traded in active markets are only examples and are
not restrictive on the methods that can be used.
 
    
    IAS 39, Financial Instruments: Recognition and Measurement.The amendment clarifies
that a prepayment option is considered closely related to the host contract when the
exercise price of a prepayment option reimburses the lender up to the approximate
present value of lost interest for the remaining term of the host contract. The
amendment also clarifies that the scope exemption for contracts between an acquirer and
a vendor in a business combination to buy or sell an acquiree at a future date, applies
only to binding forward contracts, and not derivative contracts where further actions
by either party are still to be taken. It also clarifies that gains or losses on cash
flow hedges of a forecast transaction that subsequently results in the recognition of a
financial instrument or on cash flow hedges of recognized financial instruments should
be reclassified in the year that the hedged forecast cash flows affect profit or loss.
 
    
    IFRIC 9, Reassessment of Embedded Derivatives.The improvement clarifies that it
does not apply to possible reassessment, at the date of acquisition, to embedded
derivatives in contracts acquired in a combination between entities or businesses under
common control or the formation of a joint venture.
 
    
    IFRIC 16, Hedges of a Net Investment in a Foreign Operation.The improvement states
that, in a hedge of a net investment in a foreign operation, qualifying hedging
instruments may be held by any entity or entities within the group, including the
foreign operation itself, as long as the designation, documentation and effectiveness
requirements of IAS 39that relate to a net investment hedge, are satisfied.
 Effective 2011
 Amendment to IFRIC 14, Prepayments of a Minimum Funding Requirement.
  F-38




---



##### Table of Contents



IFRIC 19, Extinguishing Financial Liabilities with Equity Instrument. IFRIC 19
 Amendments to IAS 24, Related Party Disclosures.
 Amendment to IAS 32, Financial Instruments: Presentation  Classification of Rights Issues.
 Effective 2013
 IFRS 9, Financial Instruments (Phase I). IFRS 9 IFRS IAS
 IFRS 9 (Phase I) IAS 39.
   IFRS 9 IFRS 9
  F-39




---



##### Table of Contents



3.
    
    Managements Use of Judgments, Estimates and Assumptions
  Judgments
  Determination of functional currency
   Leases
 IAS 17 Note 20 -
Interest-bearing Financial Liabilities, Note 26  Contractual Obligations and Commercial
Commitments Note 28  Financial Assets and Liabilities
 Estimates and Assumptions
  Asset impairment
   F-40




---



##### Table of Contents



Note 4  Operating Segment Information, Note 5  Income and Expenses Note 10  Investments in Associates and Joint Ventures
 Notes 9, 10, 14, 16, 17 18,
 Estimating useful lives of property, plant and equipment
  Note 4  Operating Segment Information Note 9  Property, Plant and
Equipment
 Determining the fair value of investment properties
  Note 12  Investment
Properties
  F-41




---



##### Table of Contents



Goodwill and intangible assets
   Note 13  Business Combinations and
Acquisition of Non-Controlling Interests Note 14  Goodwill and Intangible Assets
 Recognition of deferred income tax assets and liabilities
  Note 4  Operating Segment Information Note 7  Income Tax
 Estimating allowance for doubtful accounts
   F-42




---



##### Table of Contents



Note 4  Operating Segment Information, Note 5  Income and
Expenses, Note 16  Trade and Other Receivables Note 28  Financial Assets and Liabilities
 Estimating net realizable value of inventories and supplies
  Note 4  Operating Segment Information, Note 5
- Income and Expenses Note 17  Inventories and Supplies
 Estimation of pension benefit costs and retirement benefits
 Note 25  Share-based Payments and
Employee Benefits
 Note 5  Income and Expenses, Note 18 -
Prepayments Note 25  Share-based Payments and Employee Benefits
  F-43




---



##### Table of Contents



Share-based payment transactions
 Note 25  Share-based Payments and Employee Benefits Note 5  Income and Expenses, Note 23  Accrued Expenses and Other Current Liabilities Note
25  Share-based Payments and Employee Benefits
 Provision for asset retirement obligations
 Note 21  Deferred Credits
and Other Noncurrent Liabilities
 Provision for legal contingencies and tax assessments
 Note 27  Provisions and Contingencies
 Revenue recognition
      F-44




---



##### Table of Contents



Determination of fair values of financial assets and liabilities
  Note 28  Financial Assets and Liabilities
 4.
    
    Operating Segment Information
   
    
    Wireless  wireless telecommunications services provided through our cellular service
providers namely, Smart, Piltel (on August 17, 2009, Smart acquired the cellular business
of Piltel) and CURE; SBI, BOW, Airborne Access and PDSI, our wireless broadband service
providers; Wolfpac and Chikka Group, our wireless content operators; and Mabuhay Satellite
and ACeS Philippines, our satellite operators;
 
    
    Fixed Line  fixed line telecommunications services primarily provided by PLDT. We also
provide fixed line services through PLDTs subsidiaries ClarkTel, SubicTel, Philcom,
Maratel, SBI, PDSI, BCC and PLDT Global, all of which together account for approximately 4%
of our consolidated fixed line subscribers; and
 
    
    ICT  information and communications infrastructure and services for internet
applications, internet protocol-based solutions and multimedia content delivery provided by
ePLDT and BayanTrade Group; knowledge processing solutions provided by the SPi Group;
customer interaction solutions provided under the umbrella brand name ePLDT Ventus,
including Ventus, Parlance and Vocativ; and internet access and online gaming services
provided by Infocom, Digital Paradise, netGames and Level Up!; and e-commerce, and
IT-related services provided by other investees of ePLDT, as discussed in Note 10 -
Investments in Associates and Joint Ventures.
   F-45




---



##### Table of Contents



F-46




---



##### Table of Contents



Inter-segmentWireless
    
    
    Fixed Line
    
    
    ICT
    
    
    Transactions
    
    
    Consolidated(in million pesos)As at and for the year ended December 31, 2009RevenuesExternal customer:
    
    
    96,560
    
    
    
    41,318
    
    
    
    10,115
    
    
    
    
    
    
    
    147,993Service revenues
    
    
    94,865
    
    
    
    41,085
    
    
    
    9,697
    
    
    
    
    
    
    
    145,647Non-service revenues (Note 5)
    
    
    1,695
    
    
    
    233
    
    
    
    418
    
    
    
    
    
    
    
    2,346Inter-segment transactions:
    
    
    964
    
    
    
    10,055
    
    
    
    1,434
    
    
    
    (12,453
    )
    
    
    Service revenues
    
    
    964
    
    
    
    10,055
    
    
    
    1,234
    
    
    
    (12,253
    )
    
    
    Non-service revenues
    
    
    
    
    
    
    
    
    
    
    200
    
    
    
    (200
    )
    
    
    Total revenues
    
    
    97,524
    
    
    
    51,373
    
    
    
    11,549
    
    
    
    (12,453
    )
    
    
    147,993ResultsDepreciation and amortization (Notes 3 and 9)
    
    
    13,237
    
    
    
    11,619
    
    
    
    751
    
    
    
    
    
    
    
    25,607Asset impairment (Notes 3, 5, 9, 10, 14, 16, 17, 18, 26 and 28)
    
    
    2,026
    
    
    
    2,901
    
    
    
    134
    
    
    
    
    
    
    
    5,061Interest income (Note 5)
    
    
    1,139
    
    
    
    402
    
    
    
    28
    
    
    
    (30
    )
    
    
    1,539Equity share in net earnings (losses) of associates and
joint ventures (Note 10)
    
    
    (68
    )
    
    
    (98
    )
    
    
    168
    
    
    
    
    
    
    
    2Financing costs  net (Notes 5, 9, 20 and 28)
    
    
    2,619
    
    
    
    3,796
    
    
    
    171
    
    
    
    (30
    )
    
    
    6,556Provision for (benefit from) income tax (Notes 3 and 7)
    
    
    12,514
    
    
    
    2,258
    
    
    
    (28
    )
    
    
    
    
    
    
    14,744Net income for the year / Segment profit for the year
    
    
    33,727
    
    
    
    5,864
    
    
    
    504
    
    
    
    
    
    
    
    40,095EBITDA for the year
    
    
    59,411
    
    
    
    25,215
    
    
    
    1,330
    
    
    
    238
    
    
    
    86,194EBITDA margin for the year
    
    
    62
    %
    
    
    49
    %
    
    
    12
    %
    
    
    
    
    
    
    59
    %Core income for the year
    
    
    33,026
    
    
    
    7,502
    
    
    
    613
    
    
    
    (3
    )
    
    
    41,138Assets and liabilitiesOperating assets
    
    
    107,880
    
    
    
    206,385
    
    
    
    16,297
    
    
    
    (80,368
    )
    
    
    250,194Investments in associates and joint ventures (Notes 3, 5, 10
and 28)
    
    
    21,440
    
    
    
    
    
    
    
    793
    
    
    
    
    
    
    
    22,233Deferred income tax assets  net (Notes 3, 7 and 28)
    
    
    187
    
    
    
    7,346
    
    
    
    188
    
    
    
    
    
    
    
    7,721Total assets
    
    
    129,507
    
    
    
    213,731
    
    
    
    17,278
    
    
    
    (80,368
    )
    
    
    280,148Operating liabilities
    
    
    96,194
    
    
    
    111,294
    
    
    
    4,574
    
    
    
    (32,360
    )
    
    
    179,702Deferred income tax liabilities  net (Notes 3, 7 and 28)
    
    
    640
    
    
    
    21
    
    
    
    328
    
    
    
    332
    
    
    
    1,321Total liabilities
    
    
    96,834
    
    
    
    111,315
    
    
    
    4,902
    
    
    
    (32,028
    )
    
    
    181,023Other segment informationCapital expenditures
    
    
    16,281
    
    
    
    11,059
    
    
    
    729
    
    
    
    
    
    
    
    28,069As at and for the year ended December 31, 2008RevenuesExternal customer:
    
    
    95,365
    
    
    
    40,736
    
    
    
    9,736
    
    
    
    
    
    
    
    145,837Service revenues
    
    
    93,106
    
    
    
    40,316
    
    
    
    9,451
    
    
    
    
    
    
    
    142,873Non-service revenues (Note 5)
    
    
    2,259
    
    
    
    420
    
    
    
    285
    
    
    
    
    
    
    
    2,964Inter-segment transactions:
    
    
    487
    
    
    
    8,950
    
    
    
    1,247
    
    
    
    (10,684
    )
    
    
    Service revenues
    
    
    487
    
    
    
    8,950
    
    
    
    966
    
    
    
    (10,403
    )
    
    
    Non-service revenues
    
    
    
    
    
    
    
    
    
    
    281
    
    
    
    (281
    )
    
    
    Total revenues
    
    
    95,852
    
    
    
    49,686
    
    
    
    10,983
    
    
    
    (10,684
    )
    
    
    145,837ResultsDepreciation and amortization (Notes 3 and 9)
    
    
    11,975
    
    
    
    11,901
    
    
    
    833
    
    
    
    
    
    
    
    24,709Asset impairment (Notes 3, 5, 9, 10, 14, 16, 17 and 28)
    
    
    1,006
    
    
    
    888
    
    
    
    2,286
    
    
    
    
    
    
    
    4,180Provisions (Notes 3, 26 and 27)
    
    
    897
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    898Interest income (Note 5)
    
    
    1,197
    
    
    
    448
    
    
    
    22
    
    
    
    1
    
    
    
    1,668Equity share in net earnings (losses) of associates and
joint ventures (Note 10)
    
    
    (119
    )
    
    
    (74
    )
    
    
    17
    
    
    
    
    
    
    
    (176
    )Financing costs  net (Notes 5, 9, 20 and 28)
    
    
    2,029
    
    
    
    3,903
    
    
    
    172
    
    
    
    
    
    
    
    6,104Provision for (benefit from) income tax (Notes 3 and 7)
    
    
    16,124
    
    
    
    3,048
    
    
    
    (99
    )
    
    
    
    
    
    
    19,073Net income (loss) for the year / Segment profit (loss) for the
year
    
    
    29,499
    
    
    
    7,732
    
    
    
    (2,186
    )
    
    
    (69
    )
    
    
    34,976EBITDA for the year
    
    
    60,967
    
    
    
    25,854
    
    
    
    1,056
    
    
    
    119
    
    
    
    87,996EBITDA margin for the year
    
    
    65
    %
    
    
    52
    %
    
    
    10
    %
    
    
    
    
    
    
    62
    %Core income for the year
    
    
    30,250
    
    
    
    7,890
    
    
    
    138
    
    
    
    (64
    )
    
    
    38,214
  F-47




---



##### Table of Contents



Inter-segmentWireless
    
    
    Fixed Line
    
    
    ICT
    
    
    Transactions
    
    
    Consolidated(in million pesos)Assets and liabilitiesOperating assets
    
    
    112,162
    
    
    
    189,377
    
    
    
    15,963
    
    
    
    (75,723
    )
    
    
    241,779Investments in associates and joint ventures
(Notes 3, 5, 10 and 28)
    
    
    531
    
    
    
    
    
    
    
    643
    
    
    
    
    
    
    
    1,174Deferred income tax assets  net (Notes 3, 7 and 28)
    
    
    251
    
    
    
    9,131
    
    
    
    223
    
    
    
    
    
    
    
    9,605Total assets
    
    
    112,944
    
    
    
    198,508
    
    
    
    16,829
    
    
    
    (75,723
    )
    
    
    252,558Operating liabilities
    
    
    67,656
    
    
    
    89,636
    
    
    
    4,222
    
    
    
    (17,213
    )
    
    
    144,301Deferred income tax liabilities  net (Notes 3, 7 and 28)
    
    
    911
    
    
    
    
    
    
    
    377
    
    
    
    
    
    
    
    1,288Total liabilities
    
    
    68,567
    
    
    
    89,636
    
    
    
    4,599
    
    
    
    (17,213
    )
    
    
    145,589Other segment informationCapital expenditures
    
    
    16,728
    
    
    
    7,651
    
    
    
    824
    
    
    
    
    
    
    
    25,203As at and for the year ended December 31, 2007RevenuesExternal customer:
    
    
    88,867
    
    
    
    40,117
    
    
    
    9,720
    
    
    
    
    
    
    
    138,704Service revenues
    
    
    86,067
    
    
    
    39,836
    
    
    
    9,575
    
    
    
    
    
    
    
    135,478Non-service revenues (Note 5)
    
    
    2,800
    
    
    
    281
    
    
    
    145
    
    
    
    
    
    
    
    3,226Inter-segment transactions:
    
    
    432
    
    
    
    8,715
    
    
    
    602
    
    
    
    (9,749
    )
    
    
    Service revenues
    
    
    432
    
    
    
    8,715
    
    
    
    480
    
    
    
    (9,627
    )
    
    
    Non-service revenues
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    (122
    )
    
    
    Total revenues
    
    
    89,299
    
    
    
    48,832
    
    
    
    10,322
    
    
    
    (9,749
    )
    
    
    138,704ResultsDepreciation and amortization (Notes 3 and 9)
    
    
    12,202
    
    
    
    15,477
    
    
    
    934
    
    
    
    
    
    
    
    28,613Asset impairment (Notes 3, 5, 9, 10, 14, 16, 17 and 28)
    
    
    563
    
    
    
    43
    
    
    
    711
    
    
    
    
    
    
    
    1,317Provisions (Notes 3, 26 and 27)
    
    
    
    
    
    
    666
    
    
    
    
    
    
    
    
    
    
    
    666Interest income (Note 5)
    
    
    1,186
    
    
    
    296
    
    
    
    21
    
    
    
    
    
    
    
    1,503Equity share in net losses of associates and joint ventures
(Note 10)
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )Financing costs  net (Notes 5, 9, 20 and 28)
    
    
    2,299
    
    
    
    4,657
    
    
    
    132
    
    
    
    
    
    
    
    7,088Provision for (benefit from) income tax (Notes 3 and 7)
    
    
    15,566
    
    
    
    3,358
    
    
    
    (117
    )
    
    
    
    
    
    
    18,807Net income (loss) for the year / Segment profit (loss) for the
year
    
    
    31,780
    
    
    
    7,519
    
    
    
    (94
    )
    
    
    69
    
    
    
    39,274EBITDA for the year
    
    
    57,129
    
    
    
    26,418
    
    
    
    1,140
    
    
    
    90
    
    
    
    84,777EBITDA margin for the year
    
    
    66
    %
    
    
    54
    %
    
    
    11
    %
    
    
    
    
    
    
    63
    %Core income for the year
    
    
    29,771
    
    
    
    5,869
    
    
    
    687
    
    
    
    23
    
    
    
    36,350Assets and liabilitiesOperating assets
    
    
    89,984
    
    
    
    180,529
    
    
    
    17,663
    
    
    
    (63,126
    )
    
    
    225,050Investments in associates and joint ventures
(Notes 3, 5, 10 and 28)
    
    
    724
    
    
    
    
    
    
    
    627
    
    
    
    
    
    
    
    1,351Deferred income tax assets  net (Notes 3, 7 and 28)
    
    
    1,640
    
    
    
    12,040
    
    
    
    77
    
    
    
    
    
    
    
    13,757Total assets
    
    
    92,348
    
    
    
    192,569
    
    
    
    18,367
    
    
    
    (63,126
    )
    
    
    240,158Operating liabilities
    
    
    50,828
    
    
    
    78,323
    
    
    
    5,697
    
    
    
    (9,101
    )
    
    
    125,747Deferred income tax liabilities  net (Notes 3, 7 and 28)
    
    
    1,571
    
    
    
    
    
    
    
    495
    
    
    
    
    
    
    
    2,066Total liabilities
    
    
    52,399
    
    
    
    78,323
    
    
    
    6,192
    
    
    
    (9,101
    )
    
    
    127,813Other segment informationCapital expenditures
    
    
    14,259
    
    
    
    9,886
    
    
    
    679
    
    
    
    
    
    
    
    24,824
  F-48




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007(in million pesos)Consolidated EBITDA
    
    
    86,194
    
    
    
    87,996
    
    
    
    84,777Amortization of intangible assets (Notes 3 and 14)
    
    
    (368
    )
    
    
    (377
    )
    
    
    (390
    )Depreciation and amortization (Notes 3 and 9)
    
    
    (25,607
    )
    
    
    (24,709
    )
    
    
    (28,613
    )Asset impairment:Goodwill and intangible assets (Notes 3, 5 and 14)
    
    
    (379
    )
    
    
    (2,450
    )
    
    
    (1,244
    )Property, plant and equipment (Notes 3, 5 and 9)
    
    
    (634
    )
    
    
    (104
    )
    
    
    Investments in associates and joint ventures (Notes 3, 5 and 10)
    
    
    
    
    
    
    (282
    )
    
    
    Reversal of impairment in investment in debt securities (Notes 3 and 5)
    
    
    
    
    
    
    
    
    
    
    616Prepayments and others (Notes 3, 5, 18 and 26)
    
    
    (1,324
    )
    
    
    (23
    )
    
    
    (29
    )Consolidated operating profit for the year
    
    
    57,882
    
    
    
    60,051
    
    
    
    55,117Interest income (Note 5)
    
    
    1,539
    
    
    
    1,668
    
    
    
    1,503Foreign exchange gains (losses)  net (Notes 9 and 28)
    
    
    909
    
    
    
    (6,170
    )
    
    
    7,990Equity in net earnings (losses) of associates and joint ventures (Note 10)
    
    
    2
    
    
    
    (176
    )
    
    
    (11
    )Gains (losses) on derivative financial instruments  net (Note 28)
    
    
    (1,006
    )
    
    
    3,115
    
    
    
    (2,849
    )Financing costs  net (Notes 5, 9, 20 and 28)
    
    
    (6,556
    )
    
    
    (6,104
    )
    
    
    (7,088
    )Nonrecurring gains  net
    
    
    2,069
    
    
    
    1,665
    
    
    
    3,419Consolidated income before income tax
    
    
    54,839
    
    
    
    54,049
    
    
    
    58,081Provision for income tax (Notes 3 and 7)
    
    
    14,744
    
    
    
    19,073
    
    
    
    18,807Consolidated net income for the year
    
    
    40,095
    
    
    
    34,976
    
    
    
    39,274
  2009
    
    
    2008
    
    
    2007(in million pesos)Consolidated core income for the year
    
    
    41,138
    
    
    
    38,214
    
    
    
    36,350Foreign exchange gains (losses)  net (Notes 9 and 28)
    
    
    908
    
    
    
    (6,170
    )
    
    
    7,990Core income adjustment on equity share in net earnings of associates
and joint ventures
    
    
    (517
    )
    
    
    
    
    
    
    Gains (losses) on derivative financial instruments  net, excluding
hedge cost (Note 28)
    
    
    (407
    )
    
    
    3,934
    
    
    
    (1,724
    )Asset impairment on noncurrent assets
    
    
    (1,948
    )
    
    
    (2,486
    )
    
    
    (657
    )Other nonrecurring losses (Notes 3 and 9)
    
    
    
    
    
    
    
    
    
    
    (734
    )Net tax effect of aforementioned adjustments
    
    
    607
    
    
    
    825
    
    
    
    (1,936
    )Net income for the year attributable to equity holders of PLDT
(Notes 6 and 8)
    
    
    39,781
    
    
    
    34,317
    
    
    
    39,289Net income (loss) for the year attributable to non-controlling interests
    
    
    314
    
    
    
    659
    
    
    
    (15
    )Consolidated net income for the year
    
    
    40,095
    
    
    
    34,976
    
    
    
    39,274
  F-49




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007(in million pesos)Wireless servicesService revenues:Cellular
    
    
    87,829
    
    
    
    87,410
    
    
    
    82,319Wireless broadband, satellite and others
    
    
    7,036
    
    
    
    5,696
    
    
    
    3,74894,865
    
    
    
    93,106
    
    
    
    86,067Non-service revenues:Sale of cellular handsets, cellular SIM-packs and
broadband data modems
    
    
    1,695
    
    
    
    2,259
    
    
    
    2,800Total wireless revenues
    
    
    96,560
    
    
    
    95,365
    
    
    
    88,867Fixed line servicesServices revenues:Local exchange
    
    
    15,530
    
    
    
    15,794
    
    
    
    16,068International long distance
    
    
    6,250
    
    
    
    7,044
    
    
    
    8,661National long distance
    
    
    6,239
    
    
    
    6,143
    
    
    
    6,277Data and other network
    
    
    12,585
    
    
    
    10,864
    
    
    
    8,470Miscellaneous
    
    
    481
    
    
    
    471
    
    
    
    36041,085
    
    
    
    40,316
    
    
    
    39,836Non-service revenues:Sale of computers
    
    
    233
    
    
    
    420
    
    
    
    281Total fixed line revenues
    
    
    41,318
    
    
    
    40,736
    
    
    
    40,117ICT servicesService revenues:Knowledge processing solutions
    
    
    5,215
    
    
    
    5,272
    
    
    
    5,261Customer interaction solutions
    
    
    2,676
    
    
    
    2,922
    
    
    
    2,962Internet and online gaming
    
    
    1,079
    
    
    
    945
    
    
    
    902Data center and others
    
    
    727
    
    
    
    312
    
    
    
    4509,697
    
    
    
    9,451
    
    
    
    9,575Non-service revenues:Point-product-sales
    
    
    418
    
    
    
    285
    
    
    
    145Total ICT revenues
    
    
    10,115
    
    
    
    9,736
    
    
    
    9,720Total products and services from external customers
    
    
    147,993
    
    
    
    145,837
    
    
    
    138,704
   5.
    
    Income and Expenses
 Non-service Revenues
 2009
    
    
    2008
    
    
    2007(in million pesos)Sale of computers, cellular handsets, cellular SIM-packs
and broadband data modems
    
    
    1,928
    
    
    
    2,679
    
    
    
    3,081Point-product-sales
    
    
    418
    
    
    
    285
    
    
    
    145(Note 4)
    
    
    2,346
    
    
    
    2,964
    
    
    
    3,226
 Compensation and Employee Benefits
 2009
    
    
    2008
    
    
    2007(in million pesos)Salaries and other employee benefits
    
    
    19,468
    
    
    
    18,286
    
    
    
    16,645Incentive plans (Notes 3 and 25)
    
    
    1,833
    
    
    
    1,281
    
    
    
    1,448Pension benefit costs (Notes 3 and 25)
    
    
    1,306
    
    
    
    725
    
    
    
    1,773Manpower rightsizing program, or MRP
    
    
    493
    
    
    
    417
    
    
    
    60423,100
    
    
    
    20,709
    
    
    
    20,470
  F-50




---



##### Table of Contents



Cost of Sales
 2009
    
    
    2008
    
    
    2007(in million pesos)Cost of computers, cellular handsets, cellular SIM-packs sold
and broadband data modems
    
    
    4,690
    
    
    
    4,573
    
    
    
    4,713Cost of point-product-sales
    
    
    584
    
    
    
    511
    
    
    
    254Cost of satellite air time and terminal units (Notes 24 and 26)
    
    
    158
    
    
    
    168
    
    
    
    1605,432
    
    
    
    5,252
    
    
    
    5,127
 Asset Impairment
 2009
    
    
    2008
    
    
    2007(in million pesos)Trade and other receivables (Notes 3 and 16)
    
    
    2,335
    
    
    
    1,079
    
    
    
    417Property, plant and equipment (Notes 3 and 9)
    
    
    634
    
    
    
    104
    
    
    
    Inventories and supplies (Notes 3 and 17)
    
    
    389
    
    
    
    242
    
    
    
    243Goodwill and intangible assets (Notes 3 and 14)
    
    
    379
    
    
    
    2,450
    
    
    
    1,244Investments in associates and joint ventures (Notes 3 and 10)
    
    
    
    
    
    
    282
    
    
    
    Reversal of impairment in investment in debt securities (Note 3)
    
    
    
    
    
    
    
    
    
    
    (616
    )Prepayments and others (Notes 3, 18 and 26)
    
    
    1,324
    
    
    
    23
    
    
    
    29(Note 4)
    
    
    5,061
    
    
    
    4,180
    
    
    
    1,317
 Interest Income
 2009
    
    
    2008
    
    
    2007(in million pesos)Interest income on other loans and receivables
    
    
    1,406
    
    
    
    1,545
    
    
    
    1,270Interest income on fair value through profit or loss
    
    
    86
    
    
    
    58
    
    
    
    224Interest income on assets held-to-maturity
    
    
    47
    
    
    
    65
    
    
    
    9(Note 4)
    
    
    1,539
    
    
    
    1,668
    
    
    
    1,503
 Financing Costs  net
 2009
    
    
    2008
    
    
    2007(in million pesos)Interest on loans and other related items (Notes 20 and 28)
    
    
    6,008
    
    
    
    5,861
    
    
    
    6,256Accretion on financial liabilities  net (Notes 20 and 28)
    
    
    1,062
    
    
    
    956
    
    
    
    1,161Financing charges
    
    
    177
    
    
    
    61
    
    
    
    196Capitalized interest (Note 9)
    
    
    (691
    )
    
    
    (778
    )
    
    
    (542
    )Dividends on preferred stock subject to mandatory redemption (Note 20)
    
    
    
    
    
    
    4
    
    
    
    17(Note 4)
    
    
    6,556
    
    
    
    6,104
    
    
    
    7,088
   F-51




---



##### Table of Contents



6.
    
    Other Comprehensive Income
  Income taxrelated to
    
    
    Cash flow
    
    
    Foreign
    
    
    Available-for-Cash flow
    
    
    cash flow
    
    
    hedges net
    
    
    currency
    
    
    sale financialhedges
    
    
    hedges
    
    
    of tax
    
    
    translation
    
    
    assets
    
    
    Total(in million pesos)Balance at January 1, 2007
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    
    (44
    )
    
    
    2
    
    
    
    (37
    )Other comprehensive income for the year
    
    
    662
    
    
    
    (256
    )
    
    
    406
    
    
    
    (1,782
    )
    
    
    30
    
    
    
    (1,346
    )Balance as at December 31, 2007
    
    
    662
    
    
    
    (251
    )
    
    
    411
    
    
    
    (1,826
    )
    
    
    32
    
    
    
    (1,383
    )Balance at January 1, 2008
    
    
    662
    
    
    
    (251
    )
    
    
    411
    
    
    
    (1,826
    )
    
    
    32
    
    
    
    (1,383
    )Other comprehensive income for the year
    
    
    (662
    )
    
    
    251
    
    
    
    (411
    )
    
    
    1,425
    
    
    
    (9
    )
    
    
    1,005Balance as at December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (401
    )
    
    
    23
    
    
    
    (378
    )Balance at January 1, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (401
    )
    
    
    23
    
    
    
    (378
    )Other comprehensive income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (642
    )
    
    
    3
    
    
    
    (639
    )Balance as at December 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,043
    )
    
    
    26
    
    
    
    (1,017
    )
 7.
    
    Income Tax
  2009
    
    
    2008(in million pesos)Net deferred income tax assets
    
    
    7,721
    
    
    
    9,605Net deferred income tax liabilities
    
    
    (1,321
    )
    
    
    (1,288
    )
  2009
    
    
    2008(in million pesos)Net deferred income tax assets:Unearned revenues
    
    
    3,412
    
    
    
    4,389Unamortized past service pension costs
    
    
    2,974
    
    
    
    959Accumulated provision for doubtful accounts
    
    
    2,708
    
    
    
    3,005Unrealized foreign exchange losses
    
    
    1,291
    
    
    
    2,088Derivative financial instruments
    
    
    825
    
    
    
    540Provision for impaired assets
    
    
    767
    
    
    
    533Accumulated write-down of inventories to net realizable values
    
    
    293
    
    
    
    270NOLCO
    
    
    44
    
    
    
    22Asset impairment
    
    
    24
    
    
    
    MCIT
    
    
    21
    
    
    
    770Capitalized taxes and duties  net of amortization
    
    
    (246
    )
    
    
    (306
    )Capitalized foreign exchange differential  net of depreciation
    
    
    (495
    )
    
    
    (627
    )Pension and other employee benefits
    
    
    (891
    )
    
    
    1,147Undepreciated capitalized interest charges
    
    
    (2,976
    )
    
    
    (3,230
    )Others
    
    
    (30
    )
    
    
    457,721
    
    
    
    9,605Net deferred income tax liabilities:Unearned revenues
    
    
    1,047
    
    
    
    898Pension and other employee benefits
    
    
    100
    
    
    
    384Fair value adjustment on fixed assets
    
    
    (332
    )
    
    
    Intangible assets and fair value adjustments on assets acquired  net of amortization
    
    
    (478
    )
    
    
    (616
    )Undepreciated capitalized interest charges
    
    
    (536
    )
    
    
    (679
    )Unrealized foreign exchange gains
    
    
    (879
    )
    
    
    (782
    )Asset retirement obligation  net of undepreciated capitalized asset
    
    
    
    
    
    
    329Accumulated provision for doubtful accounts
    
    
    
    
    
    
    223Provision for impaired assets
    
    
    
    
    
    
    210Gain on debt exchange and debt restructuring transactions
    
    
    
    
    
    
    (1,197
    )Others
    
    
    (243
    )
    
    
    (58
    )(1,321
    )
    
    
    (1,288
    )
  F-52




---



##### Table of Contents



Movements of net deferred income tax assets (liabilities) as at December 31, 2009 and 2008 are
as follows:
 2009
    
    
    2008(in million pesos)Net deferred income tax assets  balance at beginning of year
    
    
    9,605
    
    
    
    13,757Net deferred income tax liabilities  balance at beginning of year
    
    
    (1,288
    )
    
    
    (2,066
    )Net balance at beginning of year
    
    
    8,317
    
    
    
    11,691Business combinations (Note 13)
    
    
    (349
    )
    
    
    (1
    )Provision for deferred income tax
    
    
    (656
    )
    
    
    (2,715
    )Excess MCIT deducted against RCIT due
    
    
    (766
    )
    
    
    (857
    )Movement charged directly to equity
    
    
    
    
    
    
    251Others
    
    
    (146
    )
    
    
    (52
    )Net balance at end of year
    
    
    6,400
    
    
    
    8,317Net deferred income tax assets  balance at end of year
    
    
    7,721
    
    
    
    9,605Net deferred income tax liabilities  balance at end of year
    
    
    (1,321
    )
    
    
    (1,288
    )
  2009
    
    
    2008(in million pesos)Deferred income tax assets:Deferred income tax assets to be recovered after more than 12 months
    
    
    9,565
    
    
    
    12,581Deferred income tax assets to be recovered within 12 months
    
    
    3,605
    
    
    
    1,28313,170
    
    
    
    13,864Deferred income tax liabilities:Deferred income tax liabilities to be recovered after more than 12 months
    
    
    (4,793
    )
    
    
    (3,660
    )Deferred income tax liabilities to be recovered within 12 months
    
    
    (656
    )
    
    
    (599
    )(5,449
    )
    
    
    (4,259
    )Net deferred income tax assets
    
    
    7,721
    
    
    
    9,605
  2009
    
    
    2008(in million pesos)Deferred income tax assets:Deferred income tax assets to be recovered after more than 12 months
    
    
    1,161
    
    
    
    1,147Deferred income tax assets to be recovered within 12 months
    
    
    20
    
    
    
    1,1111,181
    
    
    
    2,258Deferred income tax liabilities:Deferred income tax liabilities to be recovered after more than 12 months
    
    
    (2,289
    )
    
    
    (2,163
    )Deferred income tax liabilities to be recovered within 12 months
    
    
    (213
    )
    
    
    (1,383
    )(2,502
    )
    
    
    (3,546
    )Net deferred income tax liabilities
    
    
    (1,321
    )
    
    
    (1,288
    )
  F-53




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007(in million pesos)Current
    
    
    14,088
    
    
    
    16,358
    
    
    
    10,776Deferred
    
    
    656
    
    
    
    2,715
    
    
    
    8,03114,744
    
    
    
    19,073
    
    
    
    18,807
  2009
    
    
    2008
    
    
    2007(in million pesos)Provision for income tax at the applicable statutory tax rates
    
    
    16,452
    
    
    
    18,917
    
    
    
    20,328Tax effects of:Net movement in unrecognized deferred income tax assets
    
    
    3,979
    
    
    
    (576
    )
    
    
    823Non-deductible expenses
    
    
    201
    
    
    
    724
    
    
    
    333Equity share in net losses (earnings) of associates and joint ventures
    
    
    (1
    )
    
    
    62
    
    
    
    4Loss (income) subject to lower tax rate
    
    
    (443
    )
    
    
    1,408
    
    
    
    (1,752
    )Income subject to final tax
    
    
    (502
    )
    
    
    (616
    )
    
    
    (509
    )Income not subject to income tax
    
    
    (1,483
    )
    
    
    (846
    )
    
    
    (420
    )Difference between OSD and itemized deductions
    
    
    (3,310
    )
    
    
    
    
    
    
    Others
    
    
    (149
    )
    
    
    
    
    
    
    Actual provision for corporate income tax
    
    
    14,744
    
    
    
    19,073
    
    
    
    18,807
      F-54




---



##### Table of Contents



2009
    
    
    2008(in million pesos)NOLCO
    
    
    2,341
    
    
    
    916Accumulated provision for doubtful accounts
    
    
    894
    
    
    
    419Accumulated write-down of inventories to net realizable values
    
    
    261
    
    
    
    112Unearned revenues
    
    
    188
    
    
    
    61Provisions for other assets
    
    
    163
    
    
    
    6Fixed asset impairment
    
    
    111
    
    
    
    239Unrealized foreign exchange losses
    
    
    33
    
    
    
    60Pension
    
    
    44
    
    
    
    MCIT
    
    
    19
    
    
    
    1Financial instruments
    
    
    19
    
    
    
    Operating lease
    
    
    3
    
    
    
    4,076
    
    
    
    1,814Consolidated unrecognized deferred income tax assets (Note 3)
    
    
    1,236
    
    
    
    545
   Year Incurred
    
    Expiry Date
    
    MCIT
    
    
    NOLCO(in million pesos)December 31, 2007
    
    December 31, 2010
    
    
    2
    
    
    
    652December 31, 2008
    
    December 31, 2011
    
    
    11
    
    
    
    639December 31, 2009
    
    December 31, 2012
    
    
    27
    
    
    
    1,19640
    
    
    
    2,487Consolidated tax benefits
    
    
    
    
    
    
    40
    
    
    
    746Consolidated unrecognized
deferred income tax assets
    
    
    
    
    
    
    (19
    )
    
    
    (702
    )Consolidated recognized
deferred income tax assets
    
    
    
    
    
    
    21
    
    
    
    44
   Registration with Subic Bay Freeport and Clark Special Economic Zone
   F-55




---



##### Table of Contents



Registration with Philippine Economic Zone Authority, or PEZA
   Registration with the Board of Investments, or BOI
       F-56




---



##### Table of Contents



8.
    
    Earnings Per Common Share
  2009
    
    
    2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted(in million pesos)Consolidated net income for the year attributable
to equity holders of PLDT (Note 4)
    
    
    39,781
    
    
    
    39,781
    
    
    
    34,317
    
    
    
    34,317
    
    
    
    39,289
    
    
    
    39,289Dividends on preferred shares (Note 19)
    
    
    (457
    )
    
    
    (457
    )
    
    
    (455
    )
    
    
    (455
    )
    
    
    (457
    )
    
    
    (457
    )Accretion of preferred stock subject to mandatory
redemption
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131Dividends on dilutive preferred stock subject to
mandatory redemption charged to interest expense
for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17Foreign exchange gains on preferred stock subject
to mandatory redemption (Notes 20 and 26)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (182
    )Consolidated net income for the year attributable
to common equity holders of PLDT
    
    
    39,324
    
    
    
    39,324
    
    
    
    33,862
    
    
    
    33,862
    
    
    
    38,832
    
    
    
    38,798(in thousands, except per share amounts)Outstanding common shares at beginning of year
    
    
    187,484
    
    
    
    187,484
    
    
    
    188,741
    
    
    
    188,741
    
    
    
    188,435
    
    
    
    188,435Effect of issuance of common shares during the year
    
    
    15
    
    
    
    15
    
    
    
    542
    
    
    
    542
    
    
    
    221
    
    
    
    221Effect of purchase of treasury stock during the year
    
    
    (583
    )
    
    
    (583
    )
    
    
    (1,120
    )
    
    
    (1,120
    )
    
    
    
    
    
    
    Average incremental number of shares under ESOP
during the year
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    38Common shares equivalent of convertible preferred
shares deemed dilutive:Preferred Stock Series VI (Notes 20 and 26)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680Weighted average number of common shares for the
year
    
    
    186,916
    
    
    
    186,937
    
    
    
    188,163
    
    
    
    188,176
    
    
    
    188,656
    
    
    
    189,374Earnings per share for the year attributable to
common equity holders of PLDT
    
    Php
    210.38
    
    
    Php
    210.36
    
    
    Php

    179.96
    
    
    Php

    179.95
    
    
    Php

    205.84
    
    
    Php

    204.88
    F-57




---



##### Table of Contents



Note 19  Equity Note 28  Financial Assets and
Liabilities
  F-58




---



##### Table of Contents



9.
    
    Property, Plant and Equipment
  Vehicles,
    
    
    
    
    
    
    Informationfurniture
    
    
    
    
    
    
    originationCable and
    
    
    Central
    
    
    
    
    
    
    
    
    
    
    and other
    
    
    
    
    
    
    and
    
    
    Land and
    
    
    Propertywire
    
    
    office
    
    
    Cellular
    
    
    
    
    
    
    network
    
    
    Communications
    
    
    termination
    
    
    land
    
    
    underfacilities
    
    
    equipment
    
    
    facilities
    
    
    Buildings
    
    
    equipment
    
    
    satellite
    
    
    equipment
    
    
    improvements
    
    
    construction
    
    
    Total(in million pesos)As at December 31, 2007Cost
    
    
    117,081
    
    
    
    86,841
    
    
    
    70,045
    
    
    
    20,695
    
    
    
    32,572
    
    
    
    8,454
    
    
    
    8,191
    
    
    
    2,561
    
    
    
    18,532
    
    
    
    364,972Accumulated depreciation
and amortization
    
    
    (54,023
    )
    
    
    (64,286
    )
    
    
    (38,175
    )
    
    
    (7,323
    )
    
    
    (27,723
    )
    
    
    (7,349
    )
    
    
    (6,407
    )
    
    
    (272
    )
    
    
    
    
    
    
    (205,558
    )Net book value
    
    
    63,058
    
    
    
    22,555
    
    
    
    31,870
    
    
    
    13,372
    
    
    
    4,849
    
    
    
    1,105
    
    
    
    1,784
    
    
    
    2,289
    
    
    
    18,532
    
    
    
    159,414Year Ended December 31, 2008Net book value at
beginning of year
    
    
    63,058
    
    
    
    22,555
    
    
    
    31,870
    
    
    
    13,372
    
    
    
    4,849
    
    
    
    1,105
    
    
    
    1,784
    
    
    
    2,289
    
    
    
    18,532
    
    
    
    159,414Additions
    
    
    1,423
    
    
    
    262
    
    
    
    4,344
    
    
    
    649
    
    
    
    2,238
    
    
    
    
    
    
    
    195
    
    
    
    25
    
    
    
    16,522
    
    
    
    25,658Disposals/Retirements
    
    
    (52
    )
    
    
    (58
    )
    
    
    (108
    )
    
    
    (104
    )
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    (59
    )
    
    
    (32
    )
    
    
    (490
    )Translation differences
charged directly to
cumulative translation
adjustments
    
    
    
    
    
    
    280
    
    
    
    
    
    
    
    (274
    )
    
    
    118
    
    
    
    338
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    462Acquisition through
business combinations
(Note 13)
    
    
    22
    
    
    
    
    
    
    
    50
    
    
    
    14
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115Impairment losses
recognized during the year
(Notes 3, 4 and 5)
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    (85
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (104
    )Reclassifications/Transfers
    
    
    2,197
    
    
    
    1,769
    
    
    
    4,198
    
    
    
    294
    
    
    
    1,203
    
    
    
    
    
    
    
    107
    
    
    
    
    
    
    
    (9,788
    )
    
    
    (20
    )Depreciation and
amortization (Notes 3 and
4)
    
    
    (9,048
    )
    
    
    (3,871
    )
    
    
    (7,544
    )
    
    
    (1,084
    )
    
    
    (2,201
    )
    
    
    (537
    )
    
    
    (423
    )
    
    
    (1
    )
    
    
    
    
    
    
    (24,709
    )Net book value at end of
year (Note 3)
    
    
    57,600
    
    
    
    20,918
    
    
    
    32,810
    
    
    
    12,867
    
    
    
    6,074
    
    
    
    906
    
    
    
    1,663
    
    
    
    2,254
    
    
    
    25,234
    
    
    
    160,326As at December 31, 2008Cost
    
    
    115,980
    
    
    
    83,562
    
    
    
    76,229
    
    
    
    21,040
    
    
    
    34,816
    
    
    
    9,581
    
    
    
    8,251
    
    
    
    2,527
    
    
    
    25,234
    
    
    
    377,220Accumulated depreciation
and amortization
    
    
    (58,380
    )
    
    
    (62,644
    )
    
    
    (43,419
    )
    
    
    (8,173
    )
    
    
    (28,742
    )
    
    
    (8,675
    )
    
    
    (6,588
    )
    
    
    (273
    )
    
    
    
    
    
    
    (216,894
    )Net book value (Note 3)
    
    
    57,600
    
    
    
    20,918
    
    
    
    32,810
    
    
    
    12,867
    
    
    
    6,074
    
    
    
    906
    
    
    
    1,663
    
    
    
    2,254
    
    
    
    25,234
    
    
    
    160,326Year Ended December 31, 2009Net book value at beginning
of year (Note 3)
    
    
    57,600
    
    
    
    20,918
    
    
    
    32,810
    
    
    
    12,867
    
    
    
    6,074
    
    
    
    906
    
    
    
    1,663
    
    
    
    2,254
    
    
    
    25,234
    
    
    
    160,326Additions
    
    
    1,834
    
    
    
    513
    
    
    
    4,040
    
    
    
    316
    
    
    
    1,970
    
    
    
    149
    
    
    
    225
    
    
    
    67
    
    
    
    19,091
    
    
    
    28,205Disposals/Retirements
    
    
    (530
    )
    
    
    (6
    )
    
    
    (843
    )
    
    
    (6
    )
    
    
    (107
    )
    
    
    (463
    )
    
    
    (3
    )
    
    
    (5
    )
    
    
    (1,228
    )
    
    
    (3,191
    )Translation differences
charged directly to
cumulative translation
adjustments
    
    
    3
    
    
    
    (2
    )
    
    
    
    
    
    
    (10
    )
    
    
    (13
    )
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69
    )Acquisition through
business combinations
(Note 13)
    
    
    1,348
    
    
    
    194
    
    
    
    141
    
    
    
    186
    
    
    
    104
    
    
    
    
    
    
    
    420
    
    
    
    105
    
    
    
    (10
    )
    
    
    2,488Impairment losses
recognized during the year
(Notes 3, 4 and 5)
    
    
    
    
    
    
    
    
    
    
    (96
    )
    
    
    (54
    )
    
    
    (17
    )
    
    
    
    
    
    
    (418
    )
    
    
    (49
    )
    
    
    
    
    
    
    (634
    )Reclassifications/Transfers
(Note 12)
    
    
    6,949
    
    
    
    2,776
    
    
    
    8,404
    
    
    
    326
    
    
    
    386
    
    
    
    
    
    
    
    110
    
    
    
    (184
    )
    
    
    (19,029
    )
    
    
    (262
    )Depreciation and
amortization (Notes 3 and
4)
    
    
    (8,793
    )
    
    
    (3,381
    )
    
    
    (9,013
    )
    
    
    (1,151
    )
    
    
    (2,176
    )
    
    
    (545
    )
    
    
    (542
    )
    
    
    (6
    )
    
    
    
    
    
    
    (25,607
    )Net book value at end of
year (Note 3)
    
    
    58,411
    
    
    
    21,012
    
    
    
    35,443
    
    
    
    12,474
    
    
    
    6,221
    
    
    
    
    
    
    
    1,455
    
    
    
    2,182
    
    
    
    24,058
    
    
    
    161,256As at December 31, 2009Cost
    
    
    126,327
    
    
    
    87,517
    
    
    
    83,451
    
    
    
    21,693
    
    
    
    35,282
    
    
    
    966
    
    
    
    8,940
    
    
    
    2,458
    
    
    
    24,058
    
    
    
    390,692Accumulated depreciation
and amortization
    
    
    (67,916
    )
    
    
    (66,505
    )
    
    
    (48,008
    )
    
    
    (9,219
    )
    
    
    (29,061
    )
    
    
    (966
    )
    
    
    (7,485
    )
    
    
    (276
    )
    
    
    
    
    
    
    (229,436
    )Net book value (Note 3)
    
    
    58,411
    
    
    
    21,012
    
    
    
    35,443
    
    
    
    12,474
    
    
    
    6,221
    
    
    
    
    
    
    
    1,455
    
    
    
    2,182
    
    
    
    24,058
    
    
    
    161,256
 Note 20 
Interest-bearing Financial Liabilities
  2009
    
    
    2008
    
    
    2007(in million pesos)Interest (Note 5)
    
    
    691
    
    
    
    778
    
    
    
    542Foreign exchange losses (gains)  net
    
    
    (119
    )
    
    
    385
    
    
    
    63
    Cable and wire facilities
    
    10  15 yearsCentral office equipment
    
    10  20 yearsCellular facilities
    
    3  10 yearsBuildings
    
    25 yearsVehicles, furniture and other network equipment
    
    3  5 yearsCommunications satellite
    
    15 yearsInformation origination and termination equipment
    
    3  15 yearsLand and land improvements
    
    10 years
  F-59




---



##### Table of Contents



Note 3  Managements Use of Judgments, Estimates and Assumptions
 Note 20  Interest-bearing Financial
Liabilities
 SBIs Acquisition of Cluster 3 Assets from Cruz Telephone Company, Inc., or Cruztelco
    Wholesale Transponder Lease Agreement between Mabuhay Satellite, ProtoStar Ltd., or ProtoStar,
and ProtoStar III Ltd., or ProtoStar III
 Note 18  Prepayments Note 26  Contractual Obligations and Commercial Commitments
 Satellite Wholesale Lease and Purchase Agreement, or SWLPA, and Operations Management Agreement,
or OMA, between Mabuhay Satellite and Asia Broadcast Satellite Holdings, Ltd.
     F-60




---



##### Table of Contents



Impairment of BOWs Property and Equipment
 Note 14  Goodwill and Intangible Assets
 10.
    
    Investments in Associates and Joint Ventures
  2009
    
    
    2008(in million pesos)Carrying Value of Investments in Associates:Manila Electric Company, or Meralco
    
    
    21,420
    
    
    
    Philweb Corporation, or Philweb
    
    
    750
    
    
    
    598BOW
    
    
    
    
    
    
    605ACeS International Limited
    
    
    
    
    
    
    22,170
    
    
    
    1,203Carrying Value of Investments in Joint Ventures:ePDS, Inc., or ePDS
    
    
    43
    
    
    
    45PLDT Italy S.r.l., or PLDT Italy
    
    
    20
    
    
    
    (74
    )Mabuhay Space Holdings Limited, or MSHL
    
    
    
    
    
    
    63
    
    
    
    (29
    )Total carrying value of investments in associates and joint ventures
    
    
    22,233
    
    
    
    1,174
  2009
    
    
    2008(in million pesos)Balance at beginning of year
    
    
    4,346
    
    
    
    4,226Additions during the year
    
    
    21,555
    
    
    
    1Translation adjustments
    
    
    (23
    )
    
    
    119Business combinations (Note 13)
    
    
    (821
    )
    
    
    Dissolution of MSHL
    
    
    (887
    )
    
    
    Balance at end of year
    
    
    24,170
    
    
    
    4,346
  F-61




---



##### Table of Contents



2009
    
    
    2008(in million pesos)Balance at beginning of year
    
    
    2,903
    
    
    
    2,782Translation adjustments
    
    
    (13
    )
    
    
    (161
    )Business combinations (Note 13)
    
    
    (97
    )
    
    
    Dissolution of MSHL
    
    
    (887
    )
    
    
    Impairment for the year (Notes 3, 4 and 5)
    
    
    
    
    
    
    282Balance at end of year
    
    
    1,906
    
    
    
    2,903
  2009
    
    
    2008(in million pesos)Balance at beginning of year
    
    
    (269
    )
    
    
    (93
    )Business combinations (Note 13)
    
    
    590
    
    
    
    Translation adjustments
    
    
    3
    
    
    
    Equity share in net earnings (losses) of associates and joint ventures for the year (Note 4):
    
    
    2
    
    
    
    (176
    )Meralco
    
    
    398
    
    
    
    Philweb
    
    
    152
    
    
    
    5ePDS
    
    
    21
    
    
    
    12BayanTrade
    
    
    (5
    )
    
    
    PLDT Italy
    
    
    (98
    )
    
    
    (74
    )BOW
    
    
    (466
    )
    
    
    (119
    )Dividends
    
    
    (357
    )
    
    
    Balance at end of year
    
    
    (31
    )
    
    
    (269
    )
 Investments in Associates
 Piltels Acquisition of Shares in Meralco
     F-62




---



##### Table of Contents



Investment of ePLDT in Philweb
 Note 23  Accrued Expenses and Other Current Liabilities
   Investment of Smart in BOW
   F-63




---



##### Table of Contents



Note 2  Summary of Significant Accounting Policies Note 13  Business Combinations and Acquisition of Non-Controlling Interests
 SmartLink
 Investment of ACeS Philippines in AIL
    Note 24  Related Party Transactions Note 26  Contractual Obligations and Commercial
Commitments
 Summarized Financial Information of Equity Investees
  2009
    
    
    2008(in million pesos)Consolidated Statements of Financial Position:Noncurrent assets
    
    
    136,581
    
    
    
    1,072Current assets
    
    
    46,755
    
    
    
    1,017Equity (Capital deficiency)
    
    
    52,143
    
    
    
    (9,119
    )Noncurrent liabilities
    
    
    86,605
    
    
    
    10,468Current liabilities
    
    
    44,588
    
    
    
    740
 2009
    
    
    2008
    
    
    2007(in million pesos)Consolidated Income Statements:Revenues
    
    
    186,227
    
    
    
    572
    
    
    
    763Expenses
    
    
    180,536
    
    
    
    359
    
    
    
    341Net income attributable to controlling interests
    
    
    6,634
    
    
    
    290
    
    
    
    489
  F-64




---



##### Table of Contents



(in million pesos)Consolidated Statement of Financial Position:Noncurrent assets
    
    
    135,071Current assets
    
    
    45,342Equity
    
    
    60,878Noncurrent liabilities
    
    
    76,516Current liabilities
    
    
    43,019Consolidated Income Statement:Revenues
    
    
    184,872Expenses
    
    
    176,445Net income attributable to controlling interests
    
    
    6,005
 Investments in Joint Ventures
 Investment of ePLDT in ePDS
  Investment of PLDT Global in PLDT Italy
 
  
  
 Investment of Mabuhay Satellite in MSHL
   F-65




---



##### Table of Contents



Summarized Financial Information of Joint Ventures
  2009
    
    
    2008(in million pesos)Consolidated Statements of Financial Position:Noncurrent assets
    
    
    103
    
    
    
    556Current assets
    
    
    244
    
    
    
    261Equity (Capital deficiency)
    
    
    57
    
    
    
    (71
    )Noncurrent liabilities
    
    
    88
    
    
    
    699Current liabilities
    
    
    202
    
    
    
    189
 2009
    
    
    2008
    
    
    2007(in million pesos)Consolidated Income Statements:Revenues
    
    
    387
    
    
    
    175
    
    
    
    100Expenses
    
    
    527
    
    
    
    387
    
    
    
    173Net loss attributable to controlling interests
    
    
    154
    
    
    
    223
    
    
    
    83
  11.
    
    Investment in Debt Securities
  2009
    
    
    2008(in million pesos)National Power Corporation, or NAPOCOR, Zero Coupon Bond
    
    
    312
    
    
    
    292Rizal Commercial Banking Corporation, or RCBC, Note
    
    
    150
    
    
    
    150Government Securities
    
    
    
    
    
    
    1,656Republic of the Philippines Credit Linked Notes, or CLN
    
    
    
    
    
    
    193462
    
    
    
    2,291Less current portion of investment in debt securities (Note 28)
    
    
    
    
    
    
    1,656Noncurrent portion of investment in debt securities (Note 28)
    
    
    462
    
    
    
    635
  F-66




---



##### Table of Contents



NAPOCOR Zero Coupon Bonds
  RCBC Note
  Government Securities
  Republic of the Philippines Credit Linked Notes
 IAS 39
 12.
    
    Investment Properties
  2009
    
    
    2008(in million pesos)Balance at beginning of year
    
    
    617
    
    
    
    577Net gains from fair value adjustments (Note 3)
    
    
    352
    
    
    
    59Transfer from property, plant and equipment (Note 9)
    
    
    262
    
    
    
    Disposals
    
    
    (21
    )
    
    
    (19
    )Balance at end of year (Notes 3 and 28)
    
    
    1,210
    
    
    
    617
  F-67




---



##### Table of Contents



13.
    
    Business Combinations and Acquisition of Non-Controlling Interests
 2009 Acquisitions
 PLDTs Acquisition of Philcom
 Note 2  Summary of Significant
Accounting Policies
  (in million pesos)Assets:Property, plant and equipment
    
    
    1,851Available-for-sale financial assets
    
    
    5Deferred income tax assets  net
    
    
    3Cash and cash equivalents
    
    
    51Trade and other receivables
    
    
    204Inventories and supplies
    
    
    15Prepayments
    
    
    82,137Liabilities:Long-term debt
    
    
    340Deferred income tax liabilities  net
    
    
    381Pension and other employee benefits
    
    
    13Accounts payable
    
    
    1,206Accrued expenses and other current liabilities
    
    
    77Dividends payable
    
    
    2Income tax payable
    
    
    32,022115Non-controlling interests
    
    
    40Net assets acquired
    
    
    75
     F-68




---



##### Table of Contents



ePLDTs Acquisition of BayanTrade
 Note 2  Summary of Significant Accounting Policies
  (in million pesos)Assets:Property, plant and equipment
    
    
    21Provisional goodwill (Note 14)
    
    
    184Deferred income tax assets  net
    
    
    19Advances and refundable deposits
    
    
    11Cash and cash equivalents
    
    
    6Trade and other receivables
    
    
    179Prepayments and other current assets
    
    
    6426Liabilities:Long-term debt
    
    
    150Pension and other employee benefits
    
    
    5Other noncurrent liabilities
    
    
    59Accounts payable
    
    
    85Accrued expenses and other current liabilities
    
    
    7537452Non-controlling interests
    
    
    (9
    )Net assets acquired
    
    
    61
       F-69




---



##### Table of Contents



Smarts Acquisition of Non-Controlling Interests in Piltel
 Note 2  Summary of Significant Accounting
Policies
 Smarts Acquisition of Shares in BOW
 Note 2 
Summary of Significant Accounting Policies Note 10  Investments in Associates and Joint
Ventures
  In U.S. Dollar
    
    
    Php(1)(in millions)Assets:Property, plant and equipment
    
    
    12
    
    
    
    558Goodwill (Note 14)
    
    
    1
    
    
    
    45Intangible assets (Note 14)
    
    
    5
    
    
    
    221Advances and refundable deposits
    
    
    
    
    
    
    7Cash and cash equivalents
    
    
    5
    
    
    
    231Trade and other receivables
    
    
    
    
    
    
    33Prepayments
    
    
    
    
    
    
    3123
    
    
    
    1,126Liabilities:Long-term debt
    
    
    4
    
    
    
    203Accrued expenses and other current liabilities
    
    
    2
    
    
    
    1066
    
    
    
    30917
    
    
    
    817Non-controlling interests
    
    
    8
    
    
    
    378Net assets acquired
    
    
    9
    
    
    
    439
 (1)
    
    Converted to Philippine Peso using the exchange rate at the time of purchase of
Php48.07 to US$1.00.    F-70




---



##### Table of Contents



Smart Link
  SPis Acquisition of Laguna Medical
 Note
2  Summary of Significant Accounting Policies, Note 21  Deferred Credits and Other
Noncurrent Liabilities Note 23  Accrued Expenses and Other Current Liabilities
  In U.S. Dollar
    
    
    Php(1)(in millions)Assets:Property, plant and equipment
    
    
    
    
    
    
    8Provisional goodwill (Note 14)
    
    
    10
    
    
    
    494Deferred income tax assets  net
    
    
    1
    
    
    
    10Cash and cash equivalents
    
    
    1
    
    
    
    26Trade and other receivables
    
    
    1
    
    
    
    5913
    
    
    
    597Liability:Accrued expenses and other current liabilities
    
    
    1
    
    
    
    27Net assets acquired
    
    
    12
    
    
    
    570
 (1)
    
    Converted to Philippine Peso using the exchange rate at the time of purchase of
Php47.42 to US$1.00.     F-71




---



##### Table of Contents



Smarts Acquisition of PDSI
 Note 2  Summary of Significant Accounting Policies
  (in million pesos)Assets:Property, plant and equipment
    
    
    42Provisional goodwill (Note 14)
    
    
    1,597Prepayments
    
    
    10Advances and refundable deposits  net of current portion
    
    
    8Cash and cash equivalents
    
    
    12Trade and other receivables
    
    
    42Current portion of advances and refundable deposits
    
    
    61,717Liabilities:Accounts payable
    
    
    30Accrued expenses and other current liabilities
    
    
    116Income tax payable
    
    
    2148Net assets acquired
    
    
    1,569
       F-72




---



##### Table of Contents



Smarts Acquisition of Chikka
 Note 2  Summary of Significant Accounting Policies Note 23
 Accrued Expenses and Other Current Liabilities
  (in million pesos)Assets:Property, plant and equipment
    
    
    8Provisional goodwill (Note 14)
    
    
    561Intangible assets (Note 14)
    
    
    27Advances and refundable deposits  net of current portion
    
    
    1Cash and cash equivalents
    
    
    89Trade and other receivables
    
    
    51Current portion of advances and refundable deposits
    
    
    19756Liabilities:Accounts payable
    
    
    8Accrued expenses and other current liabilities
    
    
    105Accrued retirement benefits
    
    
    12Income tax payable
    
    
    2127Net assets acquired
    
    
    629
     2008 Acquisitions
 ePLDTs Acquisition of Non-controlling Interests in Airborne Access
   F-73




---



##### Table of Contents



Smarts Acquisition of PHC, FHI and CURE
  Fair ValuePrevious
    
    
    Recognized onCarrying Value
    
    
    Acquisition(in million pesos)Assets:Property, plant and equipment
    
    
    115
    
    
    
    115Investments in associates and joint ventures
    
    
    6
    
    
    
    6Goodwill (Note 14)
    
    
    
    
    
    
    248Advances and refundable deposits  net of current portion
    
    
    4
    
    
    
    4Cash and cash equivalents
    
    
    52
    
    
    
    52Current portion of advances and refundable deposits
    
    
    78
    
    
    
    78255
    
    
    
    503Liabilities:Accounts payable
    
    
    82
    
    
    
    82Accrued expenses and other current liabilities
    
    
    1
    
    
    
    183
    
    
    
    83Net assets acquired
    
    
    172
    
    
    
    420
     F-74




---



##### Table of Contents



14.
    
    Goodwill and Intangible Assets
  TotalGoodwillIntangible Assets
    
    
    Total
    
    
    
    
    
    
    andCustomer
    
    
    
    
    
    
    
    
    
    
    Technology
    
    
    
    
    
    
    Intangible
    
    
    
    
    
    
    IntangibleList
    
    
    Spectrum
    
    
    Licenses
    
    
    Application
    
    
    Trademark
    
    
    Assets
    
    
    Goodwill
    
    
    Assets(in million pesos)December 31, 2009Costs:Balance at beginning of year
    
    
    1,696
    
    
    
    1,205
    
    
    
    370
    
    
    
    894
    
    
    
    
    
    
    
    4,165
    
    
    
    12,289
    
    
    
    16,454Business combinations
(Notes 3, 13 and 21)
    
    
    
    
    
    
    
    
    
    
    221
    
    
    
    
    
    
    
    27
    
    
    
    248
    
    
    
    3,013
    
    
    
    3,261Translation and other adjustments
    
    
    (41
    )
    
    
    
    
    
    
    22
    
    
    
    73
    
    
    
    
    
    
    
    54
    
    
    
    (101
    )
    
    
    (47
    )Balance at end of year
    
    
    1,655
    
    
    
    1,205
    
    
    
    613
    
    
    
    967
    
    
    
    27
    
    
    
    4,467
    
    
    
    15,201
    
    
    
    19,668Accumulated amortization and impairment:Balance at beginning of year
    
    
    794
    
    
    
    348
    
    
    
    203
    
    
    
    860
    
    
    
    
    
    
    
    2,205
    
    
    
    3,799
    
    
    
    6,004Impairment during the year
(Notes 4 and 5)
    
    
    
    
    
    
    
    
    
    
    213
    
    
    
    73
    
    
    
    
    
    
    
    286
    
    
    
    93
    
    
    
    379Amortization during the year
    
    
    220
    
    
    
    80
    
    
    
    37
    
    
    
    31
    
    
    
    
    
    
    
    368
    
    
    
    
    
    
    
    368Translation and other adjustments
    
    
    (19
    )
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (24
    )
    
    
    (83
    )
    
    
    (107
    )Balance at end of year
    
    
    995
    
    
    
    428
    
    
    
    448
    
    
    
    964
    
    
    
    
    
    
    
    2,835
    
    
    
    3,809
    
    
    
    6,644Net balance at end of year
(Notes 3 and 28)
    
    
    660
    
    
    
    777
    
    
    
    165
    
    
    
    3
    
    
    
    27
    
    
    
    1,632
    
    
    
    11,392
    
    
    
    13,024Estimated useful lives (in years)
    
    
    17
    
    
    
    15
    
    
    
    218
    
    
    
    45
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Remaining useful lives (in years)
    
    
    14
    
    
    
    10
    
    
    
    213
    
    
    
    1
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    December 31, 2008Costs:Balance at beginning of year
    
    
    1,486
    
    
    
    1,205
    
    
    
    318
    
    
    
    812
    
    
    
    
    
    
    
    3,821
    
    
    
    10,879
    
    
    
    14,700Translation adjustments
    
    
    210
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    209
    
    
    
    1,312
    
    
    
    1,521Business combinations
(Notes 3, 13 and 21)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    261
    
    
    
    261Additions during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    83
    
    
    
    
    
    
    
    83Reclassifications
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    52Adjustments during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (163
    )
    
    
    (163
    )Balance at end of year
    
    
    1,696
    
    
    
    1,205
    
    
    
    370
    
    
    
    894
    
    
    
    
    
    
    
    4,165
    
    
    
    12,289
    
    
    
    16,454Accumulated amortization and impairment:Balance at beginning of year
    
    
    384
    
    
    
    268
    
    
    
    182
    
    
    
    516
    
    
    
    
    
    
    
    1,350
    
    
    
    1,629
    
    
    
    2,979Impairment during the year
(Notes 4 and 5)
    
    
    127
    
    
    
    
    
    
    
    
    
    
    
    297
    
    
    
    
    
    
    
    424
    
    
    
    2,026
    
    
    
    2,450Amortization during the year
    
    
    231
    
    
    
    80
    
    
    
    19
    
    
    
    47
    
    
    
    
    
    
    
    377
    
    
    
    
    
    
    
    377Translation adjustments
    
    
    52
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    51
    
    
    
    144
    
    
    
    195Reclassifications
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Balance at end of year
    
    
    794
    
    
    
    348
    
    
    
    203
    
    
    
    860
    
    
    
    
    
    
    
    2,205
    
    
    
    3,799
    
    
    
    6,004Net balance at end of year
(Notes 3 and 28)
    
    
    902
    
    
    
    857
    
    
    
    167
    
    
    
    34
    
    
    
    
    
    
    
    1,960
    
    
    
    8,490
    
    
    
    10,450Estimated useful lives (in years)
    
    
    37
    
    
    
    15
    
    
    
    618
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Remaining useful lives (in years)
    
    
    34
    
    
    
    11
    
    
    
    314
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Intangible Assets
 Note 9  Property, Plant and Equipment
   F-75




---



##### Table of Contents



Year
    
    (in million pesos)2010
    
    
    3432011
    
    
    3022012
    
    
    2482013
    
    
    1932014 and onwards
    
    
    546Balance at end of year
    
    
    1,632
 Impairment Testing of Goodwill
 Goodwill from Acquisition of SBI, CURE and Airborne Access
    F-76




---



##### Table of Contents



Goodwill from Acquisition of BOW
 Note 9  Property, Plant and Equipment
 Goodwill from Acquisition of SPi and its Subsidiaries, CyMed, Inc., or CyMed, and
Springfield Service Corp., or Springfield
   Goodwill from Acquisition of Level Up!
  Goodwill from Acquisition of Digital Paradise
   F-77




---



##### Table of Contents



15.
    
    Cash and Cash Equivalents
 This account consists of:
 2009
    
    
    2008(in million pesos)Cash on hand and in banks (Note 28)
    
    
    3,300
    
    
    
    4,164Temporary cash investments (Note 28)
    
    
    35,019
    
    
    
    29,52038,319
    
    
    
    33,684
 Note 28  Financial Assets and Liabilities
  16.
    
    Trade and Other Receivables
  2009
    
    
    2008(in million pesos)Corporate subscribers (Notes 24 and 28)
    
    
    9,106
    
    
    
    9,188Retail subscribers (Note 28)
    
    
    8,026
    
    
    
    8,993Foreign administrations (Note 28)
    
    
    4,353
    
    
    
    5,916Domestic carriers (Notes 24 and 28)
    
    
    1,267
    
    
    
    877Dealers, agents and others (Notes 24 and 28)
    
    
    3,927
    
    
    
    3,27126,679
    
    
    
    28,245Less allowance for doubtful accounts
    
    
    11,950
    
    
    
    12,33614,729
    
    
    
    15,909
  Dealers,Corporate
    
    
    Retail
    
    
    Foreign
    
    
    Domestic
    
    
    Agents andTotal
    
    
    Subscribers
    
    
    Subscribers
    
    
    Administrations
    
    
    Carriers
    
    
    Others(in million pesos)December 31, 2009Balance at beginning of year
    
    
    12,336
    
    
    
    6,323
    
    
    
    5,089
    
    
    
    439
    
    
    
    174
    
    
    
    311Provisions for the year
(Notes 3 and 5)
    
    
    2,335
    
    
    
    670
    
    
    
    1,512
    
    
    
    18
    
    
    
    35
    
    
    
    100Business combinations (Note
13)
    
    
    513
    
    
    
    36
    
    
    
    454
    
    
    
    
    
    
    
    
    
    
    
    23Reversals
    
    
    (46
    )
    
    
    (18
    )
    
    
    (9
    )
    
    
    (13
    )
    
    
    (6
    )
    
    
    Write-offs
    
    
    (3,212
    )
    
    
    (1,178
    )
    
    
    (1,657
    )
    
    
    (216
    )
    
    
    (157
    )
    
    
    (4
    )Translation and other
adjustments
    
    
    24
    
    
    
    844
    
    
    
    (909
    )
    
    
    61
    
    
    
    37
    
    
    
    (9
    )Balance at end of year
    
    
    11,950
    
    
    
    6,677
    
    
    
    4,480
    
    
    
    289
    
    
    
    83
    
    
    
    421Individual impairment
    
    
    9,624
    
    
    
    6,256
    
    
    
    2,595
    
    
    
    289
    
    
    
    83
    
    
    
    401Collective impairment
    
    
    2,326
    
    
    
    421
    
    
    
    1,885
    
    
    
    
    
    
    
    
    
    
    
    2011,950
    
    
    
    6,677
    
    
    
    4,480
    
    
    
    289
    
    
    
    83
    
    
    
    421
  F-78




---



##### Table of Contents



Dealers,Corporate
    
    
    Retail
    
    
    Foreign
    
    
    Domestic
    
    
    Agents andTotal
    
    
    Subscribers
    
    
    Subscribers
    
    
    Administrations
    
    
    Carriers
    
    
    Others(in million pesos)Gross amount of receivables
individually impaired,
before deducting any
impairment allowance
    
    
    9,624
    
    
    
    6,256
    
    
    
    2,595
    
    
    
    289
    
    
    
    83
    
    
    
    401December 31, 2008Balance at beginning of year
    
    
    12,855
    
    
    
    5,875
    
    
    
    4,318
    
    
    
    1,047
    
    
    
    381
    
    
    
    1,234Provisions for the year
(Notes 3, 4 and 5)
    
    
    1,079
    
    
    
    98
    
    
    
    850
    
    
    
    85
    
    
    
    26
    
    
    
    20Reversals
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (13
    )
    
    
    (1
    )Write-offs
    
    
    (1,693
    )
    
    
    (314
    )
    
    
    (189
    )
    
    
    (645
    )
    
    
    (142
    )
    
    
    (403
    )Translation and other
adjustments
    
    
    111
    
    
    
    664
    
    
    
    110
    
    
    
    (46
    )
    
    
    (78
    )
    
    
    (539
    )Balance at end of year
    
    
    12,336
    
    
    
    6,323
    
    
    
    5,089
    
    
    
    439
    
    
    
    174
    
    
    
    311Individual impairment
    
    
    11,636
    
    
    
    6,056
    
    
    
    4,656
    
    
    
    439
    
    
    
    174
    
    
    
    311Collective impairment
    
    
    700
    
    
    
    267
    
    
    
    433
    
    
    
    
    
    
    
    
    
    
    
    12,336
    
    
    
    6,323
    
    
    
    5,089
    
    
    
    439
    
    
    
    174
    
    
    
    311Gross amount of receivables
individually impaired,
before deducting any
impairment allowance
    
    
    11,708
    
    
    
    6,128
    
    
    
    4,656
    
    
    
    439
    
    
    
    174
    
    
    
    311
  17.
    
    Inventories and Supplies
  2009
    
    
    2008(in million pesos)Spare parts and supplies:At net realizable value
    
    
    982
    
    
    
    966At cost
    
    
    1,998
    
    
    
    1,933Terminal and cellular phone units:At net realizable value
    
    
    652
    
    
    
    936At cost
    
    
    981
    
    
    
    1,098Others:At net realizable value
    
    
    531
    
    
    
    167At cost
    
    
    534
    
    
    
    167Total inventories at the lower of cost or net
realizable value (Note 28)
    
    
    2,165
    
    
    
    2,069
  F-79




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007(in million pesos)Cost of sales
    
    
    4,714
    
    
    
    4,380
    
    
    
    4,778Repairs and maintenance
    
    
    429
    
    
    
    549
    
    
    
    409Write-down of inventories and supplies
(Notes 3 and 5)
    
    
    389
    
    
    
    242
    
    
    
    2435,532
    
    
    
    5,171
    
    
    
    5,430
 18.
    
    Prepayments
  2009
    
    
    2008(in million pesos)Prepaid taxes
    
    
    7,768
    
    
    
    6,178Prepaid benefit costs (Notes 3 and 25)
    
    
    5,414
    
    
    
    Prepaid rent  net (Notes 3, 5 and 26)
    
    
    208
    
    
    
    31Prepaid insurance (Note 24)
    
    
    109
    
    
    
    161Prepaid fees and licenses
    
    
    44
    
    
    
    100Other prepayments
    
    
    218
    
    
    
    19513,761
    
    
    
    6,665Less current portion of prepayments (Note 28)
    
    
    5,098
    
    
    
    4,164Noncurrent portion of prepayments (Note 28)
    
    
    8,663
    
    
    
    2,501
  Option to Purchase Series C Preferred Shares of ProtoStar
  Note 26  Contractual Obligations and Commercial Commitments
  F-80




---



##### Table of Contents



19.
    
    Equity
  Preferred Stock Php10 par value per shareSeries
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    Common Stock A to EE
    
    
    IV
    
    
    Preferred
    
    
    
    
    
    
    Php5 par value per shareNo. of Shares
    
    
    Stock
    
    
    Amount
    
    
    No. of Shares
    
    
    Amount(in millions)Authorized
    
    
    
    
    
    
    
    
    
    
    823
    
    
        Php
    8,230
    
    
    
    234
    
    
        Php
    1,170IssuedBalance as at January 1, 2007
    
    
    406
    
    
    
    36
    
    
    
    442
    
    
        Php
    4,424
    
    
    
    188
    
    
        Php
    942Issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    Conversion
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    (8
    )
    
    
    
    
    
    
    8Balance as at December 31, 2007
    
    
    405
    
    
    
    36
    
    
    
    441
    
    
    Php
    4,417
    
    
    
    188
    
    
    Php
    943Balance as at January 1, 2008
    
    
    405
    
    
    
    36
    
    
    
    441
    
    
        Php
    4,417
    
    
    
    188
    
    
        Php
    943Issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    1
    
    
    
    3Balance as at December 31, 2008
    
    
    405
    
    
    
    36
    
    
    
    441
    
    
        Php
    4,415
    
    
    
    189
    
    
        Php
    947Balance as at January 1, 2009
    
    
    405
    
    
    
    36
    
    
    
    441
    
    
        Php
    4,415
    
    
    
    189
    
    
        Php
    947Issuance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    Conversion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    Balance as at December 31, 2009
    
    
    405
    
    
    
    36
    
    
    
    441
    
    
        Php
    4,416
    
    
    
    189
    
    
        Php
    947
 Preferred Stock
     F-81




---



##### Table of Contents



Common Stock
  Note 8  Earnings Per
Common Share Note 28  Financial Assets and Liabilities
 Dividends Declared For The Year Ended December 31, 2009
 Date
   
    AmountClass
    
    Approved

    
    Record
    
    Payable
    
    Per Share
    
    
    Total(in million pesos)Preferred Stock Subject
to Mandatory RedemptionSeries V
    
    March 3, 2009
    
    March 19, 2009
    
    April 15, 2009
    
        Php
    4.675
    
    
    
    June 9, 2009
    
    June 25, 2009
    
    July 15, 2009
    
    
    4.675
    
    
    
    *August 4, 2009
    
    August 22, 2009
    
    September 10, 2009
    
    0.051944 per day
    
    
    
    Series VI
    
    March 3, 2009
    
    March 19, 2009
    
    April 15, 2009
    
    US$
    0.09925
    
    
    
    June 9, 2009
    
    June 25, 2009
    
    July 15, 2009
    
    
    0.09925
    
    
    
    August 25, 2009
    
    September 24, 2009
    
    October 15, 2009
    
    
    0.09925
    
    
    
    **November 3, 2009
    
    November 8, 2009
    
    December 8, 2009
    
        Php
    0.001103 per day
    
    
    
    Charged to income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10% Cumulative Convertible
Preferred StockSeries CC
    
    January 27, 2009
    
    February 26, 2009
    
    March 31, 2009
    
            Php
    1.00
    
    
    
    17Series DD
    
    January 27, 2009
    
    February 13, 2009
    
    February 27, 2009
    
    
    1.00
    
    
    
    3Series EE
    
    March 31, 2009
    
    April 30, 3009
    
    May 29, 2009
    
    
    1.00
    
    
    
    Series A, I, R, W, AA and BB
    
    July 7, 2009
    
    August 6, 2009
    
    August 28, 2009
    
    
    1.00
    
    
    
    128Series B, F, Q, V and Z
    
    August 4, 2009
    
    September 1, 2009
    
    September 30, 2009
    
    
    1.00
    
    
    
    91Series E, K, O and U
    
    August 25, 2009
    
    September 24, 2009
    
    October 30, 2009
    
    
    1.00
    
    
    
    44Series C, D, J, T and X
    
    September 29, 2009
    
    October 29, 2009
    
    November 26, 2009
    
    
    1.00
    
    
    
    57Series G, N, P, and S
    
    November 3, 2009
    
    December 3, 2009
    
    December 29, 2009
    
    
    1.00
    
    
    
    26Series H, L, M and Y
    
    December 8, 2009
    
    January 4, 2010
    
    January 29, 2010
    
    
    1.00
    
    
    
    40406
  F-82




---



##### Table of Contents



Date
    
    AmountClass
    
    Approved

    
    Record
    
    Payable
    
    Per Share
    
    
    Total(in million pesos)Cumulative Non-Convertible
Redeemable Preferred StockSeries IV***
    
    January 27, 2009
    
    February 20, 2009
    
    March 15, 2009
    
            Php
    
    
    
    
    12May 5, 2009
    
    May 22, 2009
    
    June 15, 2009
    
    
    
    
    
    
    13August 4, 2009
    
    August 19, 2009
    
    September 15, 2009
    
    
    
    
    
    
    13November 3, 2009
    
    November 20, 2009
    
    December 15, 2009
    
    
    
    
    
    
    1250Common StockRegular Dividend
    
    March 3, 2009
    
    March 18, 2009
    
    April 21, 2009
    
            Php
    70.00
    
    
    
    13,124August 4, 2009
    
    August 20, 2009
    
    September 22, 2009
    
    
    77.00
    
    
    
    14,384Special Dividend
    
    March 3, 2009
    
    March 18, 2009
    
    April 21, 2009
    
    
    60.00
    
    
    
    11,25038,758Charged to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,214
 *
    
    Only the holders of Series V Convertible Preferred Stock whose shares were originally
issued on August 22, 2002 and mandatorily converted onAugust 23, 2009 were entitled to
this final dividend.**
    
    Onlythe holders of Series VI Convertible Preferred Stock whose shares were originally
issued on November 8, 2002 and mandatorily converted on November 9, 2009 were entitled to
this final dividend.***
    
    Dividends were declared based on total amount paid up. Dividends Declared For The Year Ended December 31, 2008
 Date
    
    AmountClass
    
    Approved
    
    Record
    
    Payable
    
    Per Share
    
    
    Total(in million pesos)Preferred Stock Subject to
Mandatory RedemptionSeries V
    
    March 4, 2008
    
    March 20, 2008
    
    April 15, 2008
    
            Php
    4.675
    
    
    
    *May 6, 2008
    
    June 4, 2008
    
    June 23, 2008
    
    0.051944 per day
    
    
    
    June 10, 2008
    
    June 26, 2008
    
    July 15, 2008
    
    
    4.675
    
    
    
    August 26, 2008
    
    September 25, 2008
    
    October 15, 2008
    
    
    4.675
    
    
    
    December 9, 2008
    
    December 24, 2008
    
    January 15, 2009
    
    
    4.675
    
    
    
    Series VI
    
    March 4, 2008
    
    March 20, 2008
    
    April 15, 2008
    
    US$
    0.09925
    
    
    
    2*May 6, 2008
    
    June 4, 2008
    
    June 23, 2008
    
    0.001103 per day
    
    
    
    1June 10, 2008
    
    June 26, 2008
    
    July 15, 2008
    
    
    0.09925
    
    
    
    August 26, 2008
    
    September 25, 2008
    
    October 15, 2008
    
    
    0.09925
    
    
    
    December 9, 2008
    
    December 24, 2008
    
    January 15, 2009
    
    
    0.09925
    
    
    
    Charged to income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310% Cumulative Convertible
Preferred StockSeries CC
    
    January 29, 2008
    
    February 28, 2008
    
    March 31, 2008
    
            Php
    1.00
    
    
    
    17Series DD
    
    January 29, 2008
    
    February 15, 2008
    
    February 29, 2008
    
    
    1.00
    
    
    
    3Series EE
    
    March 25, 2008
    
    April 24, 2008
    
    May 30, 2008
    
    
    1.00
    
    
    
    Series A, I, R, W, AA and BB
    
    July 8, 2008
    
    August 1, 2008
    
    August 29, 2008
    
    
    1.00
    
    
    
    128Series B, F, Q, V and Z
    
    August 5, 2008
    
    September 3, 2008
    
    September 30, 2008
    
    
    1.00
    
    
    
    90Series E, K, O and U
    
    August 26, 2008
    
    September 25, 2008
    
    October 31, 2008
    
    
    1.00
    
    
    
    44Series C, D, J, T and X
    
    September 30, 2008
    
    October 30, 2008
    
    November 28, 2008
    
    
    1.00
    
    
    
    57Series G, N, P and S
    
    November 4, 2008
    
    December 4, 2008
    
    December 29, 2008
    
    
    1.00
    
    
    
    26Series H, L, M and Y
    
    December 9, 2008
    
    January 2, 2009
    
    January 30, 2009
    
    
    1.00
    
    
    
    41406Cumulative Non-Convertible
Redeemable Preferred StockSeries IV**
    
    January 29, 2008
    
    February 22, 2008
    
    March 15, 2008
    
            Php
    
    
    
    
    12May 6, 2008
    
    May 23, 2008
    
    June 15, 2008
    
    
    
    
    
    
    12July 8, 2008
    
    August 7, 2008
    
    September 15, 2008
    
    
    
    
    
    
    13November 4, 2008
    
    November 21, 2008
    
    December 15, 2008
    
    
    
    
    
    
    1350Common StockRegular Dividend
    
    March 4, 2008
    
    March 19, 2008
    
    April 21, 2008
    
            Php
    68.00
    
    
    
    12,853August 5, 2008
    
    August 22, 2008
    
    September 22, 2008
    
    
    70.00
    
    
    
    13,140Special Dividend
    
    March 4, 2008
    
    March 19, 2008
    
    April 21, 2008
    
    
    56.00
    
    
    
    10,58536,578Charged to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,034
 *
    
    Only the holders of Series V and VI Convertible Preferred Stock whose shares were
originally issued on June 4, 2001 and mandatorily converted on June 5, 2008 were entitled
to these final dividends.**
    
    Dividends were declared based on total amount paid up.  F-83




---



##### Table of Contents



Dividends Declared For The Year Ended December 31, 2007
 Date
    
    AmountClass
    
    Approved
    
    Record
    
    Payable
    
    Per Share
    
    
    Total(in million pesos)Preferred Stock Subject to
Mandatory RedemptionSeries V
    
    March 6, 2007
    
    March 20, 2007
    
    April 15, 2007
    
            Php
    4.675
    
    
    
    June 12, 2007
    
    June 28, 2007
    
    July 15, 2007
    
    
    4.675
    
    
    
    September 14, 2007
    
    September 28, 2007
    
    October 15, 2007
    
    
    4.675
    
    
    
    December 1, 2007
    
    December 21, 2007
    
    January 15, 2008
    
    
    4.675
    
    
    
    Series VI
    
    March 6, 2007
    
    March 20, 2007
    
    April 15, 2007
    
    US$
    0.09925
    
    
    
    4June 12, 2007
    
    June 28, 2007
    
    July 15, 2007
    
    
    0.09925
    
    
    
    3September 14, 2007
    
    September 28, 2007
    
    October 15, 2007
    
    
    0.09925
    
    
    
    3December 1, 2007
    
    December 21, 2007
    
    January 15, 2008
    
    
    0.09925
    
    
    
    3Charged to income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1310% Cumulative Convertible
Preferred StockSeries CC
    
    January 30, 2007
    
    February 28, 2007
    
    March 30, 2007
    
            Php
    1.00
    
    
    
    17Series DD
    
    January 31, 2007
    
    February 15, 2007
    
    February 28, 2007
    
    
    1.00
    
    
    
    2Series EE
    
    March 27, 2007
    
    April 26, 2007
    
    May 31, 2007
    
    
    1.00
    
    
    
    Series A, I, R, W, AA and BB
    
    July 10, 2007
    
    August 1, 2007
    
    August 31, 2007
    
    
    1.00
    
    
    
    129Series B, F, Q, V and Z
    
    August 7, 2007
    
    September 3, 2007
    
    September 28, 2007
    
    
    1.00
    
    
    
    91Series E, K, O and U
    
    September 14, 2007
    
    October 4, 2007
    
    October 31, 2007
    
    
    1.00
    
    
    
    44Series C, D, J, T and X
    
    September 14, 2007
    
    October 14, 2007
    
    November 27, 2007
    
    
    1.00
    
    
    
    57Series G, N, P and S
    
    November 6, 2007
    
    December 6, 2007
    
    December 28, 2007
    
    
    1.00
    
    
    
    27Series H, L, M and Y
    
    December 1, 2007
    
    December 28, 2007
    
    January 31, 2008
    
    
    1.00
    
    
    
    41408Cumulative Non-Convertible
Redeemable Preferred StockSeries IV*
    
    January 30, 2007
    
    February 23, 2007
    
    March 15, 2007
    
            Php
    
    
    
    
    12May 8, 2007
    
    May 25, 2007
    
    June 15, 2007
    
    
    
    
    
    
    13July 10, 2007
    
    August 9, 2007
    
    September 15, 2007
    
    
    
    
    
    
    12November 6, 2007
    
    November 23, 2007
    
    December 15, 2007
    
    
    
    
    
    
    1249Common StockRegular Dividend
    
    March 6, 2007
    
    March 20, 2007
    
    April 20, 2007
    
            Php
    50.00
    
    
    
    9,429August 7, 2007
    
    August 24, 2007
    
    September 24, 2007
    
    
    60.00
    
    
    
    11,322Special Dividend
    
    August 7, 2007
    
    August 24, 2007
    
    September 24, 2007
    
    
    40.00
    
    
    
    7,54828,299Charged to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,756
 *
    
    Dividends are declared based on total amount paid up. Dividends Declared After December 31, 2009
 Date
    
    AmountClass
    
    Approved
    
    Record
    
    Payable
    
    Per Share
    
    
    Total(in million pesos)10% Convertible Preferred StockSeries CC
    
    January 26, 2010
    
    February 25, 2010
    
    March 31, 2010
    
    
    1.00
    
    
    
    17Series DD
    
    January 26, 2010
    
    February 11, 2010
    
    February 26, 2010
    
            Php
    1.00
    
    
    
    3Series EE
    
    March 26, 2010
    
    April 30, 2010
    
    May 31, 2010
    
    
    1.00
    
    
    
    20Cumulative Non-Convertible
Redeemable Preferred StockSeries IV*
    
    January 26, 2010
    
    February 19, 2010
    
    March 15, 2010
    
            Php
    
    
    
    
    12May 4, 2010
    
    May 21, 2010
    
    June 15, 2010
    
    
    
    
    
    
    1224Common StockRegular Dividend
    
    March 2, 2010
    
    March 17, 2010
    
    April 20, 2010
    
            Php
    76.00
    
    
    
    14,196Special Dividend
    
    March 2, 2010
    
    March 17, 2010
    
    April 20, 2010
    
    
    65.00
    
    
    
    12,14226,338Charged to retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,382
 *
    
    Dividends are declared based on total amount paid up.  F-84




---



##### Table of Contents



20.
    
    Interest-bearing Financial Liabilities
  2009
    
    
    2008(in million pesos)Long-term portion of interest-bearing financial liabilities:Long-term debt (Notes 4, 5, 9, 23, 26 and 28)
    
    
    86,066
    
    
    
    58,899Obligations under finance lease (Notes 4, 5, 23, 26 and 28)
    
    
    13
    
    
    
    1186,079
    
    
    
    58,910Current portion of interest-bearing financial liabilities:Notes payable (Notes 4, 5, 23, 26 and 28)
    
    
    2,279
    
    
    
    553Long-term debt maturing within one year (Notes 4, 5, 9, 23, 26 and 28)
    
    
    10,384
    
    
    
    14,459Obligations under finance lease maturing within one year (Notes 4, 5,
26 and 28)
    
    
    51
    
    
    
    59Preferred stock subject to mandatory redemption (Notes 4, 5, 26 and 28)
    
    
    
    
    
    
    912,714
    
    
    
    15,080
  2009
    
    
    2008(in million pesos)Long-term debt (Note 28)
    
    
    3,858
    
    
    
    4,576Obligation under finance lease
    
    
    3
    
    
    
    1Unamortized debt discount at end of year
    
    
    3,861
    
    
    
    4,577
  2009
    
    
    2008(in million pesos)Unamortized debt discount at beginning of year
    
    
    4,577
    
    
    
    4,538Additions during the year
    
    
    182
    
    
    
    154Revaluations during the year
    
    
    22
    
    
    
    706Accretion during the year included as part of
Financing costs  Accretion on financial
liabilities (Note 5)
    
    
    (920
    )
    
    
    (806
    )Settlements and conversions during the year
    
    
    
    
    
    
    (15
    )Unamortized debt discount at end of year
    
    
    3,861
    
    
    
    4,577
 Long-term Debt
  Description
    
    Interest Rates
    
    2009
    
    
    2008(in millions)U.S. Dollar Debts:Export Credit Agencies-Supported Loans:Kreditanstalt für Wiederaufbau, or KfW
    
    5.65% and US$ LIBOR + 0.65% -  2.5% in 2009 and 5.65% - 7.58% and US$ LIBOR + 0.55% - 2.5%  in 2008
    
    US$
    31
    
    
            Php
    1,454
    
    
    US$
    74
    
    
            Php
    3,540Finnvera, Plc, or Finnvera
    
    US$ LIBOR + 0.05% - 1.35%  in 2009 and US$ LIBOR + 0.05% in 2008
    
    
    58
    
    
    
    2,681
    
    
    
    30
    
    
    
    1,420Exportkreditnamnden, or EKN
    
    3.79% in 2009 and 3.79% - 6.6% and US$ LIBOR + 0.15% - 0.65% in 2008
    
    
    18
    
    
    
    860
    
    
    
    7
    
    
    
    351107
    
    
    
    4,995
    
    
    
    111
    
    
    
    5,311
  F-85




---



##### Table of Contents



Description
    
    Interest Rates
    
    2009
    
    
    2008(in millions)Fixed Rate Notes
    
    8.35% - 11.375% in 2009 and 2008
    
    
    385
    
    
    
    17,876
    
    
    
    560
    
    
    
    26,693Term Loans:Debt Exchange Facility
    
    2.25% in 2009 and 2.25% and  US$ LIBOR + 1% in 2008
    
    
    209
    
    
    
    9,725
    
    
    
    196
    
    
    
    9,357GSM Network Expansion Facilities
    
    4.49% - 4.70% and US$ LIBOR + 0.42% - 1.85% in 2009 and 4.49% - 4.70% and US$ LIBOR  + 0.42% - 0.815% in 2008
    
    
    157
    
    
    
    7,274
    
    
    
    183
    
    
    
    8,698Others
    
    6% and swap rate + 2.79% and US$ LIBOR + 0.42% - 0.50% in 2009 and 6% - 8.9% and US$ LIBOR + 0.40% - 0.50% in 2008
    
    
    118
    
    
    
    5,484
    
    
    
    141
    
    
    
    6,694Satellite Acquisition Loans
    
    US$ LIBOR + 1.75% to 2.75% in 2009 and 2008
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    610US$
    976
    
    
    
    45,354
    
    
    US$
    1,204
    
    
    
    57,363Philippine Peso Debts:Corporate Notes
    
    5.625% - 9.1038% and PDST-F + 1.25% in 2009 and 5.625% - 8.4346% in 2008
    
    
    
    
    
    
    24,863
    
    
    
    
    
    
    
    9,921Term Loans:Unsecured Term Loans
    
    6.125% - 8.7792%; MART1 + 0.75% and PDST-F + 1% - 1.50%  in 2009 and 6.125%; MART 1 + 0.75% and PDST-F + 1% - 1.50%  in 2008
    
    
    
    
    
    
    26,088
    
    
    
    
    
    
    
    6,070Secured Term Loans
    
    PDST-F + 5.70% + Bank's cost of funds; PDST-F + 1.375% and AUB's prime rate in 2009 and 7.09% and MART1 + 5.70% in 2008
    
    
    
    
    
    
    145
    
    
    
    
    
    
    
    451,096
    
    
    
    
    
    
    
    15,995Total long-term debt
    
    
    
    
    
    
    
    
    96,450
    
    
    
    
    
    
    
    73,358Less portion maturing within one year (Note 28)
    
    
    
    
    
    
    
    
    10,384
    
    
    
    
    
    
    
    14,459Noncurrent portion of long-term (Note 28)
    
    
    
    
    
    
    
            Php
    86,066
    
    
    
    
    
    
            Php
    58,899
 Note: Amounts presented are net of unamortized debt discount and debt issuance costs.
  U.S. Dollar Debt
    
    
    Php Debt
    
    
    TotalYear
    
    In U.S. Dollar
    
    
    In Php
    
    
    In Php
    
    
    In Php(in millions)2010
    
    
    149
    
    
    
    6,939
    
    
    
    3,594
    
    
    
    10,5332011
    
    
    94
    
    
    
    4,342
    
    
    
    7,899
    
    
    
    12,2412012
    
    
    224
    
    
    
    10,421
    
    
    
    9,627
    
    
    
    20,0482013
    
    
    49
    
    
    
    2,297
    
    
    
    9,028
    
    
    
    11,3252014 and onwards
    
    
    541
    
    
    
    25,102
    
    
    
    21,059
    
    
    
    46,1611,057
    
    
    
    49,101
    
    
    
    51,207
    
    
    
    100,308
 U.S. Dollar Debts:
 Export Credit Agencies-Supported Loans
   F-86




---



##### Table of Contents



Kreditanstalt für Wiederaufbau, or KfW
  
    
    US$23 million provided in connection with the US$149 million refinancing facility
discussed below; and
    
    US$8 million provided for the 15% downpayment portion and credit facilities without
guarantee/insurance cover from the export credit agencies, of which US$5 million was in
connection with the US$149 million refinancing facility discussed in the following
paragraphs.
   Finnvera, Plc, or Finnvera
    Exportkreditnamnden, or EKN
   F-87




---



##### Table of Contents



Fixed Rate Notes
  Principal Amount
    
    Interest Rate
    
    
    Maturity Date

    
    2009
    
    
    2008(in millions)US$245,399,000
    
    
    8.350
    %
    
    March 6, 2017
    
    US$
    242
    
    
        Php
    11,256
    
    
    US$
    291
    
    
        Php
    13,896US$145,789,000
    
    
    11.375
    %
    
    May 15, 2012
    
    
    143
    
    
    
    6,620
    
    
    
    155
    
    
    
    7,380US$113,786,000
    
    
    10.500
    %
    
    April 15, 2009
    
    
    
    
    
    
    
    
    
    
    114
    
    
    
    5,417US$
    385
    
    
        Php
    17,876
    
    
    US$
    560
    
    
        Php
    26,693
 Term Loans
 US$283 Million Term Loan Facility, or Debt Exchange Facility
   GSM Network Expansion Facilities
      F-88




---



##### Table of Contents



Other Term Loans
     Satellite Acquisition Loans
   F-89




---



##### Table of Contents



Philippine Peso Debts:
 Corporate Notes
 Php5,000 Million Fixed Rate Corporate Notes
  Php5,000 Million Fixed Rate Corporate Notes
  Php5,000 Million Fixed Rate Corporate Notes
  Php3,000 Million Corporate Notes
  Php7,000 Million Fixed Rate Corporate Notes
  Term Loans
 Unsecured Term Loans
 Php2,500 Million Term Loan Facility
   F-90




---



##### Table of Contents



Php400 Million and Php20 Million Refinancing Loans
  Php2,500 Million Term Loan Facility
  Php2,400 Million Term Loan Facility
  Php3,000 Million Term Loan Facility
  Php2,000 Million Term Loan Facility
  Php1,000 Million Term Loan Facility
   F-91




---



##### Table of Contents



Php2,500 Million Term Loan Facility
  Php1,500 Million Term Loan Facility
  Php1,000 Million Term Loan Facility
  Php1,000 Million Term Loan Facility
  Php2,500 Million Term Loan Facility
  Php1,500 Million Term Loan Facility
  Php500 Million Term Loan Facility
   F-92




---



##### Table of Contents



Php1,000 Million Term Loan Facility
  Php2,000 Million Term Loan Facility
  Php1,000 Million Term Loan Facility
  Secured Term Loans
 Php150 Million Term Loan Facility
  Php8 Million Term Loan Facility
  Notes Payable
   F-93




---



##### Table of Contents



Debt Covenants
        F-94




---



##### Table of Contents



Obligations Under Finance Lease
  Year
    
    (in million pesos)2010
    
    
    532011
    
    
    62012
    
    
    52013 and onwards
    
    
    3Total minimum finance lease payments (Note 26)
    
    
    67Less amount representing interest
    
    
    3Present value of net minimum finance lease payments (Notes 3 and 28)
    
    
    64Less obligations under finance lease maturing within one year (Notes
9 and 28)
    
    
    51Long-term portion of obligations under finance lease (Notes 9 and 28)
    
    
    13
 Municipal Telephone Projects
        F-95




---



##### Table of Contents



Other Long-term Finance Lease Obligations
 Note 9  Property, Plant and Equipment
  Preferred Stock Subject to Mandatory Redemption
  2009
    
    
    2008Series V
    
    
    Series VI
    
    
    Total
    
    
    Series V
    
    
    Series VI
    
    
    Total(in million pesos)Balance at beginning of year
    
    
    2
    
    
    
    7
    
    
    
    9
    
    
    
    49
    
    
    
    966
    
    
    
    1,015Conversion (Note 29)
    
    
    (2
    )
    
    
    (7
    )
    
    
    (9
    )
    
    
    (50
    )
    
    
    (1,027
    )
    
    
    (1,077
    )Accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    36
    
    
    
    39Revaluation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    32Balance at end of year
(Notes 26 and 28)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    7
    
    
    
    9
   Note 28  Financial Assets and Liabilities
  F-96




---



##### Table of Contents



Note 26  Contractual Obligations and Commercial Commitments
 Note 5  Income and Expenses Note 8  Earnings Per Common Share
 21.
    
    Deferred Credits and Other Noncurrent Liabilities
  2009
    
    
    2008(in million pesos)Accrual of capital expenditures under long-term financing
    
    
    11,966
    
    
    
    8,650Provision for asset retirement obligations (Notes 3 and 9)
    
    
    1,204
    
    
    
    1,100Contingent consideration for business acquisitions  net
of current portion (Notes 13, 14 and 23)
    
    
    1,193
    
    
    
    593Unearned revenues (Note 23)
    
    
    66
    
    
    
    190Others
    
    
    9
    
    
    
    4914,438
    
    
    
    10,582
   2009
    
    
    2008(in million pesos)Provision for asset retirement obligations at beginning of year
    
    
    1,100
    
    
    
    952Accretion expenses for the year
    
    
    94
    
    
    
    85Additional liability recognized during the year (Note 29)
    
    
    17
    
    
    
    70Settlement of obligations
    
    
    (7
    )
    
    
    (7
    )Provision for asset retirement obligations at end of year
(Note 3)
    
    
    1,204
    
    
    
    1,100
  F-97




---



##### Table of Contents



Contingent Consideration for Business Acquisitions
 Note 2  Summary of Significant Accounting Policies, Note 13  Business
Combinations and Acquisition of Non-Controlling Interests, Note 14  Goodwill and Intangible
Assets Note 23  Accrued Expenses and Other Current Liabilities
    2009
    
    
    2008U.S. Dollar
    
    
    Php
    
    
    U.S. Dollar
    
    
    Php(in millions)Balance at beginning of year
    
    
    15
    
    
    
    720
    
    
    
    25
    
    
    
    1,048Business combinations (Note 13)
    
    
    8
    
    
    
    389
    
    
    
    (4
    )
    
    
    (162
    )Accretion for the year
    
    
    3
    
    
    
    142
    
    
    
    3
    
    
    
    137Payments
    
    
    
    
    
    
    (13
    )
    
    
    (9
    )
    
    
    (379
    )Translation
    
    
    
    
    
    
    (31
    )
    
    
    
    
    
    
    76Balance at end of year
    
    
    26
    
    
    
    1,207
    
    
    
    15
    
    
    
    720Less current portion of
contingent consideration for
business acquisitions (Note
23)
    
    
    
    
    
    
    14
    
    
    
    3
    
    
    
    127Noncurrent portion of
contingent consideration for
business acquisitions
    
    
    26
    
    
    
    1,193
    
    
    
    12
    
    
    
    593
 22.
    
    Accounts Payable
  2009
    
    
    2008(in million pesos)Suppliers and contractors (Notes 26 and 28)
    
    
    14,975
    
    
    
    14,131Carriers (Notes 26 and 28)
    
    
    1,937
    
    
    
    1,780Taxes (Notes 27 and 28)
    
    
    1,894
    
    
    
    1,970Related parties (Notes 24, 26 and 28)
    
    
    233
    
    
    
    120Others
    
    
    562
    
    
    
    26719,601
    
    
    
    18,268
  F-98




---



##### Table of Contents



23.
    
    Accrued Expenses and Other Current Liabilities
  2009
    
    
    2008(in million pesos)Accrued utilities and related expenses (Notes 24, 26 and 28)
    
    
    17,549
    
    
    
    13,504Accrued employee benefits (Notes 3, 25, 26 and 28)
    
    
    8,074
    
    
    
    2,928Unearned revenues (Note 21)
    
    
    4,588
    
    
    
    4,249Accrued taxes and related expenses (Notes 26 and 27)
    
    
    1,941
    
    
    
    1,398Accrued interests and other related costs (Notes 20, 26 and 28)
    
    
    1,167
    
    
    
    1,212Installment payable for purchase of equity investment (Note 13)
    
    
    65
    
    
    
    Current portion of contingent consideration for business acquisitions (Notes 13, 14 and 21)
    
    
    14
    
    
    
    127Others (Note 10)
    
    
    2,048
    
    
    
    96335,446
    
    
    
    24,381
  24.
    
    Related Party Transactions
 a.
    
    Air Time Purchase Agreement between PLDT and AIL and Related Agreements
   Note
10  Investments in Associates and Joint Ventures
  F-99




---



##### Table of Contents



Note 5  Income and Expenses
 b.
    
    Agreements between PLDT and certain subsidiaries with Meralco
   Note 10  Investments in Associates and Joint Ventures Note 30  Subsequent
Event
 c.
    
    Transactions with Major Stockholders, Directors and Officers
  1.
    
    Cooperation Agreement with First Pacific and certain affiliates, or the FP
Parties, NTT Communications and NTT DoCoMo
  
    
    certain contractual veto rights over a number of major decisions or
transactions; and
    
    rights relating to the representation on the Board of Directors of PLDT and
Smart, respectively, and any committees thereof.
  
    
    Restriction on Ownership of Shares of PLDT by NTT Communications and NTT DoCoMo.
Each of NTT Communications and NTT DoCoMo has agreed not to beneficially own,
directly or indirectly, in the aggregate with their respective subsidiaries and
affiliates, more than 21% of the issued and outstanding shares of PLDTs common
stock. If such event does occur, the FP Parties, as long as they own in the
aggregate not less than 21% of the issued and outstanding shares of PLDTs common
stock, have the right to terminate their respective rights and obligations under
the Cooperation Agreement, the Shareholders Agreement and the Stock Purchase and
Strategic Investment Agreement.
  F-100




---



##### Table of Contents




    
    Limitation on Competition. NTT Communications, NTT DoComo and their respective
subsidiaries are prohibited from investing in excess of certain thresholds in
businesses competing with PLDT in respect of customers principally located in the
Philippines and from using their assets in the Philippines in such businesses.
Moreover, if PLDT, Smart or any of Smarts subsidiaries intend to enter into any
contractual arrangement relating to certain competing businesses, PLDT is required
to provide, or to use reasonable efforts to procure that Smart or any of Smarts
subsidiaries provide, NTT Communications and NTT DoCoMo with the same opportunity
to enter into such agreement with PLDT or Smart or any of Smarts subsidiaries, as
the case may be.
    
    Business Cooperation. PLDT and NTT DoCoMo agreed in principle to collaborate
with each other on the business development, roll-out and use of a W-CDMA mobile
communication network. In addition, PLDT agreed, to the extent of the power
conferred by its direct or indirect shareholding in Smart, to procure that Smart
will: (i) become a member of a strategic alliance group for international roaming
and corporate sales and services; and (ii) enter into a business relationship
concerning preferred roaming and inter-operator tariff discounts with NTT DoCoMo.
    
    Additional Rights of NTT DoCoMo. Pursuant to amendments effected by the
Cooperation Agreement to the Stock Purchase and Strategic Investment Agreement and
the Shareholders Agreement, upon NTT Communications and NTT DoCoMo and their
respective subsidiaries owning in the aggregate 20% or more of PLDTs shares of
common stock and for as long as they continue to own in the aggregate at least
17.5% of PLDTs shares of common stock then outstanding, NTT DoCoMo has additional
rights under the Stock Purchase and Strategic Investment Agreement and Shareholders
Agreement, including that:
 1.
    
    NTT DoCoMo is entitled to nominate one additional NTT
DoCoMo nominee to the Board of Directors of each PLDT and Smart;2.
    
    PLDT must consult NTT DoCoMo no later than 30 days prior
to the first submission to the board of PLDT or certain of its committees of
any proposal of investment in an entity that would primarily engage in a
business that would be in direct competition or substantially the same
business opportunities, customer base, products or services with business
carried on by NTT DoCoMo, or which NTT DoCoMo has announced publicly an
intention to carry on;3.
    
    PLDT must procure that Smart does not cease to carry on
its business, dispose of all of its assets, issue common shares, merge or
consolidate, or effect winding up or liquidation without PLDT first
consulting with NTT DoCoMo no later than 30 days prior to the first
submission to the board of PLDT or Smart, or certain of its committees; and4.
    
    PLDT must first consult with NTT DoCoMo no later than 30
days prior to the first submission to the board of PLDT or certain of its
committees for the approval of any transfer by any member of the PLDT Group
of Smart common capital stock to any person who is not a member of the PLDT
Group.
  
    
    Change in Control. Each of NTT Communications, NTT DoCoMo and the FP Parties
agreed that to the extent permissible under applicable laws and regulations of the
Philippines and other jurisdictions, subject to certain conditions, to cast its
vote as a shareholder in support of any resolution proposed by the Board of
Directors of PLDT for the purpose of safeguarding PLDT from any Hostile Transferee.
A Hostile Transfereeis defined under the Cooperation Agreement to mean any
person (other than NTT Communications, NTT DoCoMo, First Pacific or any of their
respective affiliates) determined to be so by the PLDT Board of Directors and
includes, without limitation, a person who announces an intention to
  F-101




---



##### Table of Contents



acquire,
seeking to acquire or acquires 30% or more of PLDT common shares then issued and
outstanding from time to time or having (by itself or together with itself)
acquired 30% or more of the PLDT common shares who announces an intention to
acquire, seeking to acquire or acquires a
further 2% of such PLDT common shares: (a) at a price per share which is less than
the fair market value as determined by the Board of Directors of PLDT, as advised by
a professional financial advisor; (b) which is subject to conditions which are
subjective or which could not be reasonably satisfied; (c) without making an offer
for all PLDT common shares not held by it and/or its affiliates and/or persons who,
pursuant to an agreement or understanding (whether formal or informal), actively
cooperate to obtain or consolidate control over PLDT; (d) whose offer for the PLDT
common shares is unlikely to succeed; or (e) whose intention is otherwise not bona
fide; provided that, no person will be deemed a Hostile Transferee unless prior to
making such determination, the Board of Directors of PLDT has used reasonable efforts
to discuss with NTT Communications and NTT DoCoMo in good faith whether such person
should be considered a Hostile Transferee.
    
    Termination.If NTT Communications, NTT DoCoMo or their respective subsidiaries
cease to own, in the aggregate, full legal and beneficial title to at least 10% of
the shares of PLDTs common stock then issued and outstanding, their respective
rights and obligations under the Cooperation Agreement and the Shareholders
Agreement will terminate and the Strategic Arrangements (as defined in the Stock
Purchase and Strategic Investment Agreement) will terminate. If the FP Parties and
their respective subsidiaries cease to have, directly or indirectly, effective
voting power in respect of shares of PLDTs common stock representing at least
18.5% of the shares of PLDTs common stock then issued and outstanding, their
respective rights and obligations under the Cooperation Agreement, the Stock
Purchase and Strategic Investment Agreement, and the Shareholders Agreement will
terminate.
 2.
    
    Integrated i-mode Services Package Agreement between NTT DoCoMo and Smart
  3.
    
    Advisory Service Agreement between NTT DoCoMo and PLDT
  4.
    
    Other Agreements with NTT Communications and/or its Affiliates
  
    
    Advisory Services Agreement. On March 24, 2000, PLDT entered into an agreement
with NTT Communications, as amended on March 31, 2003, March 31, 2005 and June 16,
2006, under which NTT Communications provides PLDT with technical, marketing and
other consulting services for various business areas of PLDT starting April 1,
2000;
    
    Arcstar Licensing Agreement and Arcstar Service Provider Agreement. On March
24, 2000, PLDT entered into an agreement with NTT Worldwide Telecommunications
Corporation under which PLDT markets, and manages data and other services under NTT
Communications Arcstar brand to its corporate customers in the Philippines.
PLDT also entered into a Trade Name and Trademark
Agreement with NTT Communications under which PLDT has been given the right to use
the trade name Arcstar and its related trademark, logo and symbols, solely for the
purpose of PLDTs marketing, promotional and sales activities for the Arcstar
services within the Philippines;
  F-102




---



##### Table of Contents




    
    Conventional International Telecommunications Services Agreement.On March 24,
2000, PLDT entered into an agreement with NTT Communications under which PLDT and
NTT Communications agreed to cooperative arrangements for conventional
international telecommunications services to enhance their respective international
businesses; and
    
    Service Agreement.On February 1, 2008, PLDT entered into an agreement with NTT
World Engineering Marine Corporation wherein the latter provides offshore submarine
cable repair and other allied services for the maintenance of PLDTs domestic fiber
optic network submerged plant.
  5.
    
    Agreements between Smart and Asia Link B.V., or ALBV
  6.
    
    Agreements Relating to Insurance Companies
  Note 30  Subsequent Event
 Compensation of Key Officers of the PLDT Group
  2009
    
    
    2008
    
    
    2007(in million pesos)Short-term employee benefits
    
    
    593
    
    
    
    498
    
    
    
    549Share-based payments (Note 25)
    
    
    418
    
    
    
    233
    
    
    
    299Post-employment benefits (Note 25)
    
    
    33
    
    
    
    24
    
    
    
    58Total compensation paid to key officers of
the PLDT Group
    
    
    1,044
    
    
    
    755
    
    
    
    906
   F-103




---



##### Table of Contents



25.
    
    Share-based Payments and Employee Benefits
 Executive Stock Option Plan, or ESOP
   2009
    
    
    2008(in million pesos)Balance at beginning of year
    
    
    18,341
    
    
    
    26,758Exercised shares
    
    
    (18,340
    )
    
    
    (8,417
    )Forfeiture
    
    
    (1
    )
    
    
    Balance at end of year
    
    
    
    
    
    
    18,341
   LTIP
   F-104




---



##### Table of Contents



Note 3  Managements Use of Judgments, Estimates and
Assumptions, Note 5  Income and Expenses, Note 23  Accrued Expenses and Other Current
Liabilities Note 26  Contractual Obligations and Commercial Commitments
 Pension
 Defined Benefit Pension Plans
   2009
    
    
    2008
    
    
    2007(in million pesos)Change in present value of defined benefit obligations:Present value of defined benefit obligations at beginning of year
    
    
    10,917
    
    
    
    10,160
    
    
    
    13,314Interest costs
    
    
    1,193
    
    
    
    834
    
    
    
    996Current service costs
    
    
    643
    
    
    
    600
    
    
    
    777Actuarial losses (gains) on obligations
    
    
    4,720
    
    
    
    (101
    )
    
    
    (4,788
    )Liabilities of newly acquired subsidiaries
    
    
    19
    
    
    
    
    
    
    
    Actual benefits paid
    
    
    (93
    )
    
    
    (576
    )
    
    
    (566
    )Curtailment
    
    
    
    
    
    
    
    
    
    
    427Present value of defined benefit obligations at end of year
    
    
    17,399
    
    
    
    10,917
    
    
    
    10,160Change in plan assets:Fair value of plan assets at beginning of year
    
    
    7,168
    
    
    
    8,519
    
    
    
    5,768Actual contributions
    
    
    8,866
    
    
    
    914
    
    
    
    1,515Expected return on plan assets
    
    
    673
    
    
    
    865
    
    
    
    644Actual benefits paid
    
    
    (93
    )
    
    
    (576
    )
    
    
    (566
    )Actuarial gains (losses) on plan assets
    
    
    3,366
    
    
    
    (2,554
    )
    
    
    1,158Fair value of plan assets at end of year
    
    
    19,980
    
    
    
    7,168
    
    
    
    8,519Unfunded (surplus) status  net
    
    
    (2,581
    )
    
    
    3,749
    
    
    
    1,641Unrecognized net actuarial gains (losses) (Note 3)
    
    
    (2,474
    )
    
    
    (1,126
    )
    
    
    1,344(5,055
    )
    
    
    2,623
    
    
    
    2,985Accrued benefit costs (Note 3)
    
    
    359
    
    
    
    2,623
    
    
    
    2,985Prepaid benefit costs (Notes 3 and 18)
    
    
    5,414
    
    
    
    
    
    
    
    Components of net periodic benefit costs:Interest costs
    
    
    1,193
    
    
    
    834
    
    
    
    996Current service costs
    
    
    643
    
    
    
    600
    
    
    
    777Net actuarial losses (gains) recognized for the year
    
    
    (3
    )
    
    
    (11
    )
    
    
    78Expected return on plan assets
    
    
    (673
    )
    
    
    (865
    )
    
    
    (644
    )Curtailment loss
    
    
    
    
    
    
    
    
    
    
    427Amortizations of unrecognized net transition obligation
    
    
    
    
    
    
    
    
    
    
    1Net periodic benefit costs (Notes 3 and 5)
    
    
    1,160
    
    
    
    558
    
    
    
    1,635
  F-105




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007Average remaining working years of covered employee
    
    
    18
    
    
    
    20
    
    
    
    21Expected rate of return on plan assets
    
    
    12
    %
    
    
    9
    %
    
    
    10
    %Discount rate
    
    
    9
    %
    
    
    11
    %
    
    
    8
    %Rate of increase in compensation
    
    
    9
    %
    
    
    10
    %
    
    
    7
    %
     2009
    
    
    2008
    
    
    2007Investments in listed and unlisted equity securities
    
    
    78
    %
    
    
    51
    %
    
    
    60
    %Investments in debt and fixed income securities
    
    
    9
    %
    
    
    27
    %
    
    
    21
    %Investments in temporary placements
    
    
    7
    %
    
    
    8
    %
    
    
    5
    %Investments in real estate
    
    
    5
    %
    
    
    9
    %
    
    
    8
    %Investments in mutual funds
    
    
    1
    %
    
    
    5
    %
    
    
    6
    %100
    %
    
    
    100
    %
    
    
    100
    %
  Defined Contribution Plan
   F-106




---



##### Table of Contents



2009
    
    
    2008
    
    
    2007Investments in debt and fixed income securities
    
    
    61
    %
    
    
    68
    %
    
    
    57
    %Investments in listed and unlisted equity securities
    
    
    34
    %
    
    
    23
    %
    
    
    35
    %Others
    
    
    5
    %
    
    
    9
    %
    
    
    8
    %100
    %
    
    
    100
    %
    
    
    100
    %
  Pension Benefit Costs
  2009
    
    
    2008
    
    
    2007(in million pesos)Expense recognized for defined benefit plans
    
    
    1,160
    
    
    
    558
    
    
    
    1,635Expense recognized for defined contribution plans
    
    
    146
    
    
    
    167
    
    
    
    138Total expense recognized for consolidated
pension benefit costs (Notes 3 and 5)
    
    
    1,306
    
    
    
    725
    
    
    
    1,773
 26.
    
    Contractual Obligations and Commercial Commitments
 Contractual Obligations
  Payments Due by PeriodMoreLess than
    
    
    
    
    
    
    
    
    
    
    than 5Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    years(in million pesos)December 31, 2009Debt(1):
    
    
    130,075
    
    
    
    5,241
    
    
    
    56,398
    
    
    
    38,073
    
    
    
    30,363Principal
    
    
    102,587
    
    
    
    4,876
    
    
    
    40,226
    
    
    
    31,953
    
    
    
    25,532Interest
    
    
    27,488
    
    
    
    365
    
    
    
    16,172
    
    
    
    6,120
    
    
    
    4,831Lease obligations:
    
    
    7,564
    
    
    
    3,778
    
    
    
    1,956
    
    
    
    994
    
    
    
    836Operating lease
    
    
    7,497
    
    
    
    3,730
    
    
    
    1,940
    
    
    
    991
    
    
    
    836Finance lease
    
    
    67
    
    
    
    48
    
    
    
    16
    
    
    
    3
    
    
    
    Unconditional purchase obligations(2)
    
    
    834
    
    
    
    137
    
    
    
    279
    
    
    
    279
    
    
    
    139Other obligations:
    
    
    64,456
    
    
    
    44,322
    
    
    
    15,528
    
    
    
    826
    
    
    
    3,780Derivative financial liabilities(3):
    
    
    4,759
    
    
    
    
    
    
    
    2,153
    
    
    
    789
    
    
    
    1,817Long-term currency swaps
    
    
    4,759
    
    
    
    
    
    
    
    2,153
    
    
    
    789
    
    
    
    1,817Various trade and other obligations:
    
    
    59,697
    
    
    
    44,322
    
    
    
    13,375
    
    
    
    37
    
    
    
    1,963Suppliers and contractors
    
    
    26,941
    
    
    
    14,975
    
    
    
    11,966
    
    
    
    
    
    
    
    Utilities and related expenses
    
    
    14,737
    
    
    
    14,687
    
    
    
    18
    
    
    
    5
    
    
    
    27Employee benefits
    
    
    8,082
    
    
    
    8,082
    
    
    
    
    
    
    
    
    
    
    
    Customers deposits
    
    
    2,166
    
    
    
    
    
    
    
    198
    
    
    
    32
    
    
    
    1,936Carriers
    
    
    1,937
    
    
    
    1,937
    
    
    
    
    
    
    
    
    
    
    
    Dividends
    
    
    1,749
    
    
    
    1,749
    
    
    
    
    
    
    
    
    
    
    
    
  F-107




---



##### Table of Contents



Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    years(in million pesos)Others
    
    
    4,085
    
    
    
    2,892
    
    
    
    1,193
    
    
    
    
    
    
    
    Total contractual obligations
    
    
    202,929
    
    
    
    53,478
    
    
    
    74,161
    
    
    
    40,172
    
    
    
    35,118December 31, 2008Debt(1):
    
    
    99,915
    
    
    
    8,201
    
    
    
    31,500
    
    
    
    26,744
    
    
    
    33,470Principal
    
    
    78,486
    
    
    
    7,629
    
    
    
    19,916
    
    
    
    21,978
    
    
    
    28,963Interest
    
    
    21,429
    
    
    
    572
    
    
    
    11,584
    
    
    
    4,766
    
    
    
    4,507Lease obligations:
    
    
    7,235
    
    
    
    2,727
    
    
    
    1,608
    
    
    
    1,265
    
    
    
    1,635Operating lease
    
    
    7,164
    
    
    
    2,667
    
    
    
    1,601
    
    
    
    1,261
    
    
    
    1,635Finance lease
    
    
    71
    
    
    
    60
    
    
    
    7
    
    
    
    4
    
    
    
    Unconditional purchase obligations(2)
    
    
    762
    
    
    
    24
    
    
    
    167
    
    
    
    286
    
    
    
    285Other obligations:
    
    
    50,815
    
    
    
    33,162
    
    
    
    11,630
    
    
    
    1,816
    
    
    
    4,207Mandatory conversion and purchase of shares
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    Derivative financial liabilities(3):
    
    
    6,207
    
    
    
    108
    
    
    
    2,003
    
    
    
    1,768
    
    
    
    2,328Long-term currency swaps
    
    
    6,099
    
    
    
    
    
    
    
    2,003
    
    
    
    1,768
    
    
    
    2,328Forward foreign exchange contracts
    
    
    69
    
    
    
    69
    
    
    
    
    
    
    
    
    
    
    
    Long-term foreign currency options
    
    
    39
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    Various trade and other obligations:
    
    
    44,599
    
    
    
    33,045
    
    
    
    9,627
    
    
    
    48
    
    
    
    1,879Suppliers and contractors
    
    
    22,781
    
    
    
    14,131
    
    
    
    8,650
    
    
    
    
    
    
    
    Utilities and related expenses
    
    
    11,376
    
    
    
    11,346
    
    
    
    27
    
    
    
    1
    
    
    
    2Employee benefits
    
    
    2,925
    
    
    
    2,925
    
    
    
    
    
    
    
    
    
    
    
    Customers deposits
    
    
    2,251
    
    
    
    
    
    
    
    327
    
    
    
    47
    
    
    
    1,877Carriers
    
    
    1,780
    
    
    
    1,780
    
    
    
    
    
    
    
    
    
    
    
    Dividends
    
    
    1,379
    
    
    
    1,379
    
    
    
    
    
    
    
    
    
    
    
    Others
    
    
    2,107
    
    
    
    1,484
    
    
    
    623
    
    
    
    
    
    
    
    Total contractual obligations
    
    
    158,727
    
    
    
    44,114
    
    
    
    44,905
    
    
    
    30,111
    
    
    
    39,597
 (1)
    
    Consist of notes payable and long-term debt, including current portion; gross of
unamortized debt discount and debt issuance costs.(2)
    
    Based on the Amended ATPA with AIL.(3)
    
    Gross liabilities before any offsetting application. Long-term Debt
 Note 20  Interest-bearing Financial Liabilities
 Operating Lease Obligations
 Agreement for Space Segment Services with ProtoStar
 Note 18  Prepayments
  F-108




---



##### Table of Contents



License Agreement with Mobius Management Systems (Australia) Pty Ltd., or Mobius
  Other Operating Lease Obligations
  Finance Lease Obligations
 Note 20  Interest-bearing Financial Liabilities
 Unconditional Purchase Obligations
 Note 24  Related Party Transactions
  Other Obligations
 Mandatory Conversion and Purchase of Shares
 Note 20  Interest-bearing Financial Liabilities Note 20  Interest-bearing Financial
Liabilities
 Derivative Financial Liabilities
 Note 28  Financial Assets and Liabilities
 Various Trade and Other Obligations
 Note 22 -
Accounts Payable Note 23  Accrued Expenses and Other Current Liabilities
 Commercial Commitments
   F-109




---



##### Table of Contents



Note 28  Financial Assets and Liabilities
 27.
    
    Provisions and Contingencies
 NTC Supervision and Regulation Fees, or SRF
    PLDTs Local Business and Franchise Tax Assessments
   F-110




---



##### Table of Contents



Smarts Local Franchise Tax Assessments
 Smart Communications, Inc. vs. City of Makati
 Smart vs. City of
Makati Smart vs. City of Makati
  F-111




---



##### Table of Contents



in lieu of all taxes in lieu of all taxes all" all taxes in lieu of all taxes
  Smarts Local Business Tax
 Smart vs. City of Makati
 Piltels Local Franchise Tax
 Pilipino Telephone Corporation vs. City of Makati and
Andrea Pacita S. Guinto (Piltel vs. City of Makati)
 Piltel vs. City of Makati
  F-112




---



##### Table of Contents



Real Property Tax
 Smart Communications, Inc. vs. Central Board of Assessment Appeals, or CBAA, Local Board of
Assessment Appeals of Surigao City, and City Assessor of Surigao City
 Arbitration with Eastern Telecommunications Philippines, Inc., or ETPI
  Matters Relating to a Third Party Aggregator
     IAS 37
  F-113




---



##### Table of Contents



28.
    
    Financial Assets and Liabilities
 Note 2 
Summary of Significant Accounting Policies
  Designatedat fairvalue
    
    
    
    
    
    
    Available-
    
    
    Liabilities
    
    
    Total
    
    
    Non-Loans
    
    
    Held-to-
    
    
    through
    
    
    
    
    
    
    for-sale
    
    
    carried at
    
    
    financial
    
    
    financialand
    
    
    maturity
    
    
    profit or
    
    
    Held-for-
    
    
    financial
    
    
    amortized
    
    
    assets and
    
    
    assets andreceivables
    
    
    investments
    
    
    loss
    
    
    trading
    
    
    assets
    
    
    cost
    
    
    liabilities
    
    
    liabilities
    
    
    Total(in million pesos)Assets as at December 31, 2009Noncurrent:Property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161,256
    
    
    
    161,256Investments in associates and joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,233
    
    
    
    22,233Available-for-sale financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134
    
    
    
    
    
    
    
    134
    
    
    
    
    
    
    
    134Investment in debt securities
    
    
    
    
    
    
    462
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    462
    
    
    
    
    
    
    
    462Investment properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,210
    
    
    
    1,210Goodwill and intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,024
    
    
    
    13,024Deferred income tax assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,721
    
    
    
    7,721Prepayments  net of current portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,663
    
    
    
    8,663Advances and refundable deposits 
net of current portion
    
    
    842
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    842
    
    
    
    260
    
    
    
    1,102Current:Cash and cash equivalents
    
    
    38,319
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,319
    
    
    
    
    
    
    
    38,319Short-term investments
    
    
    3,338
    
    
    
    
    
    
    
    
    
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    3,824
    
    
    
    
    
    
    
    3,824Trade and other receivables  net
    
    
    14,729
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,729
    
    
    
    
    
    
    
    14,729Inventories and supplies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,165
    
    
    
    2,165Derivative financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    6Current portion of prepayments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,098
    
    
    
    5,098Current portion of advances and refundable
deposits
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    195
    
    
    
    202Total assets
    
    
    57,235
    
    
    
    462
    
    
    
    
    
    
    
    492
    
    
    
    134
    
    
    
    
    
    
    
    58,323
    
    
    
    221,825
    
    
    
    280,148Liabilities as at December 31, 2009Noncurrent:Interest-bearing financial liabilities -
net of current portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,079
    
    
    
    86,079
    
    
    
    
    
    
    
    86,079Deferred income tax liabilities  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,321
    
    
    
    1,321Derivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,751
    
    
    
    
    
    
    
    
    
    
    
    2,751
    
    
    
    
    
    
    
    2,751Pension and other employee benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    374
    
    
    
    374Customers deposits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,166
    
    
    
    2,166
    
    
    
    
    
    
    
    2,166Deferred credits and other noncurrent liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,159
    
    
    
    13,159
    
    
    
    1,279
    
    
    
    14,438Current:Accounts payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,698
    
    
    
    17,698
    
    
    
    1,903
    
    
    
    19,601Accrued expenses and other current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,687
    
    
    
    28,687
    
    
    
    6,759
    
    
    
    35,446Provision for assessments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,555
    
    
    
    1,555Current portion of interest-bearing financial
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,714
    
    
    
    12,714
    
    
    
    
    
    
    
    12,714Dividends payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,749
    
    
    
    1,749
    
    
    
    
    
    
    
    1,749Income tax payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,829
    
    
    
    2,829Total liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,751
    
    
    
    
    
    
    
    162,252
    
    
    
    165,003
    
    
    
    16,020
    
    
    
    181,023Net assets (liabilities)
    
    
    57,235
    
    
    
    462
    
    
    
    
    
    
    
    (2,259
    )
    
    
    134
    
    
    
    (162,252
    )
    
    
    (106,680
    )
    
    
    205,805
    
    
    
    99,125Assets as at December 31, 2008Noncurrent:Property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160,326
    
    
    
    160,326Investments in associates and joint ventures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,174
    
    
    
    1,174Available-for-sale financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    131
    
    
    
    
    
    
    
    131
    
    
    
    
    
    
    
    131Investment in debt securities  net of current
portion
    
    
    
    
    
    
    442
    
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    635
    
    
    
    
    
    
    
    635Investment properties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    617
    
    
    
    617Goodwill and intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,450
    
    
    
    10,450Deferred income tax assets  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,605
    
    
    
    9,605Prepayments  net of current portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,501
    
    
    
    2,501
  F-114




---



##### Table of Contents



Designatedat fairvalue
    
    
    
    
    
    
    Available-
    
    
    Liabilities
    
    
    Total
    
    
    Non-Loans
    
    
    Held-to-
    
    
    through
    
    
    
    
    
    
    for-sale
    
    
    carried at
    
    
    financial
    
    
    financialand
    
    
    maturity
    
    
    profit or
    
    
    Held-for-
    
    
    financial
    
    
    amortized
    
    
    assets and
    
    
    assets andreceivables
    
    
    investments
    
    
    loss
    
    
    trading
    
    
    assets
    
    
    cost
    
    
    liabilities
    
    
    liabilities
    
    
    Total(in million pesos)Advances and refundable deposits  net of current portion
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    840
    
    
    
    246
    
    
    
    1,086Current:Cash and cash equivalents
    
    
    33,684
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,684
    
    
    
    
    
    
    
    33,684Short-term investments
    
    
    5,964
    
    
    
    
    
    
    
    
    
    
    
    706
    
    
    
    
    
    
    
    
    
    
    
    6,670
    
    
    
    
    
    
    
    6,670Current portion of investment in debt securities
    
    
    
    
    
    
    1,656
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,656
    
    
    
    
    
    
    
    1,656Trade and other receivables  net
    
    
    15,909
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,909
    
    
    
    
    
    
    
    15,909Inventories and supplies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,069
    
    
    
    2,069Derivative financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    56Current portion of prepayments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,164
    
    
    
    4,164Current portion of advances and refundable
deposits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,825
    
    
    
    1,825Total assets
    
    
    56,397
    
    
    
    2,098
    
    
    
    193
    
    
    
    762
    
    
    
    131
    
    
    
    
    
    
    
    59,581
    
    
    
    192,977
    
    
    
    252,558Liabilities as at December 31, 2008Noncurrent:Interest-bearing financial liabilities 
net of current portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,910
    
    
    
    58,910
    
    
    
    
    
    
    
    58,910Deferred income tax liabilities  net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,288
    
    
    
    1,288Derivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,761
    
    
    
    
    
    
    
    
    
    
    
    1,761
    
    
    
    
    
    
    
    1,761Pension and other employee benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,467
    
    
    
    5,467Customers deposits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,251
    
    
    
    2,251
    
    
    
    
    
    
    
    2,251Deferred credits and other noncurrent liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,273
    
    
    
    9,273
    
    
    
    1,309
    
    
    
    10,582Current:Accounts payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,294
    
    
    
    16,294
    
    
    
    1,974
    
    
    
    18,268Accrued expenses and other current liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,612
    
    
    
    18,612
    
    
    
    5,769
    
    
    
    24,381Derivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    87Provision for assessments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,555
    
    
    
    1,555Current portion of interest-bearing financial
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,080
    
    
    
    15,080
    
    
    
    
    
    
    
    15,080Dividends payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,379
    
    
    
    1,379
    
    
    
    
    
    
    
    1,379Income tax payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,580
    
    
    
    4,580Total liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,848
    
    
    
    
    
    
    
    121,799
    
    
    
    123,647
    
    
    
    21,942
    
    
    
    145,589Net assets (liabilities)
    
    
    56,397
    
    
    
    2,098
    
    
    
    193
    
    
    
    (1,086
    )
    
    
    131
    
    
    
    (121,799
    )
    
    
    (64,066
    )
    
    
    171,035
    
    
    
    106,969
  F-115




---



##### Table of Contents



Carrying Value
    
    
    Fair Value2009
    
    
    2008
    
    
    2009
    
    
    2008(in million pesos)Noncurrent Financial AssetsAvailable-for-sale financial assets:Listed equity securities
    
    
    68
    
    
    
    69
    
    
    
    68
    
    
    
    69Unlisted equity securities
    
    
    66
    
    
    
    62
    
    
    
    66
    
    
    
    62Investment in debt securities  net of current portion
    
    
    462
    
    
    
    635
    
    
    
    474
    
    
    
    629Advances and refundable deposits  net of current portion
    
    
    842
    
    
    
    840
    
    
    
    732
    
    
    
    728Total noncurrent financial assets
    
    
    1,438
    
    
    
    1,606
    
    
    
    1,340
    
    
    
    1,488Current Financial AssetsCash and cash equivalents:Cash on hand and in banks
    
    
    3,300
    
    
    
    4,164
    
    
    
    3,300
    
    
    
    4,164Temporary cash investments
    
    
    35,019
    
    
    
    29,520
    
    
    
    35,019
    
    
    
    29,520Short-term investments
    
    
    3,824
    
    
    
    6,670
    
    
    
    3,824
    
    
    
    6,670Current portion of investment in debt securities
    
    
    
    
    
    
    1,656
    
    
    
    
    
    
    
    1,656Trade and other receivables  net:Foreign administrations
    
    
    4,064
    
    
    
    5,477
    
    
    
    4,064
    
    
    
    5,477Retail subscribers
    
    
    3,546
    
    
    
    3,904
    
    
    
    3,546
    
    
    
    3,904Corporate subscribers
    
    
    2,429
    
    
    
    2,865
    
    
    
    2,429
    
    
    
    2,865Domestic carriers
    
    
    1,184
    
    
    
    703
    
    
    
    1,184
    
    
    
    703Dealers, agents and others
    
    
    3,506
    
    
    
    2,960
    
    
    
    3,506
    
    
    
    2,960Derivative financial assets:Bifurcated embedded derivatives
    
    
    6
    
    
    
    2
    
    
    
    6
    
    
    
    2Foreign currency options
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    38Forward foreign exchange options
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    16Current portion of advances and refundable deposits
    
    
    7
    
    
    
    
    
    
    
    7
    
    
    
    Total current financial assets
    
    
    56,885
    
    
    
    57,975
    
    
    
    56,885
    
    
    
    57,975Total Financial Assets
    
    
    58,323
    
    
    
    59,581
    
    
    
    58,225
    
    
    
    59,463Noncurrent Financial LiabilitiesInterest-bearing financial liabilities:Long-term debt  net of current portion
    
    
    86,066
    
    
    
    58,899
    
    
    
    88,383
    
    
    
    57,058Obligations under finance lease
    
    
    13
    
    
    
    11
    
    
    
    12
    
    
    
    11Derivative financial liabilities:Long-term currency swap
    
    
    2,751
    
    
    
    1,761
    
    
    
    2,751
    
    
    
    1,761Customers deposits
    
    
    2,166
    
    
    
    2,251
    
    
    
    1,375
    
    
    
    1,476Deferred credits and other noncurrent liabilities
    
    
    13,159
    
    
    
    9,273
    
    
    
    11,629
    
    
    
    7,959Total noncurrent financial liabilities
    
    
    104,155
    
    
    
    72,195
    
    
    
    104,150
    
    
    
    68,265Current Financial LiabilitiesAccounts payable:Suppliers and contractors
    
    
    14,975
    
    
    
    14,131
    
    
    
    14,975
    
    
    
    14,131Carriers
    
    
    1,937
    
    
    
    1,780
    
    
    
    1,937
    
    
    
    1,780Related parties
    
    
    233
    
    
    
    120
    
    
    
    233
    
    
    
    120Others
    
    
    553
    
    
    
    263
    
    
    
    553
    
    
    
    263Accrued expenses and other current liabilities:Utilities and related expenses
    
    
    17,388
    
    
    
    13,385
    
    
    
    17,388
    
    
    
    13,385Employee benefits
    
    
    8,071
    
    
    
    2,925
    
    
    
    8,071
    
    
    
    2,925Interests and other related costs
    
    
    1,167
    
    
    
    1,212
    
    
    
    1,167
    
    
    
    1,212Others
    
    
    2,061
    
    
    
    1,090
    
    
    
    2,061
    
    
    
    1,090Derivative financial liabilities:Foreign currency options
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    44Forward foreign exchange contracts
    
    
    
    
    
    
    31
    
    
    
    
    
    
    
    31Bifurcated embedded derivatives
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    11Bifurcated equity call options
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1
  F-116




---



##### Table of Contents



Carrying Value
    
    
    Fair Value2009
    
    
    2008
    
    
    2009
    
    
    2008(in million pesos)Interest-bearing financial liabilities:Notes payable
    
    
    2,279
    
    
    
    553
    
    
    
    2,279
    
    
    
    553Current portion of long-term debt
    
    
    10,384
    
    
    
    14,459
    
    
    
    10,384
    
    
    
    14,459Obligations under finance lease
    
    
    51
    
    
    
    59
    
    
    
    51
    
    
    
    59Preferred stock subject to mandatory redemption
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    9Dividends payable
    
    
    1,749
    
    
    
    1,379
    
    
    
    1,749
    
    
    
    1,379Total current financial liabilities
    
    
    60,848
    
    
    
    51,452
    
    
    
    60,848
    
    
    
    51,452Total Financial Liabilities
    
    
    165,003
    
    
    
    123,647
    
    
    
    164,998
    
    
    
    119,717
  2009
    
    
    2008Level 1(1)
    
    
    Level 2(2)
    
    
    Total
    
    
    Level 1(1)
    
    
    Level 2(2)
    
    
    Total(in million pesos)Noncurrent Financial AssetAvailable-for-sale financial
assets  Listed equity
securities
    
    
    68
    
    
    
    
    
    
    
    68
    
    
    
    69
    
    
    
    
    
    
    
    69Investment in debt securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    193
    
    
    
    
    
    
    
    193Current Financial AssetsShort-term investments
    
    
    486
    
    
    
    
    
    
    
    486
    
    
    
    706
    
    
    
    
    
    
    
    706Derivative financial assets
    
    
    
    
    
    
    6
    
    
    
    6
    
    
    
    
    
    
    
    56
    
    
    
    56Total
    
    
    554
    
    
    
    6
    
    
    
    560
    
    
    
    968
    
    
    
    56
    
    
    
    1,024Noncurrent Financial LiabilityDerivative financial liabilities
    
    
    
    
    
    
    2,751
    
    
    
    2,751
    
    
    
    
    
    
    
    1,761
    
    
    
    1,761Current Financial LiabilityDerivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    87Total
    
    
    
    
    
    
    2,751
    
    
    
    2,751
    
    
    
    
    
    
    
    1,848
    
    
    
    1,848
 (1)
    
    Fair values determined using observable market inputs that reflect quoted prices
in active markets for identical assets or liabilities.(2)
    
    Fair values determined using inputs other than quoted prices that are either
directly or indirectly observable for the assets or liabilities.   Long-term financial assets and liabilities:
 Type
    
    Fair Value AssumptionsNoncurrent portion of advances and refundable deposits
    
    Estimated fair value
is based on the
discounted values of
future cash flows
using the applicable
zero coupon rates
plus credit spread.Fixed rate loans:
U.S. dollar notes
Other loans in all other currencies
    
    Quoted market price. 
Estimated fair value
is based on the
discounted value of
future cash flows
using the applicable
Commercial Interest
Reference Rate and
Philippine Dealing
System Treasury
Fixing rates for
similar types of
loans.Variable rate loans
    
    The carrying value
approximates fair
value because of
recent and regular
repricing based on
market conditions.Customers deposits and deferred credits and other
noncurrent liabilities
    
    Estimated fair value
is based on the
discounted values of
future cash flows
using the applicable
zero coupon rates
plus credit spread.
 Preferred stock subject to mandatory redemption:
  F-117




---



##### Table of Contents



Derivative Financial Instruments:
 Foreign currency options:
 Forward foreign exchange contracts, bifurcated foreign currency forwards and foreign
currency swaps:
 Bifurcated equity call options:
 Available-for-sale financial assets:
 Investment in debt securities:
  Derivative Financial Instruments
   F-118




---



##### Table of Contents



2009
    
    
    2008Mark-to-
    
    
    
    
    
    
    Mark-to-market Gains
    
    
    
    
    
    
    market GainsMaturity
    
    
    Notional
    
    
    (Losses)
    
    
    Notional
    
    
    (Losses)(in millions)PLDTCurrency swaps
    
    
    2017
    
    
    US$
    245
    
    
    Php

    (1,803
    )
    
    US$
    295
    
    
    Php
    (1,197
    )2012
    
    
    
    146
    
    
    
    (948
    )
    
    
    159
    
    
    
    (564
    )Foreign currency sold call options
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    57
    (1)
    
    
    10Foreign currency bought call options
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    (16
    )Forward foreign exchange contracts
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    57
    
    
    
    (31
    )Bifurcated equity call options
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )(2,751
    )
    
    
    
    
    
    
    (1,799
    )SmartBifurcated embedded derivatives
    
    
    2010
    
    
    
    
    
    
    
    2
    
    
    
    3
    
    
    
    (10
    )
    
    
    
    2
    
    
    
    
    
    
    
    (10
    )ePLDTForward foreign exchange contracts
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    16Bifurcated embedded derivatives
    
    
    2012
    
    
    
    1
    
    
    
    4
    
    
    
    2
    
    
    
    14
    
    
    
    
    
    
    
    17Net liabilities
    
    
    
    
    
    
    
    
    
    Php
    (2,745
    )
    
    
    
    
    
    Php
    (1,792
    )
 (1)
    
    Foreign currency sold call options based on the same notional amount as the
foreign currency bought call options. 2009
    
    
    2008(in million pesos)Presented as:Current assets
    
    
    6
    
    
    
    56Noncurrent liabilities
    
    
    (2,751
    )
    
    
    (1,761
    )Current liabilities
    
    
    
    
    
    
    (87
    )Net liabilities
    
    
    (2,745
    )
    
    
    (1,792
    )
  2009
    
    
    2008
    
    
    2007(in million pesos)Net mark-to-market losses at end of year
    
    
    (2,745
    )
    
    
    (1,792
    )
    
    
    (7,027
    )Net mark-to-market losses at beginning of year
    
    
    (1,792
    )
    
    
    (7,027
    )
    
    
    (6,499
    )Net change
    
    
    (953
    )
    
    
    5,235
    
    
    
    (528
    )Settlements, accretion and conversion
    
    
    546
    
    
    
    (2,367
    )
    
    
    (622
    )Hedge cost
    
    
    (599
    )
    
    
    (819
    )
    
    
    (1,125
    )Net losses on cash flow hedges charged to cumulative translation adjustments
    
    
    
    
    
    
    662
    
    
    
    (570
    )Effective portion recognized in the profit or loss for the cash flow hedge
    
    
    
    
    
    
    286
    
    
    
    Ineffective portion recognized in the profit or loss for the cash flow hedge
    
    
    
    
    
    
    118
    
    
    
    (4
    )Net gains (losses) on derivative financial instruments (Note 4)
    
    
    (1,006
    )
    
    
    3,115
    
    
    
    (2,849
    )
 PLDT
   F-119




---



##### Table of Contents



Currency Swaps
    Foreign Currency Options
     F-120




---



##### Table of Contents



Forward Foreign Exchange Contracts
  Bifurcated Equity Call Options
 Note 20  Interest-bearing Financial Liabilities
 Smart
   ePLDT
   Financial Risk Management Objectives and Policies
  Liquidity Risk
   F-121




---



##### Table of Contents



Note 26 -
Contractual Obligations and Commercial Commitments.
 Foreign Currency Exchange Risk
    F-122




---



##### Table of Contents



2009
    
    
    2008U.S. Dollar
    
    
    Php(1)
    
    
    U.S. Dollar
    
    
    Php(2)(in millions)Noncurrent Financial AssetsNote receivable
    
    
    2
    
    
    
    81
    
    
    
    
    
    
    
    Advances and refundable deposits
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    Total noncurrent financial assets
    
    
    2
    
    
    
    88
    
    
    
    
    
    
    
    Current Financial AssetsCash and cash equivalents
    
    
    140
    
    
    
    6,496
    
    
    
    101
    
    
    
    4,794Short-term investments
    
    
    47
    
    
    
    2,164
    
    
    
    21
    
    
    
    986Trade and other receivables  net
    
    
    206
    
    
    
    9,573
    
    
    
    207
    
    
    
    9,880Derivative financial assets
    
    
    
    
    
    
    6
    
    
    
    1
    
    
    
    56Total current financial assets
    
    
    393
    
    
    
    18,239
    
    
    
    330
    
    
    
    15,716Total Financial Assets
    
    
    395
    
    
    
    18,327
    
    
    
    330
    
    
    
    15,716Noncurrent Financial LiabilitiesInterest-bearing financial liabilities  net of current
portion
    
    
    837
    
    
    
    38,871
    
    
    
    925
    
    
    
    44,064Derivative financial liabilities
    
    
    59
    
    
    
    2,751
    
    
    
    37
    
    
    
    1,761Total noncurrent financial liabilities
    
    
    896
    
    
    
    41,622
    
    
    
    962
    
    
    
    45,825Current Financial LiabilitiesAccounts payable
    
    
    155
    
    
    
    7,180
    
    
    
    143
    
    
    
    6,820Accrued expenses and other current liabilities
    
    
    95
    
    
    
    4,409
    
    
    
    93
    
    
    
    4,447Derivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    87Current portion of interest-bearing financial liabilities
    
    
    155
    
    
    
    7,220
    
    
    
    301
    
    
    
    14,331Total current financial liabilities
    
    
    405
    
    
    
    18,809
    
    
    
    539
    
    
    
    25,685Total Financial Liabilities
    
    
    1,301
    
    
    
    60,431
    
    
    
    1,501
    
    
    
    71,510
 (1)
    
    The exchange rate used to translate the U.S. dollar amounts into Philippine peso
was Php46.43 to US$1.00, the peso-dollar exchange rate as quoted through the Philippine
Dealing System as at December 31, 2009.(2)
    
    The exchange rate used to translate the U.S. dollar amounts into Philippine peso
was Php47.65 to US$1.00, the peso-dollar exchange rate as quoted through the Philippine
Dealing System as at December 31, 2008.    Note 4  Operating Segment Information
  F-123




---



##### Table of Contents



Interest Rate Risk
    F-124




---



##### Table of Contents



As at December 31, 2009
 Discount/DebtIssuance
    
    
    Carrying
    
    
    Fair ValueIn U.S. Dollar
    
    
    
    
    
    
    Cost
    
    
    Value
    
    
    In U.S.Below 1 year
    
    
    1-2 years
    
    
    2-3 years
    
    
    3-5 years
    
    
    Over 5 years
    
    
    Total
    
    
    In Php
    
    
    In Php
    
    
    In Php
    
    
    Dollar
    
    
    In Php(in millions)Assets:Cash in BankU.S. Dollar
    
    11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    540
    
    
    
    
    
    
    
    540
    
    
    
    11
    
    
    
    540Interest rate
    
    0.0025% to 0.88%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    1,673
    
    
    
    
    
    
    
    1,673
    
    
    
    36
    
    
    
    1,673Interest rate
    
    0.625% to 2.90%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other Currencies
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    31
    
    
    
    
    
    
    
    31
    
    
    
    1
    
    
    
    31Interest rate
    
0.0014 to 2.40%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Temporary Cash
InvestmentsU.S. Dollar
    
    384
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384
    
    
    
    17,870
    
    
    
    
    
    
    
    17,870
    
    
    
    384
    
    
    
    17,870Interest rate
    
    0.50% to 1.75%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    369
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    369
    
    
    
    17,149
    
    
    
    
    
    
    
    17,149
    
    
    
    369
    
    
    
    17,149Interest rate
    
    1.25% to 5.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term
InvestmentsU.S. Dollar
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46
    
    
    
    2,132
    
    
    
    
    
    
    
    2,132
    
    
    
    46
    
    
    
    2,132Interest rate
    
    4.25% to 7.006%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    36
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    1,692
    
    
    
    
    
    
    
    1,692
    
    
    
    36
    
    
    
    1,692Interest rate
    
4.40%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment in Debt
SecuritiesPhilippine Peso
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    10
    
    
    
    462
    
    
    
    
    
    
    
    462
    
    
    
    10
    
    
    
    474Interest rate
    
    
    
    
    
    
    
    
    
    
6.92%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    883
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    893
    
    
    
    41,549
    
    
    
    
    
    
    
    41,549
    
    
    
    893
    
    
    
    41,561Liabilities:Long-term DebtFixed RateU.S. Dollar Notes
    
    
    
    
    
    
    
    146
    
    
    
    
    
    245
    
    
    
    391
    
    
    
    18,161
    
    
    
    285
    
    
    
    17,876
    
    
    
    449
    
    
    
    20,837Interest rate
    
    
    
    
    
    
    
11.375%
    
    
    
    
    
8.350%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    U.S. Dollar Fixed
Loans
    
    14
    
    
    27
    
    
    5
    
    
    285
    
    
    
    
    
    
    331
    
    
    
    15,397
    
    
    
    3,338
    
    
    
    12,059
    
    
    
    229
    
    
    
    10,654Interest rate
    
4.515%
    
    
    3.79% to 4.70%
    
    
3.79%
    
    
    2.25% to 3.79%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    
    
    
    63
    
    
    126
    
    
    236
    
    
    305
    
    
    
    730
    
    
    
    33,858
    
    
    
    84
    
    
    
    33,774
    
    
    
    744
    
    
    
    34,535Interest rate
    
    
    
    
    6.0323% to 8.4346%
    
    
    5.625% to 8.4346%
    
    
    6.125% to 9.1038%
    
    
    6.50% to 9.1038%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Variable RateU.S. Dollar
    
    41
    
    
    160
    
    
    74
    
    
    60
    
    
    
    
    
    
    335
    
    
    
    15,543
    
    
    
    124
    
    
    
    15,419
    
    
    
    332
    
    
    
    15,419Interest rate
    
    US$LIBOR +
    
    
    US$LIBOR +
    
    
    US$LIBOR +
    
    
    US$LIBOR +
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.05% to 2.5%
    
    
    0.42% to 1.85%;
    
    
    0.42% to 1.85%;
    
    
    0.42% to 1.85%;swap rate +
    
    
    swap rate +
    
    
    swap rate +2.79%
    
    
2.79%
    
    
2.79%Philippine Peso
    
    
    
    
    185
    
    
    81
    
    
    107
    
    
    
    
    
    
    373
    
    
    
    17,349
    
    
    
    27
    
    
    
    17,322
    
    
    
    373
    
    
    
    17,322Interest rate
    
    
    
    
    MART 1 +
    
    
    PDST-F +
    
    
    PDST-F +
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.75%;
    
    
    1.0% to 1.50%;
    
    
    1.0% to 1.50%PDST-F +
    
    
    AUBs prime rate1.0% to 1.5%;
AUBs prime rateShort-term DebtNotes PayableU.S. Dollar
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    279
    
    
    
    
    
    
    
    279
    
    
    
    6
    
    
    
    279Interest rate
    
3.25%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    43
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    2,000
    
    
    
    
    
    
    
    2,000
    
    
    
    43
    
    
    
    2,000Interest rate
    
    PDST-F + 
1.5%; 6.0896%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104
    
    
    435
    
    
    432
    
    
    688
    
    
    550
    
    
    
    2,209
    
    
    
    102,587
    
    
    
    3,858
    
    
    
    98,729
    
    
    
    2,176
    
    
    
    101,046
  F-125




---



##### Table of Contents



As at December 31, 2008
 Discount/DebtIssuance
    
    
    Carrying
    
    
    Fair ValueIn U.S. Dollar
    
    
    
    
    
    
    Cost
    
    
    Value
    
    
    In U.S.Below 1 year
    
    
    1-2 years
    
    
    2-3 years
    
    
    3-5 years
    
    
    Over 5 years
    
    
    Total
    
    
    In Php
    
    
    In Php
    
    
    In Php
    
    
    Dollar
    
    
    In Php(in millions)Assets:Cash in BankU.S. Dollar
    
    26
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    26
    
    
    
    1,258
    
    
    
    
    
    
    
    1,258
    
    
    
    26
    
    
    
    1,258Interest rate
    
    0.10% to 4.50%
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    56
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    56
    
    
    
    2,682
    
    
    
    
    
    
    
    2,682
    
    
    
    56
    
    
    
    2,682Interest rate
    
    0.25% to 3.50%
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Temporary Cash
InvestmentsU.S. Dollar
    
    74
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    74
    
    
    
    3,400
    
    
    
    
    
    
    
    3,400
    
    
    
    74
    
    
    
    3,400Interest rate
    
    0.30% to 7.50%
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    567
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    567
    
    
    
    26,120
    
    
    
    
    
    
    
    26,120
    
    
    
    567
    
    
    
    26,120Interest rate
    
    2% to 7.50%
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term
InvestmentsU.S. Dollar
    

    21
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    21
    
    
    
    985
    
    
    
    
    
    
    
    985
    
    
    
    21
    
    
    
    985Interest rate
    

    3.29%
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    119
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    119
    
    
    
    5,685
    
    
    
    
    
    
    
    5,685
    
    
    
    119
    
    
    
    5,685Interest rate
    
    6.69%
    
    

    
    
    

    
    
    

    
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investment in Debt
SecuritiesPhilippine Peso
    

    35
    
    

    
    
    

    4
    
    

    9
    
    

    
    
    
    
    48
    
    
    
    2,291
    
    
    
    
    
    
    
    2,291
    
    
    
    48
    
    
    
    2,285Interest rate
    

    6.3194%
    
    

    
    
    

    6.125%
    
    
    6.875% to 7%
        

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    898
    
    

    
    
    

    4
    
    

    9
    
    

    
    
    
    
    911
    
    
    
    42,421
    
    
    
    
    
    
    
    42,421
    
    
    
    911
    
    
    
    42,415Liabilities:Long-term DebtFixed RateU.S. Dollar Notes
    

    114
    
    

    
    
    

    
    
    

    159
    
    

    295
    
    
    
    568
    
    
    
    27,061
    
    
    
    368
    
    
    
    26,693
    
    
    
    559
    
    
    
    26,607Interest rate
    

    10.50%
    
    

    
    
    

    
    
    

    11.375%
    
    

    8.35%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    U.S. Dollar Fixed
Loans
    

    22
    
    

    50
    
    

    11
    
    

    3
    
    

    280
    
    
    
    366
    
    
    
    17,444
    
    
    
    4,046
    
    
    
    13,398
    
    
    
    252
    
    
    
    12,030Interest rate
    
    4.49% to 6%
    
    
    3.79% to 4.70%
    
    
    3.79% to 4.70%
    
    
    3.79%
    
    
    2.25%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    
    
    

    3
    
    

    1
    
    

    182
    
    

    33
    
    
    
    219
    
    
    
    10,420
    
    
    
    79
    
    
    
    10,341
    
    
    
    209
    
    
    
    9,955Interest rate
    

    
    
    
    6.50% to 8.4346%
    
    
    5.625% to 8.4346%
    
    
    5.625% to 8.4346%
    
    
    6.125% to 6.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Variable RateU.S. Dollar
    

    13
    
    

    215
    
    

    59
    
    

    77
    
    

    
    
    
    
    364
    
    
    
    17,339
    
    
    
    67
    
    
    
    17,272
    
    
    
    363
    
    
    
    17,272Interest rate
    

    US$LIBOR + 1.75% to 2.75%
    
    

    US$LIBOR + 
0.42% to 2.50%
    
    
    US$LIBOR + 
0.42% to 0.815%
    
    
    US$LIBOR + 
0.42% to 0.75%
    
    

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Philippine Peso
    
    
    
    
    47
    
    
    32
    
    
    40
    
    
    
    
    
    
    119
    
    
    
    5,670
    
    
    
    16
    
    
    
    5,654
    
    
    
    119
    
    
    
    5,653Interest rate
    
    
    
    
    MART 1 +0.75% to 5.70%;PDST-F +1.0% to 1.50%
    
    
    MART 1 +0.75%; PDST-F
+1.0% to 1.50%
    
    
    PDST-F +1.0% to 1.50%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term DebtNotes PayableU.S. Dollar
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    553
    
    
    
    
    
    
    
    553
    
    
    
    12
    
    
    
    553Interest rate
    
    5.25% to 5.30%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161
    
    
    315
    
    
    103
    
    
    461
    
    
    608
    
    
    
    1,648
    
    
    
    78,487
    
    
    
    4,576
    
    
    
    73,911
    
    
    
    1,514
    
    
    
    72,070
     F-126




---



##### Table of Contents



Credit Risk
     Gross Maximum Exposure(1)
    
    
    Net Maximum Exposure(2)2009
    
    
    2008
    
    
    2009
    
    
    2008(in million pesos)Loans and receivables:Advances and refundable deposits
    
    
    849
    
    
    
    840
    
    
    
    848
    
    
    
    840Cash and cash equivalents
    
    
    38,319
    
    
    
    33,684
    
    
    
    38,101
    
    
    
    33,621Short-term investments
    
    
    3,338
    
    
    
    5,964
    
    
    
    3,338
    
    
    
    5,963Foreign administrations
    
    
    4,064
    
    
    
    5,477
    
    
    
    4,011
    
    
    
    5,477Retail subscribers
    
    
    3,546
    
    
    
    3,904
    
    
    
    3,505
    
    
    
    3,877Corporate subscribers
    
    
    2,429
    
    
    
    2,865
    
    
    
    2,328
    
    
    
    2,709Domestic carriers
    
    
    1,184
    
    
    
    703
    
    
    
    1,184
    
    
    
    703Dealers, agents and others
    
    
    3,506
    
    
    
    2,960
    
    
    
    3,506
    
    
    
    2,958Held-to-maturity investments:Investment in debt securities
    
    
    462
    
    
    
    2,098
    
    
    
    462
    
    
    
    2,098Designated at fair value through profit or loss:Investment in debt securities
    
    
    
    
    
    
    193
    
    
    
    
    
    
    
    193Available-for-sale financial assets
    
    
    134
    
    
    
    131
    
    
    
    134
    
    
    
    131Held-for-trading:Short-term investments
    
    
    486
    
    
    
    706
    
    
    
    486
    
    
    
    706Bifurcated embedded derivatives
    
    
    6
    
    
    
    2
    
    
    
    6
    
    
    
    2Foreign currency options
    
    
    
    
    
    
    38
    
    
    
    
    
    
    
    38Forward foreign exchange contracts
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    16Total
    
    
    58,323
    
    
    
    59,581
    
    
    
    57,909
    
    
    
    59,332
 (1)
    
    Gross financial assets before taking into account any collateral held or other
credit enhancements or offsetting arrangements.(2)
    
    Gross financial assets after taking into account any collateral or other credit
enhancements or offsetting arrangements or deposit insurance.  F-127




---



##### Table of Contents



Neither past due
    
    
    Past due butnor impaired
    
    
    notTotal
    
    
    Class A(1)
    
    
    Class B(2)
    
    
    impaired
    
    
    Impaired(in million pesos)December 31, 2009Loans and receivables:Advances and refundable deposits
    
    
    849
    
    
    
    790
    
    
    
    59
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    38,319
    
    
    
    37,767
    
    
    
    552
    
    
    
    
    
    
    
    Short-term investments
    
    
    3,338
    
    
    
    2,971
    
    
    
    367
    
    
    
    
    
    
    
    Corporate subscribers
    
    
    9,106
    
    
    
    1,078
    
    
    
    283
    
    
    
    1,068
    
    
    
    6,677Retail subscribers
    
    
    8,026
    
    
    
    1,236
    
    
    
    518
    
    
    
    1,792
    
    
    
    4,480Foreign administrations
    
    
    4,353
    
    
    
    1,261
    
    
    
    451
    
    
    
    2,352
    
    
    
    289Domestic carriers
    
    
    1,267
    
    
    
    157
    
    
    
    8
    
    
    
    1,019
    
    
    
    83Dealers, agents and others
    
    
    3,927
    
    
    
    2,068
    
    
    
    1,022
    
    
    
    416
    
    
    
    421Held-to-maturity investments:Investment in debt securities
    
    
    462
    
    
    
    462
    
    
    
    
    
    
    
    
    
    
    
    Available-for-sale financial assets
    
    
    134
    
    
    
    103
    
    
    
    31
    
    
    
    
    
    
    
    Held-for-trading(3):Short-term investments
    
    
    486
    
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    Bifurcated embedded derivatives
    
    
    6
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    70,273
    
    
    
    48,385
    
    
    
    3,291
    
    
    
    6,647
    
    
    
    11,950December 31, 2008Loans and receivables:Advances and refundable deposits
    
    
    840
    
    
    
    703
    
    
    
    137
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    33,684
    
    
    
    32,979
    
    
    
    705
    
    
    
    
    
    
    
    Short-term investments
    
    
    5,964
    
    
    
    5,680
    
    
    
    284
    
    
    
    
    
    
    
    Corporate subscribers
    
    
    9,188
    
    
    
    858
    
    
    
    272
    
    
    
    1,663
    
    
    
    6,395Retail subscribers
    
    
    8,993
    
    
    
    1,457
    
    
    
    550
    
    
    
    1,897
    
    
    
    5,089Foreign administrations
    
    
    5,916
    
    
    
    2,602
    
    
    
    956
    
    
    
    1,919
    
    
    
    439Domestic carriers
    
    
    877
    
    
    
    84
    
    
    
    3
    
    
    
    616
    
    
    
    174Dealers, agents and others
    
    
    3,271
    
    
    
    2,114
    
    
    
    444
    
    
    
    402
    
    
    
    311Held-to-maturity investments:Investment in debt securities
    
    
    2,098
    
    
    
    2,098
    
    
    
    
    
    
    
    
    
    
    
    Designated at fair value through profit or loss:Investment in debt securities
    
    
    193
    
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    Available-for-sale financial assets
    
    
    131
    
    
    
    103
    
    
    
    28
    
    
    
    
    
    
    
    Held-for-trading(3):Short-term investments
    
    
    706
    
    
    
    706
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign currency options
    
    
    38
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign exchange contracts
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    Bifurcated embedded derivatives
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    71,917
    
    
    
    49,633
    
    
    
    3,379
    
    
    
    6,497
    
    
    
    12,408
 (1)
    
    This includes low risk and good paying customer accounts with no history of
account treatment for a defined period and no overdue accounts as at report date; and
deposits or placements to counterparties with good credit rating or bank standing financial
review.(2)
    
    This includes medium risk and average paying customer accounts with no overdue
accounts as at report date, and new customer accounts for which sufficient credit history
has not been established; and deposits or placements to counterparties not classified as
Class A.(3)
    
    Gross receivables from counterparties, before any offsetting arrangements.  F-128




---



##### Table of Contents



Neither past due
    
    
    Past due but not impairedTotal
    
    
    nor impaired
    
    
    1-60 days
    
    
    61-90 days
    
    
    Over 91 days
    
    
    Impaired(in million pesos)December 31, 2009Loans and receivables:Advances and refundable deposits
    
    
    849
    
    
    
    849
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    38,319
    
    
    
    38,319
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term investments
    
    
    3,338
    
    
    
    3,338
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate subscribers
    
    
    9,106
    
    
    
    1,361
    
    
    
    433
    
    
    
    198
    
    
    
    437
    
    
    
    6,677Retail subscribers
    
    
    8,026
    
    
    
    1,754
    
    
    
    1,362
    
    
    
    184
    
    
    
    246
    
    
    
    4,480Foreign administrations
    
    
    4,353
    
    
    
    1,712
    
    
    
    1,320
    
    
    
    405
    
    
    
    627
    
    
    
    289Domestic carriers
    
    
    1,267
    
    
    
    165
    
    
    
    283
    
    
    
    293
    
    
    
    443
    
    
    
    83Dealers, agents and others
    
    
    3,927
    
    
    
    3,090
    
    
    
    332
    
    
    
    21
    
    
    
    63
    
    
    
    421Held-to-maturity investments:Investment in debt securities
    
    
    462
    
    
    
    462
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Available-for-sale financial assets
    
    
    134
    
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Held-for-trading:Short-term investments
    
    
    486
    
    
    
    486
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bifurcated embedded derivatives
    
    
    6
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    70,273
    
    
    
    51,676
    
    
    
    3,730
    
    
    
    1,101
    
    
    
    1,816
    
    
    
    11,950December 31, 2008Loans and receivables:Advances and refundable deposits
    
    
    840
    
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    33,684
    
    
    
    33,684
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Short-term investments
    
    
    5,964
    
    
    
    5,964
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Corporate subscribers
    
    
    9,188
    
    
    
    1,130
    
    
    
    1,024
    
    
    
    313
    
    
    
    326
    
    
    
    6,395Retail subscribers
    
    
    8,993
    
    
    
    2,007
    
    
    
    1,338
    
    
    
    266
    
    
    
    293
    
    
    
    5,089Foreign administrations
    
    
    5,916
    
    
    
    3,558
    
    
    
    1,043
    
    
    
    550
    
    
    
    326
    
    
    
    439Domestic carriers
    
    
    877
    
    
    
    87
    
    
    
    80
    
    
    
    87
    
    
    
    449
    
    
    
    174Dealers, agents and others
    
    
    3,271
    
    
    
    2,558
    
    
    
    48
    
    
    
    9
    
    
    
    345
    
    
    
    311Held-to-maturity investments:Investment in debt securities
    
    
    2,098
    
    
    
    2,098
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Designated at fair value through profit or loss:Investment in debt securities
    
    
    193
    
    
    
    193
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Available-for-sale financial assets
    
    
    131
    
    
    
    131
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Held-for-trading:Short-term investments
    
    
    706
    
    
    
    706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign currency options
    
    
    38
    
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign exchange contracts
    
    
    16
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Bifurcated embedded derivatives
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    71,917
    
    
    
    53,012
    
    
    
    3,533
    
    
    
    1,225
    
    
    
    1,739
    
    
    
    12,408
 Impairment Assessments
  Individually assessed allowance
   F-129




---



##### Table of Contents



Collectively assessed allowances
   Capital Management
    Note 8  Earnings Per Common Share Note 19
- Equity
   2009
    
    
    2008(in million pesos)Long-term debt, including current portion (Note 20)
    
    
    96,450
    
    
    
    73,358Notes payable (Note 20)
    
    
    2,279
    
    
    
    553Total consolidated debt
    
    
    98,729
    
    
    
    73,911Cash and cash equivalents (Note 15)
    
    
    (38,319
    )
    
    
    (33,684
    )Short-term investments
    
    
    (3,824
    )
    
    
    (6,670
    )Net consolidated debt
    
    
    56,586
    
    
    
    33,557Equity attributable to equity holders of PLDT
    
    
    98,575
    
    
    
    105,531Net consolidated debt to equity ratio
    
    
    57
    %
    
    
    32
    %
  F-130




---



##### Table of Contents



29.
    
    Cash Flow Information
 2009
    
    
    2008
    
    
    2007(in million pesos)Non-cash financing activities:Recognition of asset retirement obligations (Note 21)
    
    
    17
    
    
    
    70
    
    
    
    48Conversion of preferred stock subject to mandatory
redemption (Note 20)
    
    
    9
    
    
    
    1,077
    
    
    
    313
 30.
    
    Subsequent Events
 Transfer of Piltels Equity Interest in Meralco
 Note 10 -
Investments in Associates and Joint Ventures
 Investment in Beacon
       F-131




---



##### Table of Contents



Transfer of Meralco Shares to Beacon
       F-132




---



##### Table of Contents



Call Option
    Property Dividends
  Governance Arrangements
    Corporate Merger of Vocativ, Parlance and Ventus
   F-133




---



##### Table of Contents



Item 19. Exhibits
   1(a).
    
    
    Articles of Incorporation (incorporated by reference to PLDTs Form 20-F as filed with the
Securities and Exchange Commission in May 2001)1(b).
    
    
    By-Laws (as amended on June 28, 2005) (incorporated by reference to PLDTs Form 20-F as filed
with the Securities and Exchange Commission in June 2006)2.
    
    
    We have not included as exhibits certain instruments with respect to our long-term debt, the
amount of debt authorized under each of which does not exceed 10% of our total assets, and we
agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon
request.4.
    
    
    Material Contracts6.
    
    
    Computation of Earnings Per Share7.
    
    
    Calculation of Ratio of Earnings to Fixed Charges8.
    
    
    Subsidiaries12.1
    
    
    Certification of Chief Executive Officer required by Rule 13a-14(a) of the Exchange Act12.2
    
    
    Certification of the Principal Financial Officer required by Rule 13a-14(a) of the Exchange Act13.1
    
    
    Certification of Chief Executive Officer required by Rule 13a-14(b) of the Exchange Act13.2
    
    
    Certification of the Principal Financial Officer required by Rule 13a-14(b) of the Exchange Act
  156




---



##### Table of Contents



PHILIPPINE LONG DISTANCE TELEPHONE COMPANYBy:
    /s/  Ma. Lourdes C. Rausa-ChanMA. LOURDES C. RAUSA-CHANSenior Vice President, Corporate Affairs and 
Legal
Services Head and Corporate Secretary  157




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit1(a)
    
    
    Articles of Incorporation (incorporated by reference to PLDTs Form 20-F as filed with the
Securities and Exchange Commission in May 2001)1(b)
    
    
    By-Laws (as amended on June 28, 2005) (incorporated by reference to PLDTs Form 20-F as filed
with the Securities and Exchange Commission in June 2006)2
    
    
    We have not included as exhibits certain instruments with respect to our long-term debt, the
amount of debt authorized under each of which does not exceed 10% of our total assets, and we
agree to furnish a copy of any such instrument to the Securities and Exchange Commission upon
request.4(a)
    
    
    Stock Purchase and Strategic Investment Agreement, dated September 28, 1999, by and among
PLDT, First Pacific Limited, Metro Pacific Corporation, Metro Pacific Asia Link Holdings,
Inc., Metro Pacific Resources, Inc. and NTT Communications Corporation (incorporated by
reference to PLDTs Form 6-K for the month of September 1999)4(b)
    
    
    Executive Stock Option Plan (incorporated by reference to PLDTs Form 20-F as filed with the
Securities and Exchange Commission in May 2001)4(c)
    
    
    Master Restructuring Agreement, dated June 21, 2000, as amended on December 12, 2000 and
December 19, 2000, between Piltel, Piltel (Cayman) Limited, PLDT, The Chase Manhattan Bank, as
escrow agent, Metropolitan Bank and Trust Company, as administrative agent and the creditors
named therein (incorporated by reference to PLDTs Form 20-F as filed with the Securities and
Exchange Commission in May 2001)4(d)
    
    
    The Cooperation Agreement, dated January 31, 2006, entered into by and among PLDT, First
Pacific, Metro Pacific Corporation, Metro Asia Link Holdings, Inc., Metro Pacific Resources,
Inc., Larouge B.V., Metro Pacific Assets Holdings, Inc., NTT Communications and NTT DoCoMo
(incorporated by reference to Schedule 13D/A (Amendment No.2) as filed with the United States
Securities and Exchange Commission by Nippon Telegraph and Telephone Corporation and NTT
Communications Corporation on January 31, 2006)6
    
    
    Computation of Earnings Per Share7
    
    
    Calculation of Ratio of Earnings to Fixed Charges8
    
    
    Subsidiaries12.1
    
    
    Certification of Chief Executive Officer required by Rule 13a-14(a) of the Exchange Act12.2
    
    
    Certification of the Principal Financial Officer required by Rule 13a-14(a) of the Exchange Act13.1
    
    
    Certification of Chief Executive Officer required by Rule 13a-14(b) of the Exchange Act13.2
    
    
    Certification of the Principal Financial Officer required by Rule 13a-14(b) of the Exchange Act
  158