The consolidated core net income of the Philippine Long Distance Telephone (PLDT) dropped  to P18.7 billion in the first half of 2012,  the company’s unaudited financial and operating results before exceptional items show.
While 11 percent lower than the P21.0 billion recorded in the same period in 2011, the second quarter 2012 Core Net Income of P9.4 billion is 4 percent higher than the average quarterly Core Net Income of P9.0 billion in the second half of 2011 when the operating environment was under severe competitive pressure.
Reported Net Income, after reflecting exceptional gains for the period declined eight percent to P19.5 billion from P21.3 billion in 2011.
These results reflect the consolidation of the operating performance of Digital Telecommunications Philippines, Inc. (Digitel) from its acquisition which closed on October 2011.
Despite higher service revenues, Core Net Income declined as a result of higher operating expenses relating mainly to the manpower reduction programs at PLDT and Digitel and selling and promotions initiatives.
Core net income was also affected by the recognition of a P2.0 billion deferred gain relating to the transfer of shares of the Manila Electric Company (Meralco) from PLDT Communications and Energy Ventures (PCEV) to Beacon Asset Holdings, Inc (Beacon) which gain was realized upon the sale by PCEV of some of its preferred shares in Beacon.
Reported net income was impacted by the decline in core net income and higher net foreign exchange and derivative gains.
EBITDA margin for the first six months of 2012 dipped to 46 percent, from 55 percent in 2011.
To align more closely with global accounting standards, service revenues have been restated to reflect the change in the presentation of our outbound revenues from net to gross of interconnect expense, which in turn is included in our expenses.
 Although Ebitda does not change, Ebitda margins are calculated against the adjusted service revenues.
 Consolidated Ebitda for the first half of 2012 was lower by 5 percent at P39.3 billion compared with the same period in 2011.
Without the P1.7 billion charge relating to the manpower reduction programs, Ebitda would have been P41.0 billion, or 1 percent lower than the first half of 2011 and 7 percent higher than the second half of 2011.
Digitel Ebitda stood at P3.4 billion; its lower Ebitda margin of 31 percent contributed to the decline in overall Ebitda margin.
Overall consolidated service revenues for the first six months of 2012 increased by 12 percent to P84.7 billion, including the P11.1 billion revenue contribution from Digitel and reflecting the combined effect (before Digitel) of a 4 percent decline in wireless revenues, one percent decrease in fixed line revenues, and a 17 percent rise in BPO revenues.
Earlier yesterday, the Company’s board of directors declared an interim dividend of P60 per share, in line the Company’s continued commitment to pay out a minimum ratio of 70 percent of core earnings.
“It is noteworthy that, despite the earnings pressure from the competitive state of the local industry and continuing pressure on margins, our free cash flows remain strong, thus enabling us to sustain our customary dividend levels,”  Manuel Pangilinan, PLDT chairman, said.
Consolidated free cash flow reached P24.4 billion, a one percent increase from last year.
Consolidated capital expenditures for the half amounted to P9.3 billion. PLDT Group Capex for 2012 is estimated to reach P38 billion, in line with the group’s P67.0 billion capital expenditure program, which has been completed ahead of schedule.