PLDT AR 2010 COVER.pdf 1 4/27/11 6:05 PM
CONTENTS
2
Comparative Highlights
3
4
Consolidated Financial Performance Highlights
A Message from the Chairman
8
A Letter from the President and CEO
12
17
PLDT Group 2010 Milestones: Everyday Game Changers
The PLDT Group CSR Report
22
Corporate Governance Report
30
The Board of Directors
34
Key Officers and Advisors
36
Officers
37
Financial Review
84
85
Audit Committee Report
Statement of Management’s Responsibility
for Consolidated Financial Statements
86
87
Independent Auditors’ Report
Consolidated Statements of Financial Position
89
Consolidated Income Statements
90
91
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
92
94
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Contact Information
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Comparative Highlights
Consolidated Financial Performance Highlights
A Message from the Chairman
A Letter from the President and CEO
PLDT Group 2010 Milestones: Everyday Game Changers
The PLDT Group CSR Report
Corporate Governance Report
The Board of Directors
Key Officers and Advisors
Officers
Financial Review
Audit Committee Report
Statement of Management’s Responsibility
for Consolidated Financial Statements
Independent Auditors’ Report
Consolidated Statements of Financial Position
Consolidated Income Statements
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Contact Information
PLDT is the leading telecommunications service provider in the Philippines.
Through its three principal business segments—wireless, fixed line, and
information and communications technology—PLDT offers the largest and
most diversified range of telecommunications services across the Philippines’
most extensive fiber optic backbone and wireless, fixed line, broadband and
satellite networks.
PLDT is listed on the Philippine Stock Exchange (PSE:TEL) and its American
Depositary Shares are listed on the New York Stock Exchange (NYSE:PHI). In
2010, PLDT was one of the largest Philippine-listed companies in terms of
market capitalization.
SUBSIDIARIES
Smart Communications, Inc. and Subsidiaries
Smart Broadband, Inc. and Subsidiaries
Connectivity Unlimited Resource Enterprise, Inc.
Chikka Holdings Limited and Subsidiaries
PLDT Communications and Energy Ventures, Inc.
(formerly Pilipino Telephone Corporation)
ACeS Philippines Cellular Satellite Corporation
Mabuhay Satellite Corporation
PLDT Clark Telecom, Inc.
PLDT Subic Telecom, Inc.
PLDT Global Corporation and Subsidiaries
PLDT-Philcom, Inc. and Subsidiaries
PLDT-Maratel, Inc.
Bonifacio Communications Corporation
Smart-NTT Multimedia, Inc.
ePLDT, Inc. and Subsidiaries
SPi Technologies, Inc. and Subsidiaries
SPi CRM, Inc. (formerly ePLDT Ventus, Inc.)
Infocom Technologies, Inc.
BayanTrade, Inc. and Subsidiaries
Level Up!, Inc.
netGames, Inc.
WIRELESS
FIXED
LINE
INFORMATION &
COMMUNICATIONS
TECHNOLOGY (ICT)
MISSION/VISION
PLDT will be the preferred full service
provider of voice, video and data at the
most attractive levels of price, service
quality, content and coverage, thereby
bringing maximum benefit to the
Company’s stakeholders.
VALUES
Accountability
We take full responsibility for our
actions and decisions.
Integrity
We do the right thing.
Fairness
We uphold justice and fair play.
Transparency
We disclose accurate and prompt
information.
ABOUT THE COVER
The PLDT 2010 Annual Report’s cover
is literally a statement – borne by the
rapidly changing and increasingly difficult
environment. It may also serve as a
battlecry to help strengthen and ensure
PLDT’s undisputed
the
telecommunications industry.
leadership
in
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COMPARATIVE HIGHLIGHTS
FINANCIAL INFORMATION (in millions, except
cash dividends declared per common share)
Revenues
Service Revenues
Non-Service Revenues
Expenses
Depreciation and Amortization
Compensation and Employee Benefits
Repairs and Maintenance
Selling and Promotions
Professional and Other Contracted Services
Cost of Sales
Others
Net Income Attributable to Equity Holders of PLDT
EBITDA
Core Income
Php124,976
2,967
127,943
Php135,478
2,480
137,958
Php142,873
2,709
145,582
Php145,567
2,426
147,993
Php142,242
2,217
144,459
31,869
18,359
6,886
4,907
3,149
5,625
11,260
Php82,055
Php35,138
Php79,765
Php31,564
28,613
20,470
7,310
5,541
5,588
5,127
11,807
Php84,456
Php36,004
Php83,162
Php35,151
24,709
20,709
8,569
5,695
4,591
5,252
16,261
Php85,786
Php34,635
Php87,741
Php38,079
25,607
23,100
8,631
5,749
4,361
5,432
17,231
Php90,111
Php39,781
Php86,194
Php41,138
26,277
24,070
9,434
5,284
4,853
4,771
14,214
Php88,903
Php40,217
Php83,717
Php42,028
Property, Plant and Equipment
Accumulated Depreciation, Impairment and Amortization
Carrying Value
Capital Expenditures
Short and Long-Term Debts
Net Debt
Equity Attributable to Equity Holders of PLDT
Cash Dividends Declared Per Common Share
Out of the Earnings for the Year
Php347,407
183,217
Php164,190
Php20,674
Php80,154
Php54,957
Php102,521
Php364,972
205,558
Php159,414
Php24,824
Php60,640
Php29,778
Php111,113
Php377,220
216,894
Php160,326
Php25,203
Php73,911
Php 33,557
Php105,531
Php390,692
229,436
Php161,256
Php28,069
Php98,729
Php56,586
Php98,575
Php416,390
253,206
Php163,184
Php28,766
Php89,646
Php52,299
Php97,069
Php140
Php184
Php200
Php218
Php222
24,175,384
1,776,647
264,649
131,490
133,159
2,189,374
30,041,030
1,724,702
579,095
314,804
264,291
2,185,395
35,224,604
1,782,356
995,916
563,333
432,583
2,183,666
41,328,641
1,816,541
1,614,407
1,054,743
559,664
2,183,194
45,636,008
1,822,105
2,021,004
1,377,956
643,048
2,182,391
28,225
5,358
8,711
14,156
30,255
5,415
8,080
16,760
29,904
5,602
7,813
16,489
29,035
5,507
7,947
15,581
28,770
5,165
7,395
16,210
OPERATING INFORMATION
Number of Cellular Subscribers
Number of Fixed Line Subscribers
Number of Broadband Subscribers
Wireless
Fixed Line
Number of Stockholders
Number of Employees
Wireless
Fixed Line
ICT
2
COMPARATIVE HIGHLIGHTS
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CONSOLIDATED FINANCIAL PERFORMANCE HIGHLIGHTS
Service Revenues
(in billion pesos)
EBITDA
(in billion pesos)
Core Income
(in billion pesos)
125.0
135.5
142.9
145.7
142.2
9.5
9.7
9.4
9.6
39.8
40.3
41.1
39.8
5.9
41.3
77.8
86.1
93.1
94.9
93.0
90
80
70
60
50
40
30
20
10
0
83.2
79.8
87.7
86.2
83.7
41.1
42.0
38.1
35.2
31.6
50
40
30
20
10
0
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
Wireless
Fixed Line
ICT
Subscriber Base
(in millions)
Cash Flows from Operations
(in billion pesos)
Market Capitalization
(Year-end, in billion pesos)
26.3
32.3
38.0
44.7
49.4
1.8
2.0
1.8
1.6
1.8
1.0
1.7
0.6
1.8
0.3
24.2
30.0
35.2
41.3
45.6
80
70
60
50
40
30
20
10
0
77.4
78.3
74.4
77.3
69.2
599.3
480.5
489.4
477.0
396.5
600
500
400
300
200
100
0
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
Wireless
Broadband
Fixed Line
150
120
90
60
30
0
50
40
30
20
10
0
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CONSOLIDATED FINANCIAL PERFORMANCE HIGHLIGHTS
3
CHANGE
A Message from
THE CHAIRMAN
The winds of change blew strong in 2010. Filipinos installed
a new president through a maiden automated electoral
process which delivered nationwide results with surprising
speed. The Philippine economy bounced back from a slow
2009, buoyed by the global recovery and continued strong
overseas remittances.
In telecommunications, the forces of change that had
been gathering momentum for years began to impact
more palpably the bottomlines of industry players as these
continued to reshape the market and disrupt legacy business
models. Despite this challenging environment, your Company
delivered solid financial results, maximizing its existing
businesses whilst innovating for a new future.
Group Core Income totaled Php42.0 billion in 2010, a 2%
increase from the year before. We continued to set the pace
for the country in terms of overall profitability, posting a 1%
increase in Reported Income of Php40.2 billion despite a 2%
decline in consolidated service revenues to Php142.2 billion.
Free cash flow in 2010 remained robust at Php43.7 billion,
enabling your Company to declare a 100% cash dividend for
the fourth year running. Dividends per share amounted to
Php222, while the total dividend payments for 2010 added up
to Php41.4 billion – yet again the highest corporate dividend
payout in business.
Fundamental Shift
Despite the Group’s strong performance, the 2010 results
indicate that a fundamental market transformation has
indeed started. The impact of the evolving industry dynamics
that we observed in 2009 became even more pronounced in
2010.
Continued strong data revenues combined with a surge
in cellular voice to boost service revenues. This was
accompanied, however, by marked revenue reduction in
cellular text despite a significant increase in volume, and in
fixed national and international long distance voice revenues
– our traditional bread-and-butter services. Across the legacy
voice and texting businesses, usage rose but at lower prices
– thus depressing yield per usage some more in the course
of the year.
This pressure on revenues has come largely from the
continued consumer shift to bucket and unlimited pricing
plans for voice, short messaging system (SMS) and,
increasingly, for broadband internet services as well. It has
also come from the rising popularity of online services such
as social networking and voice over internet protocol (VoIP)
services as mainstream means of communications.
Both these trends have tended to “de-couple” traffic from
revenues. This profound disconnect becomes even more
pronounced as the internet is increasingly fused with
telecommunications.
In this emerging industry landscape, the competitive arena
has become multi-dimensional. Aside from contending with
various threats emanating onshore, telecoms carriers must
reckon with “over the top” service providers offshore which
offer various social media, VoIP and other online services
directly to their customers.
In our view, these trends indicate that the telecom industry
has reached an inflection point. We are bumping against the
limits of the old ways of doing business. To put your Company,
and indeed the entire industry, on the path of continued
growth, we cannot just move forward, doing more of the
same. We need to change the game.
Pursuing Convergence
It is worth pointing out that PLDT had undertaken a strategic
redirection before. When growth shifted from landlines to
mobile in the late 1990s and early 2000s, PLDT seized the
opportunity and invested considerable resources to ensure
that Smart Communications, Inc. (Smart), which it had by
then acquired, would maintain, if not enhance its industry
leadership position.
Similarly, we have embraced the new broadband services
that are now reshaping the industry. The challenge here
is precisely to generate sustainable value in these new
businesses for both the industry and its customers.
In setting PLDT’s new direction for the next few years, your
Board of Directors and Management have taken into account
the large, rapid and often unpredictable shifts in technologies,
consumer tastes and market conditions that altogether drive
the telecoms industry.
4
A MESSAGE FROM THE CHAIRMAN
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CHANGE
In our view, the way forward is to pursue convergence
aggressively and with focus, within the PLDT Group. Over
the past fi ve years, many aspects of the organizati on and
operati ons of the Group have already been placed on a
convergent platf orm. But in the face of the industry’s new
challenges, we need to raise convergence to its fullest
potenti al.
Focus on the Customer
This new phase of convergence shall be driven by a single-
minded focus on serving our customers in the best possible
way, by off ering compelling, high-quality products and
services at att racti ve price points. This customer-centric
approach will guide us through the many strategic choices
that have to be made in the coming years.
As the fi rst step in this directi on, we have organized a
new business unit within the Group dedicated to serving
the Home market, alongside three other Verti cals: the
Enterprise, Internati onal, and Individual Consumer markets.
The members of these four Verti cals have been drawn from
both the fi xed and mobile businesses and are concentrated
on serving customers and developing new products for each
of these markets.
To support our broad convergence
initi ati ve, we are
undertaking a massive modernizati on program of our
mobile and fi xed networks. For the next two years, we have
committ ed a total of Php67 billion to expand and upgrade the
core, access and backroom support elements of our cellular
network to handle the rapidly rising levels of voice, SMS
and broadband traffi c at superior service quality levels. This
signifi cant capex commitment also supports the conti nuing
shift of our fi xed lines to a Next Generati on Network, all-IP
platf orm.
These new fi xed and mobile networks will be able to
support a more diversifi ed and fl exible portf olio of services
addressing the diff erent market segments. This includes new
internally-developed mobile internet devices such as Smart’s
Netphone and PLDT’s TelPad, which open up opportuniti es
for the development of new and rich content and service
applicati ons.
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A MESSAGE FROM THE CHAIRMAN 5
CHANGERS
CHANGERS
6
A MESSAGE FROM THE CHAIRMAN
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CHANGERS
The new networks will also serve as platf orms for what we call
new “synergy services “ (such as prepaid electricity services
and smart meters) being developed for the Manila Electric
Company (Meralco), in which PLDT has invested, as well as for
Maynilad Water Services, Inc. (Maynilad), the Metro Pacifi c
Tollways Corporati on and the various hospitals of the Metro
Pacifi c Investments Corporati on (MPIC). Convergence is thus
acquiring a business footprint far beyond the PLDT Group.
To support all these initi ati ves, we shall further transform
our organizati on to make it more fl exible, responsive and
customer-focused. Our people and organizati on will acquire
new skills and competencies needed to off er the more
complex products and services valued by our customers.
Organizati onal structures will have to be made more
adaptable to the changing requirements of the business.
Our Awards
PLDT conti nued to win major awards and recogniti on in 2010.
Most grati fying are the awards for corporate governance and
transparency and for our commitment to a strong dividend
policy given to us by presti gious internati onal magazines like
FinanceAsia, Asiamoney and Alpha Southeast Asia.
Euromoney also ranked PLDT No. 1 in its listi ng of 18 best-
managed Philippine companies and cited your Company for
having the “most convincing and coherent strategy” in the
Philippines.
PLDT and Smart also won 14 awards for its communicati ons
and community service programs from the Public Relati ons
Society of the Philippines.
PLDT’s business process outsourcing (BPO) subsidiary, SPi
Global, was named for the sixth straight year to the 2011
Global Outsourcing 100 List by the Internati onal Associati on
of Outsourcing Professionals. These awards provide fresh
validati on of PLDT’s commitment to excellence and integrity.
Our Social Commitment
PLDT and Smart played a signifi cant though largely low-
key role in the successful conduct of the Philippines’ fi rst
nati onwide automated presidenti al electi ons in May 2010.
Smart’s mobile phone network carried the major share of
the electi on-return reports transmitt ed wirelessly from the
polling precincts while PLDT’s high-capacity transmission
fi ber opti c network channeled these reports to the three
data centers ran by the Commission on Electi ons. Aside from
supporti ng the Comelec, PLDT and Smart also partnered with
the Parish Pastoral Council for Responsible Voti ng (PPCRV)
to conduct a voters’ educati on campaign and to monitor the
conduct of the automated polls.
In 2010, PLDT, Smart and PLDT–Smart Foundati on, Inc. (PSF)
added public health to its roster of social concerns that
include educati on, livelihood, community-building, sports
and youth development (please see details on pages 17 to 21
of this Annual Report).
Working with various partners, Smart has rolled out
pioneering tele-health initi ati ves that promise to raise the
effi ciencies of public health care, parti cularly in remote areas
in the provinces of Tarlac and Misamis Oriental. Together
with PLDT, it is now developing an electronic referral system
that will be initi ally installed in Iloilo province.
We have also broadened our sports program to include
football, to which Smart has pledged Php80 million in
fi nancial support to the Azkals, our nati onal team, for the
next 10 years. In cooperati on with affi liated companies in the
Metro Pacifi c Investments Group, PLDT and Smart helped set
up the MVP Sports Foundati on to provide sustained support
to selected sports where we have a reasonable chance to win
medals in internati onal competi ti on.
The Group has conti nued to assist in promoti ng disaster
preparedness through the Philippine Disaster Recovery
Foundati on (PDRF) where I serve as Chairman of the Board
of Trustees. Working with diff erent Government agencies,
private companies and non-governmental organizati ons, the
PDRF has pursued projects to improve the country’s early
warning system for typhoons, develop a master plan for
fl ood control and to reforest the Marikina Watershed. It has
also established working ti es with an alliance of seven fl ood-
prone citi es and towns in Metro Manila and Rizal province
(Anti polo, Rodriguez, San Mateo, Marikina, Cainta, Pasig, and
Quezon City).
Outlook
The focus of our eff orts in the next few years is to build yet
again a new future for PLDT within a rapidly changing and
increasingly diffi cult environment. We shall spare no eff ort
to maintain and strengthen PLDT’s undisputed leadership
in terms of fi nancial performance,
innovati on, service
quality, customer focus and corporate citi zenship. It is this
commitment that gives us opti mism that our results in the
longer-term would prove to be bett er.
In closing, I wish to thank most sincerely the Board of
Directors for their insight and counsel, and our shareholders
for their unrelenti ng support. I wish to express my grati tude
as well to our Management and Staff for their dedicati on and
their excellent performance in the year past. Together, we
shall create a bett er tomorrow for PLDT, and for our country.
MANUEL V. PANGILINAN
Chairman of the Board
A MESSAGE FROM THE CHAIRMAN 7
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A Letter from the
PRESIDENT AND CEO
Dear Fellow Shareholders:
I am happy to report that PLDT has turned in another strong year
in 2010 despite a very demanding operating environment.
Consolidated service revenues for the group declined by 2%
to Php142.2 billion in 2010 compared with the year before.
Impacting our revenues were the new revenue streams such
as broadband contributing to the decrease in our traditional
revenue sources, such as international long distance and SMS
revenues. In addition, the stronger peso also resulted in reduced
service revenues for the year.
EBITDA declined by 3% to Php83.7 billion year-on-year as
a consequence of lower service revenues and higher cash
operating costs that include a significant one-time cost of
Php2.2 billion relating to the manpower reduction program that
involved close to 1,100 regular employees of both PLDT and
Smart. Notwithstanding this, EBITDA margin for 2010 was stable
at 59%.
Reported net income for 2010 was higher by 1% year-on-year to
Php40.2 billion.
Core income grew by Php900 million, or 2%, to Php42.0 billion in
2010 compared with the previous year. The higher core income
resulted from higher earnings contribution from Meralco, ePLDT/
SPi, and a lower tax charge.
Free cash flow for 2010 remained strong at Php43.7 billion, albeit
slightly lower than the Php44.4 billion in 2009, with increased
capex and net interest payments having offset the higher level of
cash from operations of Php2.9 billion.
Consistent with our dividend policy, the Board approved the
payment of a final dividend for 2010 of Php78 per share, in
addition to the interim dividend of Php78 per share paid in
September, bringing total regular dividends per share to Php156,
or a 70% dividend payout. The Board also approved the payment
of a special dividend of Php66 per share, representing another
30% dividend payout, in line with our “look back” approach.
This brings total dividend payment payout to 100%, equivalent
to a total dividend payout of Php222 per share, the fourth
consecutive year that PLDT paid out 100% of its core earnings
as dividends.
The peso closed at Php43.81 vis-à-vis the U. S. dollar at the end
of 2010 compared with Php46.43 in 2009. The average peso-
dollar exchange rate for the year was Php45.12 compared with
Php47.64 for the previous year, an appreciation of 5%.
Broadband: Continuing to Climb
Our broadband business continued its growth momentum
in 2010 with PLDT maintaining its market leadership in this
segment.
8
A LETTER FROM THE PRESIDENT AND CEO
S
R
E
G
N
A
H
C
PLDT’s combined broadband subscriber base crossed the 2
million mark, reflecting a 25% increase from 1.6 million in 2009.
At the end of 2010, our DSL subscriber base grew 15% from
the end of 2009 to over 643,000, while our wireless subscriber
base registered a strong 31% increase year-on-year to nearly 1.4
million.
Broadband service revenues for 2010 improved by 16% year-
on-year to Php16.9 billion, and now accounts for 12% of
consolidated service revenues compared with 9% in the year
before. The strong performance of our broadband business and
PLDT’s leadership position in this space are expected to continue
given the combined strength of our fixed and wireless networks.
Wireless: Managing the Transformation
Despite the high level of penetration in the cellular market,
Smart was able to register a 10% subscribers’ growth for the
year. Smart added 4.3 million subscribers in 2010, bringing
Smart’s combined subscriber base to 45.6 million.
Wireless service revenues declined by 2% to Php93.8 billion
in 2010. Excluding the impact of the peso appreciation and
our satellite operations which have been sold, wireless service
revenues would have been stable year-on-year.
Although revenues from SMS at Php41.5 billion were lower by
12% compared with the previous year, revenues from voice and
wireless broadband registered strong year-on-year growth of 9%
and 17%, respectively.
As mentioned last year, the revenue mix of our wireless business
has begun to change, with increasing contribution from voice and
broadband and declining contribution from text/SMS. With the
lower price of voice services, voice traffic has grown dramatically.
On the other hand, though volumes of text messages continue
to grow, the continuing popularity of bucket plans has resulted in
lower yields and consequently, lower text revenues.
EBITDA was slightly lower by 1%, or Php500 million, to Php58.9
billion due to softer revenues, offset by lower cash operating
expenses such as rental expenses, taxes and licenses, and selling
and promotion expenses.
As a result of a greater focus on managing costs, EBITDA margin
for our wireless business improved to 63% for 2010 despite the
lower revenues.
Fixed Line: Declining Traditional Revenues Muting Growth
Our fixed line business recorded a 5% year-on-year decline in
service revenues to Php48.6 billion. With 25% of our fixed line
service revenues being dollar-denominated or dollar-linked, the
peso’s strength negatively impacted our revenues. Had the peso
remained stable, our service revenues would have been higher
by Php700 million.
PLDT 10 AR main NEW.indd 8
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Our data and DSL service revenues of Php21.6 billion in 2010,
accounti ng for 45% of our total fi xed line revenues, were stable
year-on-year, with non-group data and DSL revenues higher by
11%. However, these improvements were muted by the declines
registered by our traditi onal fi xed line revenue sources, namely:
local exchange carrier (LEC), nati onal long distance (NLD) and
internati onal long distance (ILD).
EBITDA for the fi xed line decreased by 10% due to lower
revenues and higher cash operati ng expenses, which included
Php1.1 billion to cover the costs arising from our manpower
reducti on program.
The fi xed line business conti nues to give greater focus on serving
the needs of the corporate and SME customers, parti cularly their
requirements for data connecti vity.
ICT: Pushing Forward
Service revenues from our ICT business amounted to Php10.7
billion in 2010, now accounti ng for about 7% of total group
service revenues. 70% of ICT revenues are denominated in U. S.
dollars. Had the peso remained stable, ICT revenues would have
been 2% higher year-on-year, instead of being 2% lower.
ePLDT’s data center operati ons conti nued to grow strongly
with revenues higher by 25% year-on-year. Although our BPO
revenues grew 8% in dollar-terms, they improved by only 1% in
peso terms. In contrast, our customer relati onship management
(CRM) business registered a 15% decline largely due to lower
domesti c sales and internati onal revenues, and the impact of
the peso appreciati on.
Our moves to rati onalize and streamline our ICT business have
begun to show results. EBITDA for 2010 grew by 30% to Php1.7
billion compared to the previous year, with margin having
improved to 16% compared with 12% in 2009.
Prospects for our ICT business, parti cularly our BPO and customer
relati onship management (CRM) verti cals, should be able to
ride on the sustained dramati c growth of the off shoring-and-
outsourcing industry in the Philippines. We remain opti misti c
about the potenti als of our reorganized BPO business under SPi
Global as it conti nues to show promise given the growth in the
number of new clients and expansions of existi ng accounts, as
well as greater contributi on expected from the higher margin
verti cals such as healthcare and content soluti ons.
Meralco: Registering Strong Results
As a result of our shares in Meralco held directly by PLDT
Communicati ons and Energy Ventures (PCEV, formerly Piltel) and
indirectly by PCEV through Beacon Electric Asset Holdings, Inc.,
PLDT’s fi nancial results refl ect the equity accounti ng of Meralco’s
fi nancial results.
PLDT 10 AR main NEW.indd 9
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A LETTER FROM THE PRESIDENT AND CEO 9
I T ’ S N O T J U S T A B O U T M O V I N G F O R W A R D .
I T ’ S N O T J U S T A B O U T M O V I N G F O R W A R D .
10
A LETTER FROM THE PRESIDENT AND CEO
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I T ’ S N O T J U S T A B O U T M O V I N G F O R W A R D
Following its strong performance in 2009, Meralco sustained
its growth momentum as refl ected in its 2010 full year results.
Higher energy sales, an increase in customer count, the higher
average cost of purchased power and transmission pass-through
costs, distributi on rate adjustments, as well as greater operati ng
effi ciencies, all contributed to Meralco’s core income of Php12.2
billion in 2010, a 74% improvement year-on-year.
The Meralco Board approved a Php2.65 dividend in its February
28, 2011 meeti ng. This brought total dividends for 2010 to
Php6.45, or a payout rati o of 60% of core earnings.
improvements
We are confi dent that the
in Meralco’s
performance will be sustained, to be complemented by Meralco’s
interest to invest in power generati on. In additi on, initi ati ves to
identi fy areas of mutual cooperati on conti nue to be pursued by
both PLDT and Meralco.
Financial Positi on
PLDT’s consolidated statement of fi nancial positi on remained
solid in 2010. Consolidated gross debt declined to US$2.1 billion,
with net debt stable year-on-year at US$1.3 billion. Net debt to
EBITDA also remained steady at 0.7 ti mes, staying comfortably
below opti mum gearing levels.
PLDT’s debt profi le remains healthy with maturiti es well spread
out.
PLDT conti nued to invest in the business with capital expenditures
for 2010 amounti ng to Php28.8 billion, or equivalent to about
20% of our service revenues. Our capex for the year included
investments for increased capacity and coverage in support of
higher broadband and voice usage, which included the build out
of our second network for low-cost voice delivery. We also began
investi ng in the modernizati on of our access and core networks
to improve operati ng and cost-effi ciencies.
Undisputed Market Leadership
Our outlook for 2011 and beyond is that we expect competi ti ve
intensity in the market to be sustained, and that we are
anti cipati ng an explosion in the demand for broadband. We
foresee the conti nued popularity of bucket plans and unlimited
off erings resulti ng in higher SMS volumes and voice traffi c but
with lower yields. Although revenues from SMS and voice would
remain a signifi cant porti on of our revenues, we envision growth
shift ing to the broadband arena.
Unlike SMS and voice to some extent, broadband requires more
network resources given the subscriber’s requirement for speed,
reliability, greater customer service, and a low tolerance for
poor quality of service. Given this, a superior integrated fi xed
and wireless network, such as PLDT’s, would be a signifi cant
competi ti ve advantage in the delivery of broadband service.
Thus, in response to the demands of these changing business
dynamics, PLDT will forti fy its positi on of being the undisputed
market leader in terms of network quality, capacity and coverage,
but without losing sight of maintaining margins and profi tability.
through proacti ve customer management such as enhanced
customer service and retenti on initi ati ves. We will also develop
and implement a clear and segmented device strategy.
In additi on, we will reinforce our number one positi on in network
quality. In this connecti on, we are planning to invest Php67 billion
for capital expenditures in 2011 and 2012. Included in these
investments, among others, are projects that will modernize and
upgrade our wireless networks that would result in further cost
effi ciencies; projects that would expand our capacity in order to
serve a greater number of subscribers and off er a more varied
suite of services; projects that would strengthen our network by
providing additi onal resiliency and redundancy; and investments
in business intelligence, and in Operati ng and Business Support
Systems projects.
This higher level of capital expenditure is not being pursued to
prepare ourselves to do batt le in the unlimited arena, which we
think is unsustainable. Rather, our investments will reinforce
our positi on of strength and establish our clear lead vis-à-vis
competi ti on, especially in broadband.
As a result of the higher level of investments planned for 2011
and 2012, we expect higher depreciati on and interest charges
to reduce our core income to Php40.5 billion in each of these
years. However, we expect to return to our growth path by 2013,
stronger, and bett er positi oned to harness the opportuniti es
in the new batt lefi eld of broadband, even as we manage our
traditi onal businesses of SMS and ILD. We also foresee greater
contributi on from ICT and Meralco, as well as possibly registering
modest gains from cooperati on initi ati ves with companies in the
broader group such as investments of our Benefi cial Trust Fund
in media, and those of MPIC in roads, tollways, the water uti lity,
and the hospitals.
2011 and Beyond: The Journey Ahead
In my message to you last year, I compared 2010 to the point
in ti me where a mountain climber reaches base camp in
preparati on for scaling greater heights.
2011 will not be any easier for PLDT. Though sti ll at base camp,
we are now intensifying the preparati ons as the ti me to start
the climb approaches. Like the mountain climber, we need to
be strong, lean, and clear about where we want to go. Armed
with a strong and integrated fi xed and wireless network, with
conti nued focus on streamlining costs to ensure cost-effi cient
operati ons, and with a clear path to leadership with focus on the
customer, we will be in the best positi on for the upward journey.
On behalf of your team at PLDT, let me assure you that we are
committ ed to bringing your Company to greater heights, and
that we will conti nue to do our best to overcome the challenges
we will encounter on this arduous journey.
This will involve adjustments in our operati onal model, which
include adopti ng an integrated approach to the customer via
the delivery of a superior and integrated customer experience
NAPOLEON L. NAZARENO
President and CEO
A LETTER FROM THE PRESIDENT AND CEO 11
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PLDT GROUP 2010 MILESTONES
EVERYDAY
GAME
CHANGERS
its business transformation program
in
Pursuing
2010 under an
increasingly price-competitive and
market-share sensitive environment, PLDT submitted a
satisfactory year-end performance report card strongly
indicating that in order to survive and prosper, it must
be prepared to make changes.
The need for change is quite apparent in the Company’s
revenue mix for the year that showed the ongoing
transition of revenue streams – with the growth of new
revenue streams replacing the lower traditional sources.
Combined fixed and wireless broadband and internet
revenues increased. Cellular voice revenues likewise
increased; and so did revenues from fixed data and
other network services to third parties. On the other
hand, cellular text revenues dipped while national long
distance revenues and fixed line international long
distance revenues also declined.
To achieve its target revenues for the year, PLDT posted
operational milestones in its wireless, fixed line and
ICT business highlighted by the launch of innovative
products and services all aimed at serving customers in
the best possible way.
Photos on this spread and the next pages depict some
highlights of PLDT’s accomplishments in 2010.
12
PLDT GROUP 2010 MILESTONES
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PLDT Telpad bundles a landline service
with a touch-screen tablet and high-speed
myDSL facility all under one service plan.
PLDT Telepresence is a collaborative high-definition video and audio communication
and immersive room solution for a face-to-face, in-person conferencing experience
that offers enhanced business productivity and enables quick-to-market
opportunities, with rapid decision-making and reduced travel costs.
The reorganized BPO business
under SPi Global continues
to show promise given the
growth
in the number of
new clients and expansion of
existing accounts.
Smart unveiled the Meralco
SIM and Meralco Mobile
services that allow Talk ‘N
Text subscribers to receive
Meralco
information and
service updates with just a
few clicks on their mobile
phones any time, anywhere.
PLDT GROUP 2010 MILESTONES 13
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Bossing Ako pays tribute to small
and medium entrepreneurs who
continuously support and choose
PLDT as their partner in technology.
The 3-day Ultra Broadband Blowout was a hit with customers
as it offered big discounts on laptops or free subscription
periods on PLDT myDSL, among others, with all applications
processed on the same day.
Smart Bro started commercially offering WiMAX in strategic
areas in the country to complement Smart’s portfolio of
broadband access technologies and to cover unserved areas
and provide internet connectivity to places that were once
inaccessible.
PLDT Unified Communications (UNO) promises to change the game of communications – seamless
convergence of voice and data applications for improved organizational responsiveness supporting
real-time business processes and operations. PLDT UNO manages VoIP applications across a centrally-
converged network, allowing traditional call processing features and business communication applications
to run on the IP network.
14
PLDT GROUP 2010 MILESTONES
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PLDT’s KaAsenso program has created a community of Mini
Gosyantes to uplift the entrepreneurs’ standard of living and
building the Philippine economy one micro business at a time by
offering various products and services customized for their business
and provide supplementary income for their families.
PLDT myDSL Biz Macbook Bundle promo caters to
the high-end SME market that wish to avail of fast
broadband internet connection together with reliable
Apple desktops and laptops.
Open to all Smart Buddy and Talk ‘N Text subscribers
nationwide, Tutok Sabay Txt (TST), Smart’s biggest
ever text promo, in cooperation with ABC Development
Corporation (TV5) gave away as much as Php5 million to
weekly winners like the lucky 19-year-old Gina Mariano
(center) of Libmanan, Camarines Sur.
PLDT AppFarm offers best-of-breed cloud computing solutions to
the enterprise market with a rich online platform where users can
securely log on to use a whole host of helpful applications. It enables
businesses to run the enterprise applications they need, minus the
costly IT investments.
ePLDT’s data center operations continued to
grow strongly with revenues higher by 25%.
PLDT GROUP 2010 MILESTONES 15
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PLDT Negosyo Boost Connect, a new variant of the
Negosyo Boost family, aims to address the demand of
small and medium enterprises (SMEs) for business-grade
DSL and voice bundle with branches and multi ple outlets.
PLDT’s Shops.Work Unplugged (SWUP)
Card All-Access off ering extended its
applicati on beyond just card payment
processing to include ti cketi ng, cashiering
and loyalty applicati ons targeti ng the
transport and retail industry.
MasterCard Worldwide and Smart
subsidiary Smart Hub Inc., announced
a joint venture to accelerate delivery
of mobile payment soluti ons that
will enable fi nancial insti tuti ons and
cellular phone networks around the
world to deliver end-to-end mobile
p a y m e nt s e r v i c e s t h r o u g h t h e
MasterCard worldwide network.
PLDT Telerewards aims to help win the loyalty
of subscribers and gain new ones by rewarding
each customer depending on their usage,
payment habit, and tenure.
Through its numerous innovati ons, Smart helps “change the
game” or make life “extraordinary” for millions of Filipinos as
shown in one of its corporate adverti sements.
16
PLDT GROUP 2010 MILESTONES
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THE PLDT GROUP CSR REPORT
In 2010, the PLDT Group played a key role in several pioneering initiatives that had a
tremendous impact not only in Filipinos’ lives, but also in helping push the country towards
technological advancement. Collaborations likewise contributed to the further expansion
of community service initiatives.
The country’s first nationwide automated Presidential Elections was successfully held
in 2010. PLDT and Smart’s telecommunications networks supported the electronic and
wireless transmission of ballots, enabling fast and efficient canvassing of votes across the
country.
PLDT-Smart Foundation (PSF) and Smart also partnered with the Parish Pastoral Council
for Responsible Voting (PPCRV) and donated Php1 million to help fund “Botong-Boto Ka
Na Ba?”, a Voters’ Education campaign that aimed to educate voters and poll watchers on
automated election.
HEALTH
Health became a major service initiative in 2010 for the PLDT Group, even as new programs
under Education, Environment, Livelihood, and Sports continued to roll out for the rest of
the year.
PLDT Group CSR Statement
At
the PLDT Group of Companies,
Corporate Social Responsibility (CSR) is
grounded in our belief that an integral
part of our business is the imperative to
help improve the overall well-being of
the Filipino people. To achieve this goal,
we will address proactively the interests
of our various stakeholders. We believe
that as we seek to enhance value for our
shareholders, we have a responsibility to:
•
Provide quality products and services
for our customers
• Develop our employees
By harnessing its wireless technologies and extensive network that reached even remote
communities, Filipinos in far-flung areas had access to doctors and specialists – some for
the first time in their lives – via cellphones and the internet.
• Work with our suppliers and business
partners in an ethical and mutually
beneficial manner
In 2010, the healthcare sector witnessed one of the first remote wireless medical
consultations in the countryside, an innovation pioneered by Smart together with private
and public sector partners.
•
•
Care for the environment
Improve our communities
Several programs were rolled out: the Mobile Surgery Services Project with the Provincial
Government of Misamis Oriental; and the Amputee Screening via CEllphone NeTworking
(ASCENT) with the Physicians for Peace (PfP) volunteers.
Developed in support of PfP-Philippines’ Walking Free Program, ASCENT is a mobile and
web application provided by Smart to help improve amputee screening in the country to
benefit patients, health workers and doctors.
Under the Mobile Surgery Services Project, Smart is providing free one-year internet
connectivity to all seven provincial hospitals of Misamis Oriental. Pilot hospitals include
those in Gingoog, Talisayan, Balingasag, and Manticao towns.
PLDT’s “PiLa na, may Doktor Tayo” medical and dental missions, meanwhile, provided
free consultations, medicines, and dental services to victims of calamities and mishaps, to
impoverished constituents of various municipalities, and to indigenous minorities. In 2010,
PLDT served 1,534 patients in Taytay, Rizal and Barobaybay, Northern Samar. Since 2007,
the Company has served 16,009 patients.
With the Philippine Health Insurance Corporation (PhilHealth) serving as Filipinos’ basic
health insurance, Smart supported its efforts to boost membership especially among the
informal sector by providing some 200 Smart Bro Plug-It units to PhilHealth’s registration
centers for the nationwide PhilHealth Registration Day on October 2, 2010. Aside from
providing internet connectivity to PhilHealth, Smart is also helping the agency enhance its
We are conscious about the proper
management of our finite and fragile
environment and are taking tangible
measures to lessen our carbon footprint.
We will continue to invest in technical
business solutions that both cut our costs
and help save the environment.
By succeeding as a corporation, we create
wider opportunities
for employment,
entrepreneurship and the greater well-
being of all Filipinos. We believe that
as we help raise the overall economic
welfare of the Filipino, we expand the
market of our products and services. The
creed of our Company’s business strategy
is the desire to Change Lives for the better.
THE PLDT GROUP CSR REPORT 17
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PLDT and Smart supported the wireless transmission of ballots
during the country’s first nationwide automated presidential
elections successfully held in May 2010.
Teachers actively partici-
pate in the “Live and Loud”
concert, Gabay Guro’s
tribute to the country’s
mentors.
collection efficiency via the PhilHealth Remittance-by-Air service.
Exclusive to Smart subscribers, this allows PhilHealth members to
pay their monthly contributions via SMS.
PLDT, Smart, and ePLDT likewise continued to support the
Philippine National Red Cross’ (PNRC) nationwide blood donation
activities to help ensure adequate blood supply for patients in
need of blood transfusions. Smart was cited by the Philippine Red
Cross (PRC) Mindanao Regional Blood Center as the “Bloodiest
Telecommunications Company” for its efforts to promote voluntary
blood donation. PLDT continued its partnership with PNRC and
Philippine Children’s Medical Center (PCMC) by conducting blood
donation activities for the hospital’s cancer patients mostly in
Manila. PCMC has always been the first to respond to PLDT and
Smart employees’ and their immediate families’ urgent requests
for blood donations.
ENVIRONMENT
The PLDT Group’s environment-related initiatives in 2010 focused
on reforestation efforts and disaster preparedness.
Over 451,000 seedlings and mangrove propagules were planted
in about 23 municipalities by employees, partner schools, local
governments and civic organizations under PLDT’s TELEpuno
project, Smart and NTT Docomo’s joint SMARTrees program, and
PSF, ePLDT, Makati Medical Center, and partner communities’ tree
planting activities.
PLDT’s TELEpuno is a five-year program in partnership with
Department of Environment and Natural Resources (DENR),
Philippine Business for Social Progress (PBSP), the Multi-sectoral
Watershed Management Council, Inc. and the local governments
of Real and Infanta, Quezon. Under the program, 80,000 seedlings
will be planted in the 80-hectare Real-Infanta Watershed Forest
Reserve. Some 16,000 were planted in 2010. To date, 32,000
seedlings have been planted.
PSF supported the Philippine Disaster Recovery Foundation’s
(PDRF) Marikina Watershed Initiative program, which aims to
reforest the watershed to prevent massive flooding in Metro
Manila. PSF supported the project with Jollibee Foundation,
Accenture, DB Schenker Philippines, and Millward Brown, among
others.
18
THE PLDT GROUP CSR REPORT
In 2010, Smart together with private and public sector partners,
facilitated one of the first remote wireless medical consultations
in the countryside – allowing a 12-year-old patient diagnosed
at the Misamis Oriental Provincial Hospital-Balingasag with
meningo encephalocele to consult a neurosurgeon assigned at
the Provincial Health Office in Cagayan de Oro City.
PLDT and the Philippine Eagle Foundation, Inc. (PEF) signed an
agreement to restore the denuded lands within the Arakan Valley
Conservation Area into viable habitats for the Philippine Eagle
and other wildlife. PLDT is the first private institution to help PEF
reforest Arakan Valley in North Cotabato, also home to the Manobo,
Matigsalog, and Bagobo tribes. PLDT adopted one hectare of the
forest corridor and planted 1,000 seedlings. PLDT received a plaque
of appreciation from PEF for its role in protecting the forest during
the 12th Philippine Eagle Week in Davao City.
PLDT employee-volunteers planted 2,700 seedlings in Tabunan,
Cebu City, in 2010 under the Cebu Hillylands Reforestation Caravan
in partnership with the PBSP. To date, a total of 74,017 trees have
been planted in 14 municipalities under the program.
PSF likewise donated to ABS-CBN Foundation’s “Kapit Bisig para sa
Ilog Pasig” project and conducted disaster relief missions in Isabela
for victims of typhoon Juan.
PLDT’s other environment programs include the PLDT-Motolite-
PBSP Balik Baterya Program which aims to protect the environment
through proper disposal and recycling of used lead acid batteries
(ULABs). The ULABs donated by PLDT were bought by Oriental and
Motolite Marketing Corp. at a higher price. The proceeds were
used to fund the establishment of 22 Learning Resource Centers
(LRCs) or mini-libraries in eight remote towns in Cebu, six in Bohol,
three in Iloilo, and five in Samar. In 2010, seven LRCs were set up
in Cebu. The remaining 15 LRCs will be turned over in 2011. PLDT
remains to be the program’s biggest donor.
PLDT also supported the Highway Clean-up Drive for Tirona
Highway in Bacoor, Cavite in partnership with the municipality and
the Municipal Environment and Natural Resources Office (MENRO);
the Earth Day Celebration in partnership with Philippine Business
for the Environment (PBE); and the Run for Pasig River 10.10.10
which raised funds for the Pasig River clean up and also made it to
the Guinness world record.
PLDT likewise donated a potable water system for the community
in Sitio Enamong in Barangay Datu Ladayon, Arakan Valley, North
Cotabato. The Company’s employee-volunteers helped in the
installation of the water system.
PLDT 10 AR main NEW.indd 18
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For its part, Smart sponsored the development of the 10 Million
Movement campaign website, which was launched as part of the
Earth Day 2010 celebration led by the Earth Day Network Philippines,
Inc. and the DENR. The website, accessible via www.10mm.ph is
part of a campaign to gather 10 million commitments for the
environment from all over the country. It is designed to encourage
every Filipino to commit to an environment-friendly act, which can
be as simple as walking to the nearby grocery instead of riding the
car or taking the tricycle.
Smart, in partnership with the Makati Medical Center, installed the
country’s first hybrid wind-solar power system that uses vertical-
axis wind turbines in 2010. To date, Smart has more than 100 wind-
and solar-powered cell sites nationwide.
Smart also hosted Global System Mobile (GSM) Association’s
7th Green Power for Mobile Working Group meeting. The Green
Power for Mobile Working Group gathered some 40 representatives
from 10 mobile network operators around the world, two tower
companies and some 10 vendors to discuss innovations and
developments in the use of alternative energy sources in the global
telecom industry.
In 2010, Smart focused on developing partnerships and mobile
solutions to help reduce disaster risks, develop a flood forecasting
system, and respond more quickly to calamities.
PBSP, Smart, and the disaster coordinating councils of the Province
launched a World Bank-funded project,
of Southern Leyte
“Strengthening Disaster Preparedness of Southern Leyte through
SMS Technology”, which won a US$200,000 grant during the 2009
Development Marketplace Competition organized by the World
Bank. Under the two-year project, PBSP and Smart will set up
a system that will enable an effective exchange of information
between pilot communities in 10 towns in Southern Leyte that
have been identified as vulnerable to natural calamities and the
Southern Leyte Provincial Disaster Management Office (PDMO).
In collaboration with the country’s two other major telcos, Smart
strengthened its partnership with the government weather bureau,
the Philippine Atmospheric, Geophysical and Astronomical Services
Administration (PAGASA). The initiative is part of a program of the
PDRF to help upgrade the country’s flood forecasting system. The
installation of PAGASA flood forecasting and weather instruments in
strategic cell sites is expected to help PAGASA issue flood forecasts
and warnings more accurately.
Lastly, Smart also partnered with the Ateneo de Davao University
(AdDU) to develop a weather monitoring and disaster alert system
for Davao City; the Davao City Government for its world-class Public
Safety Command Center; PAGASA for the set up of a high-grade
automatic rain gauge in a cell site in Montalban, Rizal and the
training of seven schools and six barangays in Antipolo, Rizal and
the members of the Provincial Disaster Coordinating Council; the
Typhoon Committee Foundation, Inc. (TCFI) and PAGASA for the
first Rain Watchers Awards, a contest for all public elementary and
high schools that are participating in Smart’s Project Rain Gauge
for being the most creative and consistent in terms of collecting
and reporting rainfall data. The Monkayo National High School
in Monkayo, Compostela Valley won first prize, followed by San
Miguel National High School (SMNHS) in Bulacan then Aurora
National Science High School (ANSHS) in Baler, Aurora.
EDUCATION
PSF’s programs for education benefited more students in 2010.
Its numerous programs include Gabay Guro, MVP Academic
Excellence Awards for employees’ qualified children, PSF Employees
Educational Grant, and the PSF-Philippine National Police (PNP)
Educational Grant Assistance Program.
Gabay Guro has one dream: to improve education in the country
in a sustainable way. And in pursuing that dream, Gabay Guro
harnessed innovative partnerships and the creative use of the PLDT
Group’s resources to uplift the lives of the teachers through its six
core pillars: (1) educational grants, (2) training, (3) teachers’ tribute
cards, (4) livelihood, (5) broadbanding and computerization of
public schools, and (6) housing.
Based on the idea of a multiplier effect, where one good and well-
motivated teacher can influence hundreds or even thousands
of students, Gabay Guro has benefitted teachers and would-be
teachers since 2007.
From only 15 scholars in 2007, it now has 268 scholars and 23
partner-schools nationwide for school year 2010-2011. Last year,
from the initial batch of scholars from the Philippine Normal
University, five have graduated cum laude and one has received a
leadership service award.
Under training, teachers from public schools were given AmSpeak
instruction by our SPi Technologies trainors to help them become
better English speakers. Teachers also
learned out-of-the-box
teaching methods and e-Learning modules to help them teach better.
PLDT donated a potable water system to residents of Arakan
Valley in North Cotabato.
Smart sponsored the development of the 10 Million Movement
campaign website which was launched as part of the 2010
Earth Day celebration.
THE PLDT GROUP CSR REPORT 19
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A total of 794 students from 80 schools all over the country
completed the Infoteach Computer Advanced Course.
PSF extended support to the Angono Regional Pilot School for the
Arts by helping renovate its music room and donating musical
instruments.
In September 2010, Gabay Guro, the Government of Daet headed
by City Mayor Tito Sarion, and Education Secretary Brother Armin
A. Luistro, FSC, inked an agreement for a pioneering housing project
for teachers.
PSF likewise partnered with PDRF for the installation of container
van schools in Guitnang Bayan Elementary School and Gov. Isidro
Rodriguez Memorial High School. The Foundation also extended
support to the Angono Regional Pilot School for the Arts by helping
renovate its music room and donating musical instruments; to
the Philippine Red Cross-Rizal Chapter for the orphans under its
care; to Pastolan Elementary School, where students from the
Aeta indigenous tribe were given notebooks; to the Passerelles
Numeriques for a one-year DSL connection and cash package; and
to the local government unit in Iloilo for the use of 10 personal
computers.
PLDT’s Infoteach Outreach Program, in partnership with Netopia
(Digital Paradise Inc.), Department of Education (DepEd) and
Microsoft, aims to empower public high school students and public
school teachers by upgrading their cyber-technology skills through
internet use and basic IT education.
In 2010, graduates of the Infoteach Computer Advanced Course
totaled 794, spread out from 80 schools in NCR, Luzon, Visayas and
Mindanao. To date, 7,157 public school students and teachers have
benefitted from the PLDT Infoteach Outreach Program.
The PLDT myDSL Broadband Quiz was also held during which
student-graduates of the PLDT Infoteach Outreach Program
from the National Capital Region, Luzon, Visayas and Mindanao
competed for cyber supremacy, significant rewards and immense
pride for their respective schools. PLDT also partnered with the
University of the Philippines Open University (UPOU), Online
Teachers’ Development Program. PLDT will enroll eight qualified
top teacher graduates of the PLDT Infoteach Outreach Program in a
computer science course.
and Commission on Information and Communications Technology
(CICT) to connect all public schools to the internet.
Smart launched CommuniTeach with Silid Aralan, Inc. and the PBSP.
CommuniTeach actively involves communities in helping Grades 1
to 3 public school kids identified to be the lowest performers in
their respective batches to improve their academic performance
via after-school learning sessions. CommuniTeach also assists in
other areas through funding, school supplies donation, classroom
cleaning, and even cooking and serving snacks for the beneficiaries.
Smart highlighted its co-branding, co-financing model for its flagship
Smart Schools Program (SSP) and CommuniTeach via a partnership
with Deutsche Regis Partners, Inc. and the PBSP. Deutsche Regis
funded the provision of internet access, content and training for
10 SSP partner schools, and the inclusion of five public elementary
schools in CommuniTeach. SSP promotes the use of ICT in basic
education through partnerships with public schools officials, its
teachers, and parents-teachers-community associations.
Smart also tied up with the Naga City Government, the Ateneo
de Naga University, PBSP, DepEd Naga City, Triangulo Elementary
School and Pacol Elementary School to implement CommuniTeach
in the two schools.
Smart likewise partnered with SM Investments Corporation, which
donated Php1 million, and the PBSP to enable nine public high
schools to join the SSP.
Through its “Doon Po Sa Amin” (DPSA) Project, Smart launched two
new online content generation contests. “Ano ang Kwento Mo?”
(What’s your story?) asks high school students nationwide to create
video blogs that feature a distinct characteristic, place, or culture
in their communities. The DPSA Quest engages teacher-student
teams from SSP partner elementary schools and Online Associates
to research unique stories about their respective communities and
narrate them at their blog sites.
Continuing its thrust of sharing state-of-the-art technologies to
the academe, Smart launched its Worldwide Interoperability for
Microwave Access (WiMAX) for Public Schools program with a
simple Switch-On ceremony at the Dr. Arcadio Santos National
High School (DASNHS) in Parañaque City. The event highlighted
Smart’s deployment of WiMAX in support of the goal of the DepEd
For its partner colleges and universities, Smart conducted the
6th SWEEP Innovation and Excellence Awards, its annual search for
the most innovative wireless applications developed by 38 partner
schools under the Smart Wireless Engineering Education Program
(SWEEP). Holy Name University won the grand prize for its wireless
application that enables residents of Calape, Bohol to monitor
20
THE PLDT GROUP CSR REPORT
PLDT 10 AR main NEW.indd 20
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the condition of their water pipes and detect leakages. Other
winners included Bulacan State University’s Wilmir Nicanor for the
PalaECEpan quiz bee and Surigao del Sur’s Barobo National High
School’s entry “Sumbada” for the 2nd DPSA Learning Challenge.
Smart also conducted On-the-Job training to partner schools
Systems Plus College Foundation, Wesleyan University-Philippines,
and the University of Baguio.
Under the Smart Mentors Program, 16 public school teachers
earned their Master of Arts degree in Instructional Media and
Design at the University of Makati.
Smart likewise sponsored 32 officials from SWEEP and the
Application Developers’ Intro School elective program at the
3rd Leadership Conference Series, which featured former U.S. Vice
President and environmental advocate Al Gore.
Other activities included: the participation of over 500 employee
volunteers in DepEd’s Brigada Eskwela Plus by doing repairs
and maintenance work in at least 16 public schools across the
country before the school opening; partnership with DepEd for
a poetry and essay-writing contest held during the Teachers
Month; Treebute, a tree-planting activity supporting the PDRF’s
Marikina Watershed Initiative, where 1,250 trees were planted
in Sitio San Joseph, Barangay San Jose in Antipolo City; Project
Connect: Linking Environment, Education and Technology, a
project with World Wide Fund for Nature-Philippines which aims
to educate students on energy efficiency and conservation and
renewable energy technologies; and a Blog Site contest with Sun
Star Daily for Cebu’s campus publications during the Cebu Press
Freedom Week. Benedicto College Gazette, the Cebu Normal
University’s “Ang Suga” and University of San Carlos’ “The
Carolinian” were given awards.
The SPi Technologies Foundation, Inc., through the SPi Global’s
Scholarship Program, has 16 scholars since 2008. The program
assists qualified students to complete their college education
and gain employment from SPi after graduating. The first batch of
scholars from Silliman University in Dumaguete, Negros Oriental is
expected to join the SPi office in the province.
SPi Foundation also conducted the Successful Job Applicant
workshop to 270 students in partnership with aSPire University,
SPi Global’s leadership and management training vehicle. Adobe
Acrobat and Photoshop workshops were also conducted for students
in the Laguna and Batangas areas. The Company continuously hires
Adobe-trained specialists to support the growing volume of client
requirements needing Adobe skills.
COMMUNITY DEVELOPMENT AND LIVELIHOOD
PSF, PLDT, and Smart turned over a Php2.5-million check to Gawad
Kalinga (GK) Foundation for the building of homes in adopted GK
villages in Southern Leyte and Sulu. PSF, PLDT, and Smart have
adopted eight PLDT-Smart Amazing GK Villages nationwide.
SPi Foundation’s SPi Springer Sunshine GK Village at St. Mary’s
Compound, Moonwalk, Parañaque City now has 50 families.
In late 2010, two of SPi’s major clients – Springer and TNT, have
committed to build another 50 houses for a total of 100. The
Foundation will likewise look at another GK program in Negros
Oriental where SPi Global is currently expanding its operations.
In 2010, SPi Foundation’s Employee Volunteer Program spent
12,000 hours for various programs in the Philippines, India, Vietnam
and the U.S. These programs include the house builds, medical
missions, feeding programs, computer training lessons, business
training programs, and participation in partner organizations’
CSR programs such as Operation Smile, Gabay Guro, Dream in A
Shoebox, Health Run for a Cause, Walk the World, Cribs Philippines,
and Smart Gilas, among others.
For livelihood, PLDT established seedling nurseries in Quezon in
line with the five-year tree planting program in the area. Other
initiatives include: ePLDT’s Christmas donation to Food for the
Hungry Philippines; iPlus/Infocom’s CSO Modelo fundraiser for
children cancer patients at the Philippine General Hospital; and
BayanTrade’s support to the Black Pencil Movement.
SPORTS AND ATHLETIC DEVELOPMENT
Advocacy for sports came in the form of donation to three
major institutions, namely: the Samahang Basketbol ng Pilipinas,
Amateur Boxing Association of the Philippines, and the Philippine
Taekwondo Association.
Smart conducted the 6th SWEEP Innovation and Excellence
Awards, its annual search for the most innovative wireless
applications developed by 38 partner schools under SWEEP.
The Company continued to support sports by sponsoring events
and giving donations to sports organizations like the Amateur
Boxing Association of the Philippines.
THE PLDT GROUP CSR REPORT 21
PLDT 10 AR main NEW.indd 21
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CORPORATE GOVERNANCE REPORT
PLDT’s Board of Directors ensures principled business conduct in pursuit of promoting and protecting the interest of the Company, its
stockholders, and all other stakeholders.
PLDT recognizes that corporate governance is a key element in its
strategy to accomplish the Company’s mission, create value for its
shareholders and stakeholders, and sustain its long-term viability.
The Company’s approach is to continuously improve its governance
structures and processes on three levels: (1) compliance with the
standards and requirements of laws and regulatory issuances and
guidelines; (2) benchmarking against recognized international best
practices and monitoring developments in corporate governance;
and (3) fostering an ethical corporate culture guided by the
principles of accountability, integrity, fairness, and transparency.
PLDT conforms with the corporate governance laws, issuances,
guidelines and standards of three jurisdictions. PLDT is subject to
Philippine corporate governance laws, issuances, guidelines and
standards as established by the Philippine Securities and Exchange
Commission (Philippine SEC) and the PSE. The Company is also
subject to the standards set forth in U.S. Securities Exchange Act,
the Sarbanes-Oxley Act of 2002 and the NYSE Listed Company
Manual. As an investee company of various Philippine and
other affiliates of First Pacific Company Limited (First Pacific),
PLDT likewise endeavours to conform with certain corporate
governance guidelines of First Pacific which are based on the rules
of the Hong Kong Stock Exchange in which First Pacific’s shares
are listed. The demanding regulatory regime under which PLDT
operates has provided the impetus for PLDT to impose upon itself
high standards of corporate governance and business conduct.
Our GOvernance StructureS
Board of Directors
It is the Board of Directors which has the primary responsibility
for ensuring principled business conduct in pursuit of promoting
22
CORPORATE GOVERNANCE REPORT
and protecting the interest of the Company, its stockholders, and
all other stakeholders. The Board of Directors functions within the
scope of its powers and authorities provided in applicable laws
and the Company’s By-Laws, and conducts itself in accordance
with Company policies such as the PLDT Manual on Corporate
Governance (CG Manual) and the PLDT Code of Business Conduct
and Ethics (Code of Ethics).
The PLDT Board of Directors is composed of 13 members whose
diverse skills and experiences serve to create the appropriate
balance and mix of expertise matched by a commitment to the
highest standards of corporate governance and business conduct.
This commitment is manifested in the Board’s independence from
Management, as well as its undertaking to observe and adopt,
whenever applicable, proven best practices, and to continuously
improve the Board’s and individual Directors’ performance.
The positions of Chairman and Chief Executive Officer (CEO) are
held separately by two individuals, Mr. Manuel V. Pangilinan and
Mr. Napoleon L. Nazareno, respectively. Each position has been
given distinct and separate duties and responsibilities under
PLDT’s By-Laws and CG Manual.
Independent oversight by the PLDT Board over Management
is enhanced through PLDT’s independent directors and non-
executive Directors. PLDT has four duly-screened and qualified
independent directors, namely: Rev. Fr. Bienvenido F. Nebres,
S.J., Oscar S. Reyes1, Mr. Pedro E. Roxas, and Mr. Alfred V. Ty. The
number of PLDT’s independent directors surpasses that required
under local regulations of at least two independent directors or
20% of the entire board membership, whichever is lower. With the
1 Mr. Reyes’ status as an independent director ceased as of August 3, 2010 due to
his appointment as Chief Operating Officer of Meralco, an affiliate and investee
company of the PLDT Group.
PLDT 10 AR main NEW.indd 22
4/30/11 12:06 PM
exception of Mr. Napoleon L. Nazareno and Atty. Ray C. Espinosa,
all the members of the Board are non-executive Directors.
vital concern on more solid footing with the creation of the PLDT
Group Enterprise Risk Management Department.
The Board commits itself to a process of self-improvement.
In the past year, the Board continued its pioneering practice
in the Philippines of conducting a periodic performance self–
assessment. It is a process whereby the Board, through its
individual members, assesses its collective performance as well as
that of the individuals that comprise it and its committees. The
Board utilizes a self-assessment tool developed with reference to
the Philippine SEC’s Revised Code of Corporate Governance and
Self-Rating Form, PLDT’s CG Manual and Code of Ethics, Sarbanes-
Oxley Act, NYSE Listed Company Manual, the survey questions of
the Institute of Corporate Directors (ICD), and established global
best-practices. The assessment instrument includes an evaluation
of the Board’s structure, processes and responsibilities, as well
as the performance of the Chief Executive Officer. Results of the
assessment are used to develop strategies to strengthen and
enhance, among others, PLDT’s governance practices.
The Board undergoes training on corporate governance through
annual corporate governance enhancement sessions. These
sessions provide the Directors with an opportunity to interact
with experts and stay abreast with key developments in corporate
governance and business ethics that are of particular significance
to the PLDT Group. All of the current Directors have undergone
corporate governance training or have attended at least one
enhancement session out of the four enhancement sessions
conducted since 2007.
Aside from its regular meetings to review the Company’s
financial results and operating performance, in 2010, the Board
also went through a technology briefing in order to be fully
updated on the latest trends and developments that have an
impact on the Company’s strategy and competitiveness. The
Board also led and actively participated in the review of the
PLDT Group’s business strategy and in the assessment of new
business opportunities and sources of growth, to ensure that
the PLDT Group maintains its market leadership in the intensely
competitive telecommunications industry. The Board also focused
on strengthening enterprise risk management (ERM), placing this
BOARD OF DIRECTORS 2010 MEETINGS
ATTENDANCE PERFORMANCE
The Board also sees to it that all other aspects of corporate
governance and responsibility are given proper emphasis and
attention. It provides overall guidance to Management with
respect to CSR programs and directs efforts to devise and
implement meaningful and authentic approaches to our corporate
sharing, as well as ways and means to act responsibly in relation to
the world’s finite resources and fragile environment.2
The Board had a total of 12 meetings in 2010. The Chairman and
five other Directors attended all of the meetings and the remaining
seven Directors attended at least 75% of the said meetings. The
table below provides a summary of the attendance performance
of the Directors.
In 2010, the total amount of per diem provided for the Board
of Directors (and the five members of the Advisory Committee)
was Php41.8 million. Each Director and member of the Advisory
Committee is entitled to receive a per diem of Php0.2 million for
each board meeting attended. Except for the per diem, Directors
are not entitled to any other compensation from the Company.
Board Committees
The Board has an Advisory Committee which provides guidance
and suggestions, as necessary, on matters deliberated upon during
Board meetings.
To assist in the performance of the Board’s responsibilities and
aid in ensuring compliance with the principles of good corporate
governance, the Board has established four committees namely,
the Audit Committee, the Governance and Nomination Committee,
the Executive Compensation Committee and the Technology
Strategy Committee (collectively, the Board Committees).
The Board Committees have their respective charters that
have been approved by the Board. The charters establish the
composition, define the functions, set the general objectives
and outline the procedures of the said Committees. In 2010, the
Board approved the revisions, as recommended by the Board
Manuel V. Pangilinan
Napoleon L. Nazareno
Donald G. Dee*
Helen Y. Dee
Albert F. del Rosario
Ray C. Espinosa
Tatsu Kono
Bienvenido F. Nebres
Takashi Ooi
Oscar S. Reyes
Pedro E. Roxas
Tony Tan Caktiong
Alfred V. Ty
Jan 26 Mar 2 Mar 26 May 13
Jun 8
**
Jul 7
Aug 3
Aug 31
Sept 28
Nov 4
Dec 7
–
–
–
–
–
–
–
–
–
–
Dec 8
***
–
–
* Mr. Dee resigned as a PLDT Director effective December 6, 2010.
** The meeting on June 8, 2010 was also the date of the Annual Stockholders Meeting and the Organizational Meeting.
*** The meeting on December 8, 2010 was the only special meeting of the Board of Directors in 2010.
2 Please see separate report on PLDT Group CSR Activities.
CORPORATE GOVERNANCE REPORT 23
PLDT 10 AR main NEW.indd 23
4/30/11 9:39 AM
Committees, to their respective charters. Key amendments
to these charters pertain to aligning each Board Committee’s
purposes to those set forth in the CG Manual. Furthermore,
sections in the CG Manual pertaining to the independence criteria
for independent directors, qualifications for directorship, and
grounds for disqualification from directorship, were incorporated
as Annexes to the revised charters.
Audit Committee
The Audit Committee (AC) is composed of three independent
directors, and three advisors. Each of the members of the AC is
financially literate and one of the advisors is a certified public
accountant with financial management expertise. The primary
purpose of the AC is to assist the Board in fulfilling its oversight
responsibilities for: the integrity of the Company’s accounting
and financial reporting principles and policies, and system of
internal controls, including the integrity of the Company’s financial
statements and the independent audit thereof; the Company’s
compliance with legal and regulatory requirements; the Company’s
assessment and management of enterprise risks including credit,
market, liquidity, operational and legal risks; and the Company’s
audit process and the performance of the Company’s internal
audit organization and external auditor, including the external
auditor’s qualifications and independence.
In addition to the general amendments stated earlier, the AC
Charter was also updated with respect to references to applicable
Independence Standards and Auditing Standards relating to the
external auditor, including reports and communications required
to be submitted by the latter.
The revised charter of the AC may be viewed and downloaded
from the PLDT website through the following link: http://
www.pldt.com.ph/about/management/Documents/Audit%20
Committee%20Charter.pdf.
For the year 2010, the AC held six regular meetings, four special
meetings and one joint meeting with the audit committees
of major subsidiaries, Smart and ePLDT during which it also
performed the activities described below.
With respect to the external auditor, SGV&Co.:
•
Discussed the results of their integrated audit of PLDT’s 2009
financial statements prepared in accordance with Philippine
Financial Reporting Standards (PFRS) and International
Financial Reporting Standards (IFRS);
Evaluated internal controls over financial reporting;
Received the required communications from the external
auditor including a statement as to its independence as
required by prevailing applicable auditing and independence
standards;
Reviewed the external auditor’s integrated plan for the
audit of the 2010 financial statements and review of internal
controls over financial reporting; and
Evaluated the performance of SGV&Co. for the year 2009 and
resolved to re-appoint SGV&Co. as the external auditor for
the year 2010.
•
•
•
•
With respect to the internal audit organization:
•
Reviewed and/or approved the internal auditor’s charter,
reports and plans such as the Internal Audit and Fraud Risk
Management Group’s accomplishment report for 2009,
the internal audit plan and updated internal audit plan for
2010, and periodic status reports regarding the PLDT Group’s
Sarbanes-Oxley Section 404 readiness and compliance as of
year end 2010; and
24
CORPORATE GOVERNANCE REPORT
•
Discussed with auditing firm Punongbayan & Araullo the
results of its external quality assessment review for the PLDT
internal audit organization, which was given the highest rating
of “General Conformance” with the International Standards
for the Professional Practice of Internal Auditing (ISPPIA).
With respect to the integrity of financial reporting:
•
Reviewed with the PLDT finance officers, internal auditors,
and SGV&Co., the financial results and reports for the first
quarter of 2010, the six months ended June 30, 2010 and the
nine months ended September 30, 2010.
With respect to governance, general internal controls, and risk
management:
•
Reviewed and discussed the status of the Company’s
compliance with applicable laws and significant legal matters,
the status of whistleblowing complaints and updates on the
PLDT Group’s ERM processes and activities, including results
of internal risk assessments and various ERM initiatives.
The table shows the number of meetings held by the AC and the
individual attendance record of each member for the year 2010.
For each AC meeting attended, a member/advisor is entitled to a
per diem of Php0.075 million. A total of Php4.4 million was paid as
per diem to the members and advisors of the AC for the year 2010.
Voting Members
Bienvenido F. Nebres (Chairman)*
Pedro E. Roxas*
Oscar S. Reyes3
Alfred V. Ty4
Advisors
Corazon S. De la Paz-Bernardo
Tatsu Kono
Roberto R. Romulo
Number of
Meetings Attended
11/11
11/11
8/8
2/2
11/11
9/11
11/11
* Independent Director
3 Member and independent director until August 3, 2010.
4 Member beginning September 28, 2010.
Governance and Nomination Committee
The Governance and Nomination Committee (GNC) is composed
of five voting members, three of whom are independent directors
and the other two are non-executive directors. The GNC also has
three non-voting members composed of an independent member
of the Advisory Committee, the Human Resources Group Head
and the Chief Governance Officer of the Company. The primary
purposes of the GNC are to: oversee the development and
implementation of corporate governance principles and policies;
review and evaluate the qualifications of the persons nominated
to the Board as well as those nominated to other positions
requiring appointment by the Board; identify persons believed to
be qualified to become members of the Board and/or the Board
Committees; assist the Board in making an assessment of the
Board’s effectiveness in the process of replacing or appointing new
members of the Board and/or Board Committees; and assist the
Board in developing and implementing the Board’s performance
evaluation process.
The revised charter of the GNC may be accessed and downloaded
from the PLDT website through the following link: http://www.
pldt.com.ph/about/management/Documents/Governance%20
and%20Nomination%20Committee%20Charter.pdf.
PLDT 10 AR main NEW.indd 24
4/30/11 9:39 AM
Below are the GNC’s activities for 2010 in the performance of its
governance function:
•
Reviewed and assessed PLDT’s CG Manual in light of the
issuance of the Philippine SEC’s Revised Code of Corporate
Governance;
Passed upon and approved the interpretation guidelines on
the terms used in the independence criteria for independent
directors in the said CG Manual;
Conducted a mandatory periodic review of the Conflict of
Interest Policy and the Code of Ethics (GNC determined that
both policies remain to be adequate and compliant and
required no amendments);
Provided guidance or directives with respect to proposed
corporate governance related rules and guidelines issued
by regulators and reports of corporate governance rating
agencies and other organizations interested in corporate
governance;
Provided input in the development and implementation of the
PLDT corporate governance education and communication
activities; and
Evaluated and submitted to the Board of Directors the
consolidated results of the Board Performance Assessment
for 2009 and provided assistance to the Board in initiating the
Board performance assessment for 2010.
•
•
•
•
•
As regards its nomination function, the GNC performed the
following:
•
Screened persons nominated as directors or independent
directors and determined, identified and recommended
the final list of director/independent director nominees for
election in the 2010 annual meeting of stockholders;
Reviewed the composition of Board Committees and made
the appropriate recommendations to ensure that the same
are in conformity with applicable laws, rules and regulations;
Reviewed the
list and qualifications of officers and
recommended the re-appointment of said officers at the
organizational meeting of the Board of Directors; and
Reviewed and endorsed the recommendation of the
Management Committee regarding the promotion of certain
executives with the rank of Assistant Vice President to Vice
President.
•
•
•
Summarized in the table are the number of meetings held by the
GNC and the individual attendance record of each member. For
each GNC meeting attended, each member is entitled to a per
diem of Php0.075 million. A total of Php2.4 million was paid as per
diem to the members of the GNC in 2010.
Voting Members
Manuel V. Pangilinan (Chairman)
Tatsu Kono
Bienvenido F. Nebres*
Oscar S. Reyes5
Alfred V. Ty*
Non-Voting Members
Artemio V. Panganiban
Ma. Lourdes C. Rausa-Chan
Victorico P. Vargas6
Menardo G. Jimenez, Jr.7
* Independent Director
5 Independent Director until August 3, 2010.
6 Member until September 28, 2010.
7 Member beginning November 8, 2010.
Number of
Meetings Attended
4/4
4/4
4/4
4/4
4/4
4/4
4/4
3/3
1/1
Executive Compensation Committee
The Executive Compensation Committee (ECC) is composed of
five voting members, three of whom are independent directors,
and the other two are non-executive Directors. The ECC also
has one non-voting member, who is the Human Resources
Group Head of the Company. The primary purposes of the ECC
are to: provide guidance to and assist the Board in developing a
compensation philosophy or policy consistent with the culture,
strategy and control environment of the Company; oversee the
development and administration of the Company’s executive
compensation programs, including long term incentive plans
and equity based plans for officers and executives; and assist the
Board in the performance evaluation of and succession planning
for officers, including the CEO, and in overseeing the development
and implementation of professional development programs for
officers.
The revised charter of the ECC may be viewed and downloaded
from the PLDT website through the following link: http://www.
pldt.com.ph/about/management/Documents/Executive%20
Compensation%20Committee%20Charter.pdf.
In 2010, the ECC had the following activities:
•
Discussed and approved the merit increases for officers and
executives;
Passed upon the 2009 variable pay payout and the targets for
the 2010 variable pay;
Reviewed the PLDT Long-Term Incentive Plan (LTIP) payout
for the 2007-2009 performance cycle and discussed and
recommended for Board approval the LTIP for the 2010-2012
performance cycle; and
Discussed and approved the subsidiaries and affiliates 2010-
2012 LTIP sharing scheme.
•
•
•
Summarized in the table are the number of meetings held by the
ECC and the individual attendance record of each member. For
each meeting attended, an ECC member is entitled to a per diem
of Php0.075 million. A total of Php2.5 million was paid as per diem
to the members of the ECC in 2010.
Number of
Meetings Attended
6/6
5/6
6/6
6/6
4/6
5/5
1/1
Voting Members
Albert F. del Rosario (Chairman)
Tatsu Kono
Oscar S. Reyes8
Pedro E. Roxas*
Alfred V. Ty*
Non-Voting Members
Victorico P. Vargas9
Menardo G. Jimenez, Jr.10
* Independent Director
8 Independent Director until August 3, 2010.
9 Member until August 1, 2010.
10 Member beginning December 7, 2010.
Technology Strategy Committee
The Technology Strategy Committee (TSC) is composed of five
voting members, one of whom is an independent director, and
two non-voting members. Under the revised TSC Charter, at least
one member of the TSC must have at least a general knowledge or
understanding any of the technologies relevant to the Company’s
line of business.
CORPORATE GOVERNANCE REPORT 25
PLDT 10 AR main NEW.indd 25
4/30/11 9:39 AM
The primary purposes of the TSC are to assist and enable the
Board to: review and approve the strategic vision for the role of
technology in the Company’s overall business strategy, including
the technology strategy and roadmap of the Company; fulfill its
oversight responsibilities for the Company’s effective execution
of its technology-related strategies; and ensure the optimized use
and contribution of technology to the Company’s business and
strategic objectives and growth targets.
A copy of the revised charter of the TSC may be viewed and
downloaded from the PLDT website through the following link:
http://www.pldt.com.ph/about/management/Documents/
Technology%20Strategy%20Committee%20Charter.pdf.
In 2010, the TSC had the following activities:
•
Discussed updates on the PLDT Technology Roadmap and
proof of concept of the latest technologies;
Arranged a presentation to the PLDT Board about the
technology initiatives being undertaken for both the fixed
and wireless networks and developments in the Asia Pacific
region with respect to telecommunications and technology
evolution; and
Engaged Delta partners to look at the PLDT Group’s
technological future as part of the comprehensive review of
the Company’s business.
•
•
Summarized in the table are the number of meetings held by the
TSC and the individual attendance record of each member. For
each meeting attended, a TSC member is entitled to a per diem of
Php0.075 million. A total of Php0.45 million was given as per diem
to the members of the TSC in 2010.
Voting Members
Manuel V. Pangilinan (Chairman)
Ray C. Espinosa
Tatsu Kono
Napoleon L. Nazareno
Oscar S. Reyes11
Non-Voting Members
Manuel M. Lopez12
Orlando B. Vea
11 Independent Director until August 3, 2010.
12 Resigned as member on July 26, 2010.
Number of
Meetings Attended
1/1
1/1
1/1
0/1
1/1
1/1
1/1
Chief Executive Officer
Under the overall guidance and oversight of the Board of
Directors, the CEO is charged with the general care, management
and administration of the business operations of the Company.
He provides leadership for Management in developing and
implementing business strategies, plans and budgets. More
importantly, he ensures that the business and affairs of the
Company are managed in a sound and prudent manner and
internal controls are adequate
operational, financial and
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. The CEO also has the responsibility to
provide the Board with a balanced and understandable account
of the Company’s performance, financial condition, results of
operations and prospects, on a regular basis.
Independent Audit
The Company has an internal audit system which provides
a systematic and disciplined approach in the evaluation and
improvement of the effectiveness of risk management, control,
and governance processes.
26
CORPORATE GOVERNANCE REPORT
The internal audit organization is led by the Chief Audit Officer/
Internal Audit Head who functionally reports to the Audit
Committee. It is responsible for conducting, in accordance with
the International Standards for the Practice of Internal Auditing,
internal audit activities which includes, among others, the
evaluation of the adequacy and effectiveness of controls covering
the Company’s financial reporting, governance, operations and
enforcement systems, and the reliability and integrity of financial
and operational information.
The Company also has an independent external auditor duly
accredited by the SEC. Its duty is to undertake an independent
audit and provide objective assurance on the manner by which
the Company’s financial statements have been prepared and
presented. The Audit Committee selects and appoints the external
auditor and reviews and approves all audit and non-audit services
to be performed by the external auditor and all fees to be paid for
such services.
lead audit partner, primarily
The external auditor or the
responsible for the audit of the Company’s financial statements,
is rotated at least once every five years or such shorter or longer
period provided under applicable laws and regulations.13 In
addition, PLDT’s Personnel Manual generally prohibits the hiring
of former employees of the Company’s independent auditing firm
or members of the audit team assigned to perform audit services
for the Company.14
Chief Governance Officer
The corporate governance compliance system established in
the CG Manual includes the designation by the Board of a Chief
Governance Officer who reports to the Chairman of the Board
and the Governance and Nomination Committee. The primary
responsibilities of the Chief Governance Officer include monitoring
compliance with the provisions and requirements of corporate
governance laws, rules and regulations, reporting violations
and recommending the imposition of disciplinary actions, and
adopting measures to prevent the repetition of such violations.
In addition, the Chief Governance Officer assists the Board and
the Governance and Nomination Committee in the performance
of their governance functions, including their duties to oversee
the formulation or review and implementation of the corporate
governance structure and policies of the Company, the
establishment of an evaluation system to verify and measure
compliance with the CG Manual in relation to related laws, rules
and regulations, and to oversee the conduct of a self-assessment
of the performance and effectiveness of the Board, the Board
Committees, and individual Board members in carrying out their
functions.
Corporate Governance Office
The Chief Governance Officer is supported by a Corporate
Governance Office (CGO). The CGO personnel are entrusted
with overseeing PLDT’s three E’s of Corporate Governance:
Engineering, Enforcement and Education. Engineering involves
the continuing development, drafting, issuance and review of
appropriate corporate governance-related policies to guide
company personnel. Enforcement ensures compliance by
company personnel with the corporate governance policies so
issued and enacted. Education rounds off the process by ensuring
the development of the proper knowledge, skills, attitudes and
habits that would promote voluntary observance of corporate
governance policies and, more importantly, PLDT’s four core
values of accountability, integrity, fairness and transparency.
13 Per Item 2.7.1(C), PLDT CG Manual, and Item 1.7, Schedule, Audit Committee
Charter
14 Part 2 Hiring and Placement D(6). Hiring of such persons, if ever, is allowed by the
application of various “lookback” periods, depending on the nature of the service
performed and the position for which the employee will be hired. Approval of the
Chief Financial Officer is also required in certain instances.
PLDT 10 AR main NEW.indd 26
4/30/11 9:39 AM
The Corporate Governance Office performed the following tasks in
compliance with Philippine regulatory requirements:
•
Submitted to the Philippine SEC and the PSE the Company’s
annual certification confirming that PLDT’s CG Manual, as
revised and adopted on March 26, 2010, conforms with the
provisions of the Revised Code of Corporate Governance of
the Philippine SEC;
Submitted the 2010 Corporate Governance Scorecard for
Publicly-listed Companies to the ICD and the Philippine SEC
on November 22, 2010. The fact of such submission was
disclosed to the PSE on the same date; and
Submitted the PSE Corporate Governance Disclosure in
compliance with PSE Memorandum No. 2010-0574 dated
November 26, 2010.
•
•
Implementing Structure
The diagram below presents the implementing structure for
corporate governance in PLDT.
Policies and Implementation
PLDT’s corporate governance principles, structures and processes
are established and articulated in two fundamental policies: The
CG Manual and the Code of Ethics. These policies are benchmarked
against global best practices in corporate governance, yet are
applicable and responsive to PLDT’s particular context.
CG Manual
The PLDT Manual on Corporate Governance (CG Manual) was
approved and adopted by the Board of Directors on March 26,
2010 pursuant to SEC Memorandum Circular No. 6 Series of 2009
or the Revised Code of Corporate Governance. It supersedes the
CG Manual approved and adopted on September 24, 2002, as
amended on March 30, 2004 and January 30, 2007. The structures
and processes set forth in the CG Manual, as well as the Articles
of Incorporation and By-Laws, combined with the Company’s
commitment to the principles of transparency, accountability,
fairness and integrity, form PLDT’s basic framework of governance
by which our Board of Directors, officers, executives and employees
strive to achieve the Company’s strategic objectives, create value
for all its stakeholders, and sustain its long term viability.
In compliance with the Revised Code of Corporate Governance
of the Philippine SEC and consistent with the relevant provisions
of the Securities Regulation Code and Corporation Code of the
Philippines, our CG Manual covers the following key areas:
•
The composition of our Board of Directors as well as the
qualifications and grounds for disqualification for directorship;
The requirement that at least 20% of the membership of the
Board of Directors, and in no case less than two members,
must be independent directors, and the standards/criteria for
the determination of independent directors;
•
•
•
•
•
•
•
•
•
The duties and responsibilities of our board of directors and
the individual directors;
The manner of conduct of Board meetings including the
requirement to have an independent director present in
every meeting to promote transparency and the need to
have an executive session for non-executive and independent
directors;
The establishment of Board Committees, specifically, the
Audit Committee, Executive Compensation Committee,
and Governance and Nomination Committee, including the
composition and the principal duties and responsibilities of
such committees, as well as the requirement for each board
committee to have its own charter;
The role of the Chairman as the leader of the Board and
as the prime mover in ensuring compliance with, and the
performance of, corporate governance policies and practices;
The duty of the Board of Directors to promote and uphold
stockholders’ rights, such as the right to vote, pre-emptive
right, the right to inspect corporate books and records, the
right to timely receive relevant information, the right to
dividends, and the appraisal right;
The requirement for the Board to explore and implement
steps to reduce excessive or unnecessary costs that impede
stockholders’ participation and to act with transparency and
fairness at the annual and special stockholders’ meetings;
The Company’s undertaking to disclose material information
promptly and accurately as well as the imposition of
reasonable rules regarding the treatment and handling of
material non-public information; and
The establishment of an appropriate evaluation system for
purposes of monitoring and assessing compliance with the
CG Manual and other applicable laws and administrative
issuances.
Code of Ethics
The Company’s Code of Business Conduct and Ethics, or Code
of Ethics, was adopted to strengthen the implementation of
the CG Manual. Approved by the Board on March 30, 2004 and
subsequently updated on July 11, 2006, the Code of Ethics sets
out the Company’s business principles and values, which aim
to promote a culture of good corporate governance. It provides
standards that govern and guide all business relationships of PLDT,
its directors, officers and employees, especially with respect to the
following:
•
•
Compliance with applicable laws, rules and regulations;
Ethical handling of conflicts of
opportunities and confidential information;
Protection and proper use of company assets;
Fair dealing with employees, customers, service providers,
suppliers and competitors;
Compliance with reporting and disclosure obligations to the
relevant regulators and to investors;
Compliance with disclosure and financial reporting controls
and procedures;
Assessment and management of risks involved in business
endeavors; and
Adoption of international best practices of good corporate
governance in the conduct of the Company’s business.
•
•
•
•
•
•
interest, corporate
The Code of Ethics undergoes a mandatory review process every
two years. The latest review was in October 2010. The GNC
approved the results of the review which found that the Code is
appropriate for the Company and compliant with the applicable
laws, regulations and listing standards and that no revision was
needed at that time.
15 Please see separate report on ERM.
CORPORATE GOVERNANCE REPORT 27
PLDT 10 AR main NEW.indd 27
4/30/11 10:48 PM
Other Policies
The Company also has enabling policies adopted by the Board to
provide specific guidelines on the provisions of the Code of Ethics:
PLDT is progressively institutionalizing the practice of timely
and transparent disclosures down to the level of rank-and-file
employees.
(a) Conflict of Interest Policy approved on October 24, 2005 – This
Policy aims to ensure that work-related actions of our directors,
officers, employees and consultants are based on sound business
principles and judgment devoid of bias or partiality. It enjoins all
employees to be aware of the possibility of such bias and partiality
in dealings with various entities or individuals in the course of or in
relation to their work.
(b) Policy on Gifts, Entertainment and Sponsored Travel approved
on January 31, 2006 – This Policy provides safeguards so that the
custom of giving gifts is handled in accordance with the principles of
integrity, accountability, fairness and transparency.
(c) Supplier/Contractor Relations Policy approved on January 31,
2006 – This Policy seeks to ensure that the Company upholds the
highest professional standards in business practices and ethics in its
dealings with suppliers and contractors in the procurement of goods
and services.
(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 (or the Expanded
Whistleblowing Policy) approved on May 9, 2006 – This Policy
provides guidelines on handling employee disclosure or complaint
of violation of rules pertaining to the aforestated matters, protects
whistleblowers from retaliation and ensures confidentiality and
fairness in the handling of a disclosure or complaint.
Detailed implementing guidelines are likewise issued for the said
policies to ensure their wide observance. All these policies and rules
(collectively, the Corporate Governance or CG Rules) are periodically
reviewed to ensure that they are appropriate for PLDT, keep pace
with comparable and applicable global best practices, and are
compliant with the requirements of the Philippine and U.S. SEC,
NYSE and Hong Kong Stock Exchange corporate governance rules,
as may be appropriate and applicable.
To access the Code of Ethics, CG Manual or information on how our
corporate governance practices and those required of U.S. listed
companies under NYSE Section 303A.11 differ, please refer to:
http://www.pldt.com.ph/governance/about/Documents/27623c20
007849698da4df57179ec70dPLDT_Code_of_Business_Conduct_
and_Ethics.pdf
http://www.pldt.com.ph/governance/about/Documents/22336f71
c88c495793d15575c2addffcpldtcorpgov_manual.pdf
http://www.pldt.com.ph/governance/about/Documents/f7933d17
962d4b2c942e50ba4980f21bpldtdisclosure.pdf
Our subsidiaries and their respective subsidiaries have also adopted
corporate governance rules and policies similar in substance and
form to PLDT’s CG Rules, as well as appointed their respective
corporate governance officers.
As part of the embedding of corporate governance standards
in performance evaluation of personnel, the Company includes
corporate governance policy violations as a cause for disqualification
in incentives and rewards in its Policy on Employee Qualification
for Incentives and Rewards. PLDT officers and executives have also
been required to submit Conflict of Interest Disclosures in order to
maintain strict observance of the PLDT Conflict of Interest Policy.
•
•
28
CORPORATE GOVERNANCE REPORT
Pursuant to the Expanded Whistleblowing Policy, PLDT maintains
an Expanded Whistleblowing Hotline and other reporting
facilities, such as a dedicated electronic mailbox, post office box,
and facsimile transmission system. Any employee may submit
a complaint or disclosure of violation of the rules referred to in
the said Policy to the Chief Governance Officer or to the CGO,
verbally or in writing. The system is open to all employees who
come forward in good faith, regardless of rank or status to report
violations of CG Rules or any act that may be considered as contrary
to the Company’s values of accountability, integrity, fairness and
transparency. Finally, the CGO also addresses queries and requests
for opinions from operating units to provide guidance and ensure
adherence to CG rules and values.
Education and Enhancements
PLDT recognizes the need for providing the appropriate
environment for encouraging ethical behavior as a means of
developing the desired corporate culture. PLDT’s corporate
governance education and communication activities aim to
reach out to all PLDT personnel through face-to-face and on-line
trainings and workshops, and the production and dissemination
of relevant corporate governance materials. The trainings and
communication activities conducted in 2010 are:
•
Corporate governance enhancement session for the PLDT
Board on December 14, 2010. Mr. Marc Ronez, Managing
Director of the Singapore-based Asia Risk Management
Institute spoke about Board of Directors Fiduciary Duties and
Role in Relation to ERM: Best Practices in Dealing with the
Agency Dilemma and Setting a Company’s Risk Appetite;
Corporate governance enhancement session for PLDT’s senior
management on December 14, 2010 by Mr. Marc Ronez on
Enterprise Risk Management in Relation to Transformation
and Change Efforts of an Organization;
•
• Workshops on Ethical Decision Making for newly-promoted
•
•
•
or newly-hired executives;
Development and release of e-Learning modules on the PLDT
Conflict of Interest Policy (for supervisory and rank-and-file
employees) and on the Expanded Whistleblowing Policy
(for PLDT managers, senior managers and assistant vice
presidents;
Refresher Course for selected units;
Corporate Governance Orientation
employees in the supervisory and rank-and-file levels;
for newly-hired
• On-line issuance of a monthly e-newsletter featuring stories,
news and developments on corporate governance;
• Weekly release of Corporate Governance Newsbriefs which
•
are summaries of news articles from global on-line sources;
Periodic advisories on PLDT corporate governance policies to
all its employees.
In order to learn from others and benchmark against proven best
practices in corporate governance, PLDT engages in networking
activities with like-minded companies. These activities include:
•
Continued active membership in the Ethics and Compliance
Officer Association (ECOA), the largest association of ethics
and compliance professionals in the world;
Taking a lead role in the formation of the Good Governance
Advocates and Practitioners of the Philippines (GGAPP),
which is composed of corporate governance and ethics
and compliance officers from various companies in the
Philippines; and
Active involvement in activities organized by the ICD.
PLDT 10 AR main NEW.indd 28
4/30/11 9:39 AM
These awards and recognition serve to inspire PLDT to move on and
move further with its corporate governance initiatives.
Whether or not PLDT garners awards and recognition, it aims to
show, in its own way, that good governance is essential in achieving
sustained growth and profitability, and trusts in the inherent
worth of the principles of accountability, integrity, fairness and
transparency to serve as the foundation by which it will strive to
create value for its shareholders, serve its customers, and conduct
itself responsibly for the good of all its other stakeholders.
Recognition and Awards
PLDT believes that there is a positive relationship between ethical
business conduct and good corporate governance on one hand,
and excellent business performance and results, on the other. In
2010, PLDT was once again listed among the Gold Awardees in
the Corporate Governance Scorecard of the ICD. Only 11 publicly-
listed companies in the Philippines were given the distinction of
being a Gold Awardee. PLDT has consistently been one of the
top five companies in the ICD Corporate Governance Scorecard
since it started in 2005. Asiamoney Magazine also cited PLDT as
the best company in the Philippines in corporate governance for
2010. In addition, it also recognized PLDT as the best in disclosure
and transparency, best for responsibilities of senior management
and the board of directors, and best in investor relations in the
Philippines. Likewise, Euromoney Magazine gave the following
awards to PLDT: best in corporate governance in the Philippines
and most convincing and coherent strategy in the Philippines.
Finally, Finance Asia Magazine cited PLDT’s investor relations as the
best in the country and also recognized PLDT as the company that
is most committed to a strong dividend policy in the Philippines.
ENTERPRISE RISK MANAGEMENT
In early 2010, the Group Enterprise Risk Management
Department (GRMD) was created to serve as the working
team supporting the Enterprise Risk Management Committee
(ERMC) in implementing its mandate to employ an integrated
risk management framework across the PLDT Group. During the
past year, the GRMD has successfully initiated in several critical
operational units within the Group the application of a standard
risk management process based on the ISO 31000 international
standard on risk management. The result of the said process
validated the outcome of a separate exercise conducted with
senior management of the PLDT Group to identify the most
important risk areas facing the Group. The top 10 identified risk
areas were as follows:
1. Market dynamics
2. Fast pace of technological change
3. Operational “single point of failure”
4. Regulatory challenges
5. People
6. Network quality and reliability
7. Corporate/Capital structure
8. Information security and privacy
9. Hazards
10. New investments
The succeeding steps in the risk management process will ensure
that these risks are addressed and monitored by the operational
units affected by these risks:
•
Complete risk assessment and mitigation exercises across
the PLDT Group.
•
Complete and present risk maps to all relevant groups to create
awareness of priority risks and required mitigation measures.
•
Finalize and circulate Group-wide Risk Manual.
Also in 2010, the PLDT Group Risk Management Philosophy
Statement was drafted and approved to embody the Group’s
commitment to managing risk in a proactive and effective manner.
The PLDT Group operates in a complex and dynamic
The PLDT Group operates in a complex and dynamic business
business environment which gives rise to a variety of risks
environment which gives rise to a variety of risks that can be
that can be both threat and opportunity. Recognizing that
both threat and opportunity. Recognizing that these risks are
these risks are an integral part of its business, the PLDT
an integral part of its business, the PLDT Group is committed
Group is committed to managing its overall risk exposure
to managing its overall risk exposure in a systematic way and
in a systematic way and in such a manner that supports
in such a manner that supports its strategic decision-making
its strategic decision-making process. Accordingly, the
process. Accordingly, the PLDT Group employs a comprehensive,
PLDT Group employs a comprehensive, integrated risk
integrated risk management program, effected across all levels
management program, effected across all levels of the
of the organization, with the goal of identifying, analyzing
organization, with the goal of identifying, analyzing
and managing the Group’s risks to an acceptable level, so as
and managing the Group’s risks to an acceptable level,
to enhance opportunities, reduce threats, and thus sustain
so as to enhance opportunities, reduce threats, and
competitive advantage. The PLDT Group believes that an effective
thus sustain competitive advantage. The PLDT Group
risk management program will contribute to the attainment of
believes that an effective risk management program will
objectives by PLDT and its subsidiaries, thus creating value for the
contribute to the attainment of objectives by PLDT and
business and its stakeholders.
its subsidiaries, thus creating value for the business and
its stakeholders.
Towards the end of 2010, the GRMD formally assumed the
functions of the ERMC, which, after acting as an ad hoc committee
since 2006 to administer the Group’s risk management efforts, was
abolished to streamline functional responsibilities and reporting
lines. The GRMD now serves as the dedicated team focused on
developing, implementing and enhancing risk management
approaches and practices within the PLDT Group.
PLDT 10 AR main NEW.indd 29
4/30/11 9:39 AM
CORPORATE GOVERNANCE REPORT 29
THE BOARD OF DIRECTORS
1
1
Manuel V. Pangilinan
64, Filipino
Director of the Company since November
24, 1998. He conti nues to serve as Chairman
of the Board since February 2004, aft er
serving as President and CEO for fi ve years
from November 1998. He is the Chairman
of the Governance and Nominati on and
the Technology Strategy Committ ees of the
PLDT Board. He also serves as Chairman of
Smart, PCEV, ePLDT, SPi, SPi CRM, Inc. (SPi
CRM), MPIC, Landco Pacifi c Corporati on,
Maynilad, Philex Mining Corporation,
Manila North Tollways Corporati on, Medical
Doctors, Inc. (Makati Medical Center),
Colinas Verdes, Inc. (Cardinal Santos Medical
Center), Davao Doctors, Inc., and Our Lady
of Lourdes Hospital. He is also a director
and the President and CEO of Meralco. He
is the CEO and Managing Director of First
Pacifi c Company Limited in Hong Kong, and
President Commissioner of P.T. Indofood
Sukses Makmur Tbk, the
largest food
company in Indonesia.
2
2
Napoleon L. Nazareno
61, Filipino
Director of the Company since November
24, 1998. He has served as President
and CEO since his appointment on
February 19, 2004, and is concurrently
the President and CEO of Smart, PCEV
and Connecti vity Unlimited Resources
Enterprise, Inc., positi ons he has held
since January 2000, November 2004 and
April 2008, respecti vely. He is a member of
the Technology Strategy Committ ee of the
PLDT Board. He also serves as Chairman
of Smart subsidiaries including Wolfpac
Mobile,
Inc.,
and i-CONTACTS Corporati on. His other
directorships include Mabuhay Satellite
Corporati on, where he is Chairman; ACeS
Philippines Cellular Satellite Corporati on,
where he is the President; PLDT Global
Corporati on; ePLDT; SPi; SPi CRM; and
Meralco. He is a non-executi ve director of
First Pacifi c.
Inc., Smart Broadband,
3
3 Helen Y. Dee
67, Filipino
Director of the Company since June 18, 1986.
She is the Chairman or a director of several
companies engaged in the banking, insurance
and real property businesses and the President
and/or Chief Executi ve Offi cer of GPL Holdings,
Inc., House of Investments, Inc., Grepalife Asset
Management Corporati on, Grepalife Fixed
Income Fund Corporati on and Chairperson of
Rizal Commercial Banking Corporati on, RCBC
Savings Bank and Malayan Insurance Company.
4
Att y. Ray C. Espinosa
55, Filipino
Director of the Company since November 24,
1998 and Head of PLDT Regulatory Aff airs and
Policies since March 2008. He is the President
and Chief Executi ve Offi cer of Mediaquest
Holdings, Inc., TV5, Mediascape, Inc. (Cignal
TV), Nati on Broadcasti ng Corporati on, and
other subsidiaries of Mediaquest. He is also
the Vice Chairman of the Board of Trustees of
the PLDT Benefi cial Trust Fund and Philweb
Corporati on. He is also a director of several
companies engaged in electricity, mining, other
public uti lity and media businesses.
30
THE BOARD OF DIRECTORS
PLDT 10 AR main NEW.indd 30
4/30/11 10:48 PM
4
7
5
6
55
88
Tatsu Kono
58, Japanese
Director of the Company since March 28,
2006. He is a member of the Governance and
Nominati on, Executi ve Compensati on and
Technology Strategy Committ ees and advisor to
the Audit Committ ee of the Board of Directors of
PLDT. He is the Chief Operati ng Advisor of PLDT.
He has been a Managing Director of Corporate
Sales Department, Corporate Marketi ng Division
of NTT DoCoMo since 2003.
Rev. Fr. Bienvenido F.
Nebres, S.J.
71, Filipino
Independent Director
Director of the Company since November
24, 1998. He is the Chairman of the Audit
Committ ee and a member of the Governance
and Nominati on and Executi ve Compensati on
Committ ees of the Board of Directors of PLDT.
He is the President and a member of the Board
of Trustees of the Ateneo de Manila University,
the Chairman of the Board of Trustees of the
Center for Leadership and Change, Inc., the Vice
Chairman of the Board of Trustees of the Asian
Insti tute of Management and a member of the
Board of Trustees of several private educati onal
insti tuti ons including Loyola School of Theology,
and Sacred Heart School – Jesuit Cebu City. He
is also a member of the Board of Trustees of
7
8
Manila Observatory and Philippine Insti tute
of Pure and Applied Chemistry.
Takashi Ooi
49, Japanese
Director of the Company since November 6,
2007. He is presently the Senior Vice President
for Global Business of NTT Communicati ons,
in charge of product/service development
and global network design/engineering and
proposal/installati on/delivery of global network
and soluti ons for global multi nati onal companies.
Oscar S. Reyes
65, Filipino
Independent director of the Company since
April 5, 2005. Eff ecti ve August 2010, his
status changed to a regular director in view
of his appointment as Senior Executi ve Vice
President and Chief Operati ng Offi cer of
Meralco. He serves as a member of the
Technology Strategy Committ ee of the Board
of Directors of PLDT. He is the Chairman of
Link Edge, Inc. and MRL Gold Phils., Inc. and
a director/independent director of various
public companies and private fi rms engaged
in electricity, banking, energy, fi nancial and
business advisory services, manufacturing,
mining, shipping, real estate and related
acti viti es.
6
9
9
Albert F. del Rosario1
71, Filipino
Director of the Company since November 24,
1998. He serves as Chairman of the Executi ve
Compensati on Committ ee of the Board of
Directors of PLDT. He is the President of
Gotuaco, del Rosario Insurance Brokers, Inc.
and of the Philippine Telecommunicati ons
Investment Corporati on. He is the Chairman
of the Philippine Stratbase Consultancy,
Inc., the Vice Chairman of Asia Insurance
(Philippines) Corporati on and is a director of
several companies engaged in infrastructure,
property development, media, public uti lity
and mining businesses. He also sits in the
board of First Pacifi c Company Limited
and is the Chairman of the Remunerati on
Committ ee, and is a Commissioner of P.T.
Indofood Sukses Makmur Tbk. He served
as the Ambassador Plenipotenti ary and
Extraordinary of
the
Philippines to the United States of America
from 2001 to 2006.
the Republic of
1 Resigned eff ecti ve March 25, 2011. Att y. Ma.
Lourdes C. Rausa-Chan was elected director
eff ecti ve March 29, 2011 and for the unexpired
term of her predecessor in offi ce, Mr. Albert F. del
Rosario.
THE BOARD OF DIRECTORS 31
PLDT 10 AR main NEW.indd 31
4/30/11 10:41 PM
10
11
12
13
10
Pedro E. Roxas
55, Filipino
Independent Director
Director of
the Company since March
1, 2001. He serves as a member of the
Governance and Nominati on, Audit and
Executi ve Compensati on Committ ees of
the Board of Directors of PLDT. He is the
Chairman and/or CEO/President of various
business organizati ons in the fi elds of agri-
business, sugar manufacturing and real
estate development including Roxas Holdings
Inc., Roxas and Company,
Inc., Roxaco
Land Corporati on, Central Azucarera Don
Pedro, Inc., Central Azucarera de la Carlota,
Inc., Roxol Bioenergy Corporati on, Fuego
Land Corporati on and Hawaiian Philippine
Sugar Company, an
independent director
of Meralco and BDO Private Bank, and a
director of Brightnote Assets Corporati on.
2 Elected eff ecti ve January 25, 2011 and for the
unexpired term of his predecessor in offi ce,
Mr. Donald G. Dee
11
Juan B. Santos2
73, Filipino
Director of the Company since January 25,
2011. He is the Chairman of Social Security
Commission, a member of the Board of Directors
of Alaska Milk Corporati on, First Philippine
Holdings Corporati on, Grepalife Financials, Inc.,
Philex Mining Corporati on and Zuellig Group,
Inc., a member of the Board of Advisors of Coca
Cola Bott lers Phils., Inc. and East-West Seeds
Co., Inc., a trustee of St. Lukes Medical Center,
and a consultant of the Marsman-Drysdale
Group of Companies.
12
Tony Tan Cakti ong
58, Filipino
Director of the Company since July 8, 2008. He
is the Chairman and Chief Executi ve Offi cer of
Jollibee Foods Corporati on and the Chairman of
Jollibee Foundati on. He is also an independent
director of First Gen Corporati on and a director
of Temasek Foundati on and member, Board of
Trustees, of St. Luke’s Medical Center.
32
THE BOARD OF DIRECTORS
PLDT 10 AR main NEW.indd 32
4/30/11 9:40 AM
14
15
16
17
18
19
13
Alfred V. Ty
43, Filipino
Independent Director
Director of the Company since June 13,
2006. He serves as a member of the Audit,
Governance and Nominati on and Executi ve
Compensati on Committ ees of the Board of
Directors of PLDT. He is the Vice Chairman
of Toyota Motors Philippines Corporati on,
the Chairman of Lexus Manila, Inc. and
Asia Pacifi c Top Management Internati onal
Resources, Corp. (Marco Polo Plaza Cebu),
the President of Federal Land, Inc., the
Corporate Secretary of Metropolitan
Bank and Trust Company and Metrobank
Foundati on, Inc., and a director of Global
Business Power Corp.
ADVISORY BOARD
Artemio V. Panganiban
14
15
Robert R. Romulo
16
Benny S. Santoso
17
Washington Z. SyCip*
18
Orlando B. Vea
19
Christopher H. Young
* Eff ecti ve January 25, 2011.
PLDT 10 AR main NEW.indd 33
4/30/11 10:49 PM
THE BOARD OF DIRECTORS 33
KEY OFFICERS AND ADVISORS
PLDTPLDT
From left : Napoleon L. Nazareno, Ernesto R. Alberto, Anabelle L. Chua, Christopher H. Young, René G. Bañez
PLDT
From left : Jun R. Florencio, Menardo G. Jimenez, Jr., June Cheryl A. Cabal, George N. Lim, Ma. Lourdes C. Rausa-Chan
Ernesto R. Alberto
50, Filipino
Customer Sales and Marketi ng Group (CSMG) Head, leads all revenue
generati on relati onship
including product/market
initi ati ves of PLDT
development, product management, marketi ng, sales and distributi on, and
customer relati onship management. He is the Chairman, director and/or
President of PLDT Subic Telecom, Inc. (Subictel), PLDT Clark Telecom, Inc.
(Clarktel), PLDT-Philcom, Inc. (Philcom and Subsidiaries), PLDT-Maratel,
Inc., Telesat, Inc., SBI-Cruztelco, Bonifacio Communicati ons Corporati on,
Mabuhay Satellite Corporati on, Smart NTT Multi media, Inc. and NTT
Communicati ons Phils. He has over 20 years of work experience in the areas
of corporate banking, relati onship management and business development
and, prior to joining PLDT in 2003, was a Vice President and Head of the
Nati onal Corporate Group of Citi bank N.A., Manila from 1996 to May
2003. He previously served as Vice President and Head of the Relati onship
Management Group of Citytrust Banking Corporati on.
René G. Bañez
56, Filipino
Administrati on and Materials Management Group Head, was the Chief
Governance Offi cer of PLDT from October 2004 to March 3, 2008 and the
Support Services and Tax Management Group Head of PLDT from January
1999 to January 2001. He is a director of Clarktel and Subictel. He served as
Commissioner of the Philippine Bureau of Internal Revenue from February
2001 to August 2002. Prior to joining PLDT, he was the Group Vice President
for Tax Aff airs of Metro Pacifi c Corporati on for 3 years unti l December 1998.
He holds directorships in some subsidiaries of PLDT.
June Cheryl A. Cabal
37, Filipino
Controller and Financial Reporti ng and Controllership Head, is also a director
and the chief fi nancial offi cer/treasurer of certain subsidiaries of PLDT
including Clarktel, Subictel, Smart-NTT Multi media, Inc. and the PSF. She
is also the director and chief fi nancial offi cer of Philcom and Subsidiaries,
as well as Mabuhay Satellite Corporati on and Telesat, Inc. She is also the
Chief Finance Offi cer of the Philippine Disaster Recovery Foundati on and the
President of Tahanan Mutual Building and Loan Associati on. Prior to joining
PLDT in June 2000 as an executi ve trainee in the Finance Group, she was a
senior associate in the business audit and advisory group of Sycip Gorres
Velayo & Co. She was the 2008 Young Achievers Awardee for Commerce and
Industry conferred by the Philippine Insti tute of Certi fi ed Public Accountants.
In March 2010, she was appointed as a member of the Financial Reporti ng
Standards Council of the Philippines.
Anabelle L. Chua
50, Filipino
Treasurer and Corporate Finance and Treasury Head, concurrently holds the
positi on of Chief Financial Offi cer of Smart since 2006. She holds directorships
in Smart and several subsidiaries of PLDT and Smart including ePLDT, SPi
Technologies, SPi CRM, PCEV, Wolfpac Mobile, Inc., Smart Broadband,
Inc., Connecti vity Unlimited Resources, Inc., Airborne Access Corporati on,
Smart Hub, Inc., and Chikka Holdings Limited. She is a member of the Board
of Trustees of the PLDT Benefi cial Trust Fund. She has over 20 years of
experience in the areas of corporate fi nance, treasury, fi nancial control and
credit risk management and was a Vice President at Citi bank, N.A. where she
worked for 10 years prior to joining PLDT in 1998.
34
KEY OFFICERS AND ADVISORS
PLDT 10 AR main NEW.indd 34
5/1/11 12:11 AM
SMART
From left : Napoleon L. Nazareno, Anabelle L. Chua, René G. Bañez, Danilo J. Mojica, Mario G. Tamayo, Rolando G. Peña,
Orlando B. Vea, Alejandro O. Caeg
ICT
From left :
ePLDT: Beth G. Lui, Danny Y. Yu, Sonny T. Valdez
SPi Global: Maulik Parekh, Ian Wilson, Isabel R. Bales
Jun R. Florencio
55, Filipino
Internal Audit and Fraud Risk Management Head, has over 25 years of work
experience in the areas of external and internal audit, revenue assurance,
credit management, informati on technology, fi nancial management, and
controllership. He was the Financial Controller of Smart for four years before
he joined the Company in April 1999. He held various positi ons in the fi nance
organizati on of another telecommunicati ons company prior to joining Smart.
Menardo G. Jimenez, Jr.
48, Filipino
Human Resources Group Head and concurrently Business Transformati on
Offi ce Head, was Revenue Team Head of the Business Transformati on Offi ce
from January 2008 to July 2010, the Retail Business Head of PLDT from June
2004 to December 31, 2007 and, prior to that, the Corporate Communicati ons
and Public Aff airs Head. He had a sti nt at GMA Network, Inc., where he
served as head of creati ve services and network promoti ons. He won the fi rst
CEO Excel Awards (Communicati ons Excellence in Organizati ons) given by the
Internati onal Associati on of Business Communicators mainly for eff ecti vely
using communicati ons strategies in managing the PLDT retail business team
to meet its targets and achieve new heights in the landline business. In 2006,
his further achievements in handling the retail business of PLDT and his sti nt
in Smart as offi cer-in-charge for marketi ng were recognized by the Agora
Awards which chose him as its Marketi ng Man of the Year.
George N. Lim
58, Filipino
Network Service Assurance Head and concurrently Network Team Head of
Business Transformati on Offi ce, has over 30 years of work experience in
telecommunicati ons management. He was the Network Services Head from
February 2003 to December 2007, Network Development and Provisioning
Head from February 1999 to January 2003 and Marketi ng Head from
December 1993 to February 1999. Mr. Lim holds directorships in some
subsidiaries of PLDT.
Att y. Ma. Lourdes C. Rausa-Chan
57, Filipino
Director of the Company since March 29, 2011. She has been serving as
Corporate Secretary, Corporate Aff airs and Legal Services Head and Chief
Governance Offi cer of PLDT since November 1998, January 1999 and March
2008, respecti vely. She also serves as Corporate Secretary of PCEV and
several subsidiaries of PLDT. Prior to joining PLDT, she was the Group Vice
President for Legal Aff airs of Metro Pacifi c Corporati on and the Corporate
Secretary of some of its subsidiaries.
Christopher H. Young
53, Briti sh
PLDT’s Chief Financial Advisor. He worked in PricewaterhouseCoopers in
London and Hong Kong from 1979 unti l 1987, at which ti me he joined First
Pacifi c in Hong Kong as Group Financial Controller. He joined Metro Pacifi c
Corporati on in 1995 as Finance Director, a positi on he held unti l he joined
PLDT in November 1998.
KEY OFFICERS AND ADVISORS 35
PLDT 10 AR main NEW.indd 35
4/30/11 10:51 PM
OFFICERS
Manuel V. Pangilinan
Chairman of the Board
Miguela F. Villanueva
FVP, Cost and Valuation
Napoleon L. Nazareno
President and Chief Executive Officer
Danny Y. Yu
FVP, ePLDT Group Chief Financial Officer
Ernesto R. Alberto
SVP, CSMG Head
Corporate Business Head
René G. Bañez
SVP, Supply Chain, Asset Protection and
Management Group Head
Chief Governance Officer
Anabelle L. Chua
SVP, Corporate Finance and Treasury
Corporate Treasurer
Jun R. Florencio
SVP, Internal Audit and Fraud Risk
Management
Menardo G. Jimenez, Jr.
SVP, Human Resources/
Business Transformation Office Head
George N. Lim
SVP, Network Service Assurance/
Business Transformation Office
Network Team
Claro Carmelo P. Ramirez
SVP, Office of the CEO
Ma. Lourdes C. Rausa-Chan
SVP, Corporate Affairs and Legal Services/
Chief Governance Officer
Corporate Secretary
June Cheryl A. Cabal
FVP, Financial Reporting and
Controllership
Alejandro O. Caeg1
FVP, Carrier Business
Katrina L. Abelarde
VP, Small and Medium Enterprises
Jose A. Apelo
VP, Outside Plant Network Services
Rafael M. Bejar
VP, Medical Services
Marco Alejandro T. Borlongan
VP, Customer Service Management
Renato L. Castañeda
VP, Corporate Relationship
Management C
Arnel S. Crisostomo
VP, Simple Services Provisioning and
Restoration
Amihan E. Crooc
VP, IS-Application Development and
Management/Officer-in-Charge,
Information Systems
Alona S. Dingle
VP, Financial Reporting
Margarito G. Dujali, Jr.
VP, Retail Data Acquisition
Mario C. Encarnacion
VP, Customer Services Team
Business Transformation Office
Alejandro C. Fabian
VP, Industrial and Employee Relations
Alfredo B. Carrera
FVP, Regulatory Strategy and Support
Gil Samson D. Garcia
VP, Revenue Management and Cash Assurance
Cesar M. Enriquez
FVP, CSMG Revenue and Operations Support
Florentino D. Mabasa, Jr.
FVP, Legal Services
Leo I. Posadas
FVP, Treasury
Ricardo M. Sison
FVP, Consumer Credit and Business
System Management
Emiliano R. Tanchico, Jr.
FVP, Human Resources Management
and Development
Elisa B. Gesalta
VP, Network Services Project
Management
Ma. Josefina T. Gorres
VP, Corporate Billing and Credit
Management
Ma. Criselda B. Guhit
VP, Tax Management
Emeraldo L. Hernandez
VP, Network Migration Office
Juan Victor I. Hernandez
VP, Corporate Business
36
OFFICERS
Marven S. Jardiel
VP, Corporate Process Review and
Information Management
Alexander S. Kibanoff
VP, Training, Development and Career
Management
Joseph Nelson M. Ladaban
VP, Consumer Credit and Collection
Management
Javier C. Lagdameo
VP, Corporate Relationship
Management A
Luis Ignacio A. Lopa
VP, Corporate Marketing Services
Joseph Homer A. Macapagal
VP, Property and Facilities Management
Oliver Carlos G. Odulio
VP, Asset Protection Center
Lilibeth F. Pasa
VP, Retail Market Development
Jose Lauro G. Pelayo
VP, GMM South/West Customer Service District
Ricardo C. Rodriguez
VP, Compensation and Rewards Planning
and Management
Genaro C. Sanchez2
VP, Network Planning
Ana Maria A. Sotto
VP, Business Transformation Office
(Project Manager)
Julieta S. Tañeca
VP, Consumer Business System Support
Management
Jesus M. Tañedo
VP, Visayas-Mindanao Customer Service District
Patrick S. Tang
VP, Retail Voice Acquisition-Postpaid
Victor Y. Tria
VP, Corporate Business Solutions
Melissa V. Vergel De Dios
VP, Investor Relations
Fe M. Vidar
VP, Organization, Policies and Procedures
Development
1 Appointed President and CEO of PLDT Global
Corporation effective September 23, 2010.
2 Concurrent Coordinator, International Network
Operations effective June 16, 2010.
Rebecca Jeanine R. De Guzman
VP, Retail Sales and Distribution
Gerardo C. Peña
VP, GMM North/East Customer Service District
PLDT 10 AR main NEW.indd 36
4/30/11 10:51 PM