While Philippine Long Distance Telephone Company’s (PLDT) 9M 09 revenues were in line with our estimate, operating and adjusted1 net margins were marginally below our estimates. Growth in revenues was supported by moderate performance from all three segments, whereas operating and adjusted net margins were below our estimates due to higher-than-expected Depreciation and Amortization (D&A) expenses, partially offset lower-than-expected net finance costs. In light of mixed 9M 09 performance, coupled with our anticipation of declining ARPU, reflecting increased competition in the region and current price levels we maintain our HOLD rating on the common stock. We will reassess the common stock rating for PLDT in our 9M 09 update report. As we continue to anticipate a significant negative currency impact on the ADR over the next 6-12 months and given current price levels, we reiterate our SELL rating for the ADR. We will reassess our target price and rating in our 9M 09 update report.

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