PILTEL SUSTAINS STRONG PERFORMANCE
Core Net Income at P3.2 Billion
Reported Net Income at P4.5 Billion

• Core net income of P3.2 billion, 17% higher year-on-year
• Service revenues up 8.8% year-on-year to P5.7 billion
• Subscriber base crosses 6 million; net additions of 1.08 million record high
• EBITDA up 20% to P5.2 billion
• Partial debt prepayment of US$176 million in June, of which US$55 million was paid to third parties
• Third party debt down to US$71 million
• Stockholders’ equity now at positive P9 billion

Manila, Philippines, 8th August 2006 - Pilipino Telephone Corporation (“Piltel”)
(PSE: PLTL) today announced its financial results for the first half of 2006,
recording a core net income of P3.18 billion, 17% higher than the P2.72 billion
recorded in the first six months of 2005. Reported net income of P4.51 billion for
the period was 1% lower than the profit of P4.56 billion for the same period in
2005 mainly as a result of the additional debt discount booked on debts prepaid
in June 2006 of P1.1 billion and the effects of foreign exchange revaluation and
certain deferred tax assets (“DTA”).

Operating Results

Piltel’s service revenues in the first semester of 2006 grew 8.8% to P5.7 billion,
compared to P5.2 billion for the six months of 2005, as a result of the continued
growth in revenue contribution from the Talk ‘N Text subscriber base. Piltel is the
Philippines’ third largest cellular operator with approximately 6.1 million
subscribers on Talk ‘N Text, the Company’s prepaid GSM service. Talk ‘N Text
recorded 1.076 million net additions in the first half of 2006, a historic high for a
six-month period.

Net GSM service revenues increased by 10% to P5.3 billion in the first half of
2006 from P4.8 billion in the same period in 2005. GSM service revenues now
make up 94% of Piltel’s net service revenues with fixed line service revenues
accounting for the balance of 6% amounting to P348 million.

Piltel’s total expenses increased by 185%, from P1.1 billion during the first half of
2005 to P3.2 billion in the first six months of 2006 due mainly to the recognition of
additional amortization of debt discount relating to the partial prepayment of
Piltel’s debt in June 2006.

Cash operating expenses declined by 27%, however, from P589 million in the
first six months of 2005 to P428 million in the first six months of 2006. Selling and
promotions decreased, by 36%, due to a refocusing of efforts to on-the-ground
activities vis-à-vis the more traditional television and radio advertising.
The cost of handsets and SIM packs sold came down significantly by P261
million, or 50%, as a result of the shift in sales mix to SIM sales in 2006 from
phonekit sales for the same period in 2005.

The Company recorded a financing cost of P2.2 billion for the first six months of
2006 compared to a gain of P252 million in the same period in 2005. The
accretion on financial liabilities increased to P2.0 billion in the first half of 2006
from P337 million in the first half of 2005 as the Company booked additional
discount amortization on debts prepaid in June 2006. In addition, a foreign
exchange loss of P251 million was recorded as the Peso depreciated against
both the US Dollar and Japanese Yen, as compared to a P599 million foreign
exchange gain for the same period in 2005.

On 5th June 2006, Piltel voluntarily prepaid approximately 45% of its total
outstanding debt or an aggregate amount of US$176 million in lieu of making a
deposit into the Sinking Fund Account. The amount of the prepayment
represented excess cash flows from Piltel’s operations and was applied
proportionally to the amount of the debt involved, as set out in the terms of the
Inter-Creditor Agreement signed in 2004.

As of 30th June 2006, Piltel’s total long-term debt stood at P10.2 billion compared
to P17.7 billion at the end of 2005, a decrease of 42%. 78% of Piltel’s long-term
debt are denominated in foreign currencies (US Dollars and Japanese Yen).
Piltel also recognized interest income of P559 million in the first six months of
2006 deriving from interest-bearing receivables from Smart Communications, Inc
(“Smart”) compared to interest income of P451 million for the same period in
2005. Piltel’s net receivables from Smart decreased by P5.7 billion from the
year-end 2005 balance.

For the 1st half of 2006, Piltel recorded an income tax benefit of P1.6 billion,
which includes P1.7 billion in tax benefits recognized for certain deferred tax
assets. Beginning 2005, Piltel began recognizing DTAs, having established a
history of taxable profits and the probability that it would continue to be in such
taxable position in the future so as to allow the DTAs to be recovered.
The Company’s stockholders equity stood at P9.0 billion as of 30th June 2006.
The capital deficit also continued to decline to P27.8 billion as of 30th June 2006,
substantially reduced from P32.3 billion and P45.8 billion at the end of 2005 and
2004, respectively.

As a result of the improved operating results and the incremental interest income,
the Company posted a net income of P4.5 billion for the first six months of 2006.
Piltel President and Chief Executive Officer Napoleon L Nazareno said: “Piltel
continues to strengthen itself, both operationally and financially. Our Talk ‘N Text
subscriber base is now six million strong and generating significant cash flows.
As a result, we were able to prepay part of our long-term debt and in the process,
strengthen our balance sheet. If we can sustain this robust performance, then
we hope to be able to embark on our capital restructuring exercise early next
year and bring the Company one step closer to “normalcy”.”

Pilipino Telephone Corporation

(In million pesos,) For the period ended June 30,
2006 2005

Service revenues 5,651 5,194
Non-service revenues 230 280
Other income 215 227
Total Revenues 6,096 5,701
Expenses 3,150 1,104
Income before tax 2,946 4,597
Reported Net income 4,508 4,564
Core Net income (a) 3,185 2,718
(a) Net income excluding the net impact of FX gains/losses, deferred tax assets and accelerated
debt discount