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+44 (0)20 7232 3090 Traded on

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Fax +44 (0)20 7232 3099 Stock Exchange

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LSE: IIR authorised by

Philippine Long Distance Telephone Company 24 June 2008

Update Report – 1Q 08 Results

Strong performance from Broadband and ICT to drive revenue growth

Common BUY Fundamental research indicates an 18% upside in the common stock over the next 6-24 months. We
have calculated the target price based on fundamental factors, using a weighted average of target
Stock prices obtained using DCF and comparative valuation methodologies.

Ticker: TEL.PS
Target price: PHP2,805
Current price: PHP2,375 We reiterate the common stock a BUY with a 6-24 month target price of PHP2,805 per share.

ADR BUY The ADR is expected to appreciate by approximately 63% over the next 6-24 months as the 18%
fundamental upside is augmented by approximately 44 percentage points upside attributable purely
to the anticipated appreciation of the Philippine peso against the US dollar over the same period. This
is further augmented by 1 percentage upside attributable to the anticipated reduction in the ADR
Ticker: PHI discount1

Target price: US$87.65

Current price: US$53.66 We reiterate the ADR (1 ADR = 1 common share) a BUY with a 6-24 month target price of US$87.65.

Supervisor: Jinesh Joshi

Analyst: Prashant Gattani
Editor: Shem Pennant
Global Research Director:
Satish Betadpur, CFA
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-24 months.
If this report is provided to you by your broker under the Global Settlement, you may now also access (free of
charge) the short term trading outlook that we publish from time to time for this issuer, looking at the
coming 5-30 days for readers with a shorter trading horizon. These are available on-line only at
www.researchoracle.com.

Next news due:

2Q 08 results, 05 August 2008
Report summary
Philippine Long Distance Telephone Company’s (PLDT) reported 8.9% y-o-y growth in revenues and
other income in 1Q 08 to PHP37,899. Growth in revenues and other income is primarily attributable to
5.6% y-o-y growth in service revenues to PHP34,993 mn and one time charges for gains on derivative
transactions of PHP1,777 mn, in 1Q 08. Growth in service revenues is primarily attributable to robust
growth shown by all PLDT’s segments. Gains on derivative transactions is based on mark to market
valuations of certain derivative instruments in order to align the accounts under IFRS and Philippine
Financial Reporting Standards (PFRS). Going forward we expect that PLDT will continue with its robust
growth based on growth in subscriber-base. Based on the above factors coupled with higher than
expected operating performance in 1Q 08, we believe the common stock is currently trading below its
fair value. As a result we maintain our positive outlook for the common stock.

Currency impact for US investors

The impact by itself of the anticipated currency movements on the ADR (now US$53.66), without
considering changes in the share price, is positive and is expected to be:

Over 6 months: US$61.56

Over 12 months: US$66.84
Over 24 months: US$73.11

Page 1 Refer to page 6 for all footnotes