ACCORD CAPITAL EQUITIES CORPORATION

INDUSTRY REPORT: SERVICE: TELECOMMUNICATIONS

OVERVIEW: TECHNICAL
The Services sector's year-to-date return of -12.32% 3,500.00
is the third worst among all sectors, after 3,000.00
Financial and Property groups' -14.84% and -12.63%,
respectively. The composite index registers losses 2,500.00
of -11.05% while the broader All Shares Index posted
a -5.92% decline over the same period. 2,000.00

1,500.00
The picture is even worse when measured as a
percentage of the gains made in 2010. The Service 1,000.00
sector has actually lost ALL and more of its +81.48
500.00
points advance last year! Financials have lost
roughly half while the Main Index and Property -
counters have retraced around 40%. Alternatively,
PSEI ALL FIN IND HDG PRO SVC M&O
Mining and Oil has held the most of its gains in
2010, giving up just about 6.0%.
2010 GAINS 2011 LOSSES

There is no mistaking the bullish character of the

sector based on its daily chart (see below.) Following a spirited rally for most of December 2010, the
sectors have plummeted to depths tracing back to September 2009 levels. The index breezed past successive
support lines, falling below all EMA's and dragging the short-term 10pdEMA alongside. The next support line
is pegged at 1,370, or just 1.75% below Friday's close.

While it is true that the magnitude of the drop has pulled the sector to technically oversold levels and has
in fact shown a possible near-term rebound (albeit of still questionable sustainability), such cues wait for
subsequent confirmatory signals from the indicators themselves and from one another.

STO(10,6,6), a popular momentum indicator, settled

at 5.35 Friday, marginally breaking through the
trigger line of 5.28. While such action is
considered to be an initial hint of an oncoming
upside, particularly as the measure hovers in
oversold territory, a more important point is
observed. Even as the index continued to fall in
the last two weeks from 1,486.47 (a drop of -6.2%),
the STO line has gradually risen off a low @ 3.40.
This slight divergence is a developing positive
sign. At the very least, we can surmise that the
decline has begun to lose strength. The last time
the indicator fell below 4.0 was in June 2008 @
3.67. It took almost 1.5 months of ranging action
before the index broke the upper limit and rallied.
The absence of a significant divergence in the other

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE
AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE
INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON
AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF
THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR
INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
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ACCORD CAPITAL EQUITIES CORPORATION
INDUSTRY REPORT: SERVICE: TELECOMMUNICATIONS

indicators, particularly the Accumulation-Distribution Line (AccDist), On-Balance Volume (OBV) and the Money
Flow Index (MFI) suggest the current trend will continue, albeit quite possibly at a slower, weaker pace.
Over-all the bias remains negative, technically for the sector.

EDUC, 1.27%
As at the end of 2010, the entire Service sector
DIVERSIFIED,
3.86% accounted for 12.7% of the Market's Total
HOTEL & MEDIA, 5.48% Capitalization of php8.74 trillion. The sector is
LIESURE, 0.97%
further divided into a number of sub-sectors, with
TRANSPO, the Telecommunications Group's php685 billion
23.30%
accounting for a bulk, or 62% of the sub's market
capitalization of php1.11 trillion. The other
TELCO, 61.72%
subdivisions with their respective percentage share
IT, 3.39% of the group's market capitalization are:
Transportation, 23.3%; Media, 5.48%; Diversified
Services, 3.86%; Information Technology, 3.39%;
Education, 1.27% and Hotel and Liesure, 0.97%.

PCEV, PTT, 0.00% DGTL, 1.54%

There are six stocks listed under the
0.00% Telecommunications Group: Digital Telecommunications
GLO, 16.93%
Philippines, Inc. [DGTL], Globe Telecom, Inc. [GLO],
LIB, Liberty Telecoms Holdings, Inc. [LIB], Philippine
1.13%
Long Distance Telephone Company [TEL], PLDT
Communications and Energy Ventures, Inc [PCEV-
formerly PLTL] and Philippine Telegraph & Telephone
TEL, 80.41%
Corporation [PTT]. The latter is under suspension
and was last traded December 9, 2004. PCEV on the
other hand is illiquid with a public float of only
0.5%.

Based on the closing prices last Friday, TEL accounts for 80 percent of the sub-group's market
capitalization, followed by GLO's 17%. The balance is distributed among the other stocks mentioned earlier.

We shall focus our report on the four (4) most liquid and actively traded telco stocks. The two main players
are TEL and GLO with DGTL a far third.

VALUATIONS:

Based on their MRQ financial statements, and using STOCK PER P-BK ROA ROE
annualized figures, all four issues are trading at DGTL 7.00 3.61 0.93% 36.68%
relative bargains based on their earnings multiples. GLO 8.80 1.95 5.69% 16.66%
We can “eliminate” LIB on the ground that it registers LIB (5.89) 1.61 (14.42%) (20.47%)
negative earnings. DGTL has the lowest PE @ 7.0x with TEL 9.71 4.66 12.09% 35.98%
GLO and TEL at 8.8x and 9.71x, respectively. The CURRENT RATIO DEBT-TO-EQUITY DEBT RATIO BOOK VALUE
entire Service sector's PE as of the end of last week DGTL 0.58 40.65 0.98 0.35
stood at 11.98x. Sans LIB, GLO is the cheapest in GLO 0.56 1.93 0.66 337.84
reference to its equity book value. The Balance Sheet LIB 0.67 0.42 0.30 2.80
ratios are shown in the bottom table. TEL 0.72 1.98 0.66 477.07

40.00
The chart to the right draws the 5-year PE trends
DGTL among the four (4) telco issues above. TEL and GLO
30.00
are moving at practically the same pace and
direction. In our search for “PE” bargains, we find
20.00
that only the two “pass the screen.” 2010 numbers
PSEI
are annualized based on their respective Q3 year-to-
10.00
TEL date results. We eliminate DGTL for being
GLO “exhorbitantly priced” relative to the market and
- its historical trends. LIB, on the other hand, has
2004 2005 2006 2007 2008 2009 2010 registered negative PE's (resulting from
(10.00) LIB consistently negative earnings) in all except for
one year, 2007. TEL and GLO PE have been dropping
(20.00)
while at the same time, holds below the market's PE.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE
AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE
INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON
AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF
THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR
INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
page 2 of 3
ACCORD CAPITAL EQUITIES CORPORATION
INDUSTRY REPORT: SERVICE: TELECOMMUNICATIONS

Per share earnings have been more consistent in the 250.00

case of TEL which fell only in 2008 to php182.31 from

the prior year's php188.33, a decline of -3.20%. Its 200.00

php210.52 per share earnings in 2009 is the highest

in the last five years. Annualized 2010 EPS is even 150.00

higher. Five-year average up to 2009 is at

php189.23.
100.00

GLO on the other hand displays less consistency, even 50.00

drawing a negative slope in the last four years to

2010's annualized result. The Company's 5-yr to 2009
average EPS is php89.06 and the 2010 estimate is -

2004 2005 2006 2007 2008 2009 2010Ann

lower than this average, php74.67.
GLO TEL
DIVIDEND PROFILE:
Only GLO and TEL have consistently paid out dividends in the last five years. Note however that TEL failed
to pay dividends in the years between 2001 and 2004. Since TEL GLO
2005, TEL have paid an average of php97.57 per share dividend 2004 0.00 36.00
annually. GLO's average rate is lower at php65.86 per share. 2005 56.00 40.00
2006 78.00 50.00
These figures do not include special cash dividends.
2007 110.00 116.00
2008 138.00 75.00
2009 147.00 64.00
2010 154.00 80.00
TECHNICAL CONDITION: TEL
The stock took on a steep fall for the entire
February, following a gradual negative slope in
January. At Monday's trades, it closed at
php2,160.00, -12.2% and -10.5% below the 150pdEMA
and 50pdEMA, respectively. It opens up the
possibility of a “closing” of a long-forgotten gap
that occurred March 26-27, 2009 when the price
jumped from php2,075.00 to php2,130.00. Some
positives in the technical condition of TEL is
presented by STO at grossly oversold territory
(5.31) while the Money Flow Index [MFI(4)] draws a
picture of growing bias for accumulation.
Nevertheless, there is yet no “unanimity” in the
readings, positing caution in trading, particularly
if the outlook is the near-term. Long-term
proposition is largely positive.

TECHNICAL CONDITION: GLO

A strong rebound Monday, February 28, lends strength
to the php660-support level – a multiple-year low.
This posits a possible reversal of a downtrend which
orignated from its April 2010 top of php1,035. Even
the underlying indicators supports a possible
sustainability of the positive momentum.

Immediate support for the issue price is at php660

while resistance, which likewise serves as the first
upside price target is at php745.00. Major
resistance is at php770.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE
AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE
INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON
AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF
THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR
INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
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