AMACC East Rizal

AMA Bldg., Marcos Hi-way, Brgy.

Mayamot, Antipolo City, Rizal

Narrative Report On
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY

Lelina, Denver O.
12 – STEM
I. Historical Background of the Business/Nature of the Business

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY

History

PLDT was established on November 28, 1928, by an Act of the Philippine

Legislature and approved by then-Governor-General Henry L. Stimson by means of a

merger of four telephone companies under common US ownership. Known as Act

3436, the bill granted PLDT a 50-year charter and the right to establish a Philippine

telephone network linking major points nationwide. However, PLDT had to meet a 40-

day deadline to start implementing the network, which would be implemented over a

period of one to four years. By the 1930s, PLDT had an expansive fixed-line network

and for the first time linked the Philippines to the outside world via radiotelephone

services connecting the Philippines to the United States and other parts of the world.

Telephone service in the Philippines was interrupted due to World War II. At the end of

the war, the Philippines' communications infrastructure was in ruin. U.S. military

authorities eventually handed over the remains of the communications infrastructure to

PLDT in 1947, and with the help of massive U.S. aid to the Philippines during the 1940s

and 1950s, PLDT recovered so quickly that its telephone subscribers outpaced that of

pre-war levels by 1953. On December 20, 1967, a group of Filipino entrepreneurs and

businessmen led by Ramon Cojuangco took control of PLDT after buying its shares

from the American telecommunications company GTE. The group took control of

PLDT's management on January 1, 1968, with the election of Gregorio S. Licaros and

Cojuangco as chairman and president of PLDT, respectively. A few months later,

PLDT's main office in Makati City (known today as the Ramon Cojuangco Building) was

opened, and PLDT's expansion programs begin, hoping to bring reliable telephone

services to the rural areas. On July 18, 1968, Pilipino Telephone (Piltel) was
incorporated in the Philippines with limited liability. Piltel's sole business at that time

was providing fixed line telecommunications services in eight cities and municipalities in

the Philippines. During the 1970s, PLDT was nationalized by the government of then

President Ferdinand Marcos and in 1981, in furtherance of the then existing policy of

the Philippine government to integrate the Philippine telecommunications industry,

purchased substantially all the assets and liabilities of Republic Telephone Company,

becoming the country's telephone monopoly. However, after he was overthrown, the

company was re-privatized. By 1995, with the passage of the Telecommunications Act

and the subsequent deregulation of the Philippine telecommunications industry, the

company had been de-monopolized. In 1991, Smart Communications was

incorporated, with its major shareholders at the time being certain Philippine companies

and other affiliates of First Pacific (the parent company of PLDT), as well as NTT

Communications Capital (UK) Limited. Both groups owned around 96.7% of the new

company. In the same year, Piltel launched its cellular telephone services using

Advanced Mobile Phone System (AMPS) technology, which was subsequently

upgraded to Digital AMPS later on. In 1993, Piltel launched its paging services, and

introduced digital cellular services using code division multiple access (CDMA)

technology in 1997. On March 24, 2000, PLDT completed its share-swap acquisition of

Smart, making Smart a 100%-owned PLDT subsidiary. In April 2000, Piltel launched a

digital prepaid cellular service using the Global System for Mobile Communications

("GSM") platform of Smart. A few years later, PLDT transferred its ownership of Piltel to

Smart, thereby consolidating all PLDT's wireless operations under Smart.

II. Description of the products/services of the company (what kind of business and products
they have)
Other Businesses

PLDT is the largest and most diversified telecommunications company in the

Philippines. We have organized our business into three main segments:
WIRELESS
SMART COMMUNICATIONS, INC. AND SUBSIDIARIES
PILIPINO TELEPHONE CORPORATION
ACES PHILIPPINES CELLULAR SATELLITE CORPORATION
MABUHAY SATELLITE CORPORATION
FIXED LINE
PLDT CLARK TELECOM, INC
SUBIC TELECOMMUNICATIONS COMPANY, INC
PLDT GLOBAL CORPORATION AND SUBSIDIARIES
PLDT-MARATEL, INC
BONIFACIO COMMUNICATIONS CORPORATION
Smart-NNT Multimedia, Inc.
Information and Communications Technology
ePLDT, INC. AND SUBSIDIARIES
ePLDT VENTUS, INC.
SPi TECHNOLOGIES, INC.

PLDT offered three services, voice, data and video. It operates by cable wire
communications and wireless communications. But mainly, PLDT was merely focused
on wireless communications. This company provides dial tone to subscribers to have
convenient communication and processed data through internet. The company objective
is to acquire to their operation which is the minimum time to restore the trouble. If any
trouble exists, there are allotted time to repair it. In MLR ticket where in the trouble or
problem of the subscriber in the telephone can be seen, in an example the subscriber
does not have a dial tone. There are 4 hours allotted to fix the system. In DSL or digital
subscriber line 4 hours was given to restore, in microwave system problem 4 hours was
allotted and in fiber optic break 8.5 hours was given.
III. Target clientele (who are the clients or customers of the company)
PLDT is the leading telecommunications service provider in the Philippines.
Through its principal business groups – fixed line, wireless and others – PLDT
offers a wide range of telecommunications services across the Philippines’
most extensive fiber optic backbone and fixed line and cellular networks.

IV. Organizational structure/chart of the company

PLDT ORGANIZATIONAL
STRUCTURE
V. Company rules and regulations
CODE OF BUSINESS CONDUCT AND ETHICS

PLDT Inc. (“PLDT” or the “Company”) is dedicated to doing business in

accordance with the highest standards of ethics. The Company, its directors, officers,
and employees endeavor to promote a culture of good corporate governance by
observing and maintaining its core business principles of accountability, integrity,
fairness, and transparency in their relationships among themselves and with the
Company’s customers, suppliers, competitors, business partners, governments,
regulators and the public.

This Code of Business Conduct and Ethics (the “Code”) sets forth the Company’s
business principles and values which shall guide and govern all business relationships
of the Company, its directors, officers, and employees, including their decisions and
actions when performing their respective duties and responsibilities.
THE FOUNDATION OF BUSINESS ETHICS: PRINCIPLES AND VALUES

In simple terms, the spirit of the Code means that all actions of the Company, its
directors, officers, and employees must, always, be consistent with the principles of
accountability, integrity, fairness and transparency which are defined as follows:
A. Accountability
B. Integrity
C. Fairness
D. Transparency
STANDARDS OF BUSINESS CONDUCT AND ETHICS
A. COMPLIANCE
B. Competition and Fair Dealing
C. Confidentiality of Information and Proper Use of Property
D. Conflict of Interest and Corporate Opportunities
E. Disclosure
F. Risk Management

VI. Safety/ production/ maintenance/ quality control/ quality assurance/

customer satisfaction/ housekeeping/ hygiene and others.
Corporate Governance Policies
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 context. As part of Board oversight, the
Company’s corporate governance policies and their effectiveness are reviewed every
two (2) years to ensure that they continue to be compliant, appropriate, and effective.

ANTI-CORRUPTION PROGRAM

Anti-Corruption Policy

The Company’s Anti-Corruption Policy is embodied in the following policies.

Code of Business Conduct and Ethics. This sets forth the Company’s business
principles and values which shall guide and govern all business relationships of the
Company, its directors, officers, and employees, including their commitment on
compliance with applicable laws on anti-corruption.

Policy on PLDT’s Gift-Giving Activities. This provides specific guidance on

compliance with applicable anti-corruption laws, particularly with respect to the giving
of gifts to government officers/officials or to business partners and other private non-
governmental entities, for or on behalf of PLDT. As the guiding principles for PLDT’s
gift-giving activities, it provides that such activities must comply with applicable laws
and Company polices, and the gifts policies of intended recipient should be respected. It
gives guidance by distinguishing prohibited gifts, or gifts prohibited by law, from
regulated gifts which refer to gifts which if offered or given under certain conditions
and requirements are not prohibited by law. The policy establishes internal controls and
appropriate safeguards such as defined approval requirements, proper recording in the
Company’s books, and monitoring.

Corporate Governance Guidelines for Suppliers. This provides the standards of

corporate governance expected from suppliers, including their compliance with all
applicable laws, the prohibition against the giving of bribes, and the accurate
documentation of business transactions with the Company.

Related Policies

Policy on Gifts, Entertainment and Sponsored Travel. This provides guidance on the
handling and acceptance of gifts offered or given to the Company, its directors,
employees, and consultants by entities with existing or intended business dealings with
the Company. It prohibits, among others, the direct or indirect solicitation or acceptance
of bribes.

Supplier/Contractor Relations Policy. This provides the standards that shall be observed
in business relationships with suppliers. It includes, among others, the prohibition to
solicit, accept, offer or provide any bribe and the requirement that all business
transactions of the Company with suppliers must be documented and reflected
accurately and fairly in the accounts of the Company.

Expanded Whistleblowing Policy. This provides for the confidential and anonymous
reporting of violations of Company policies, including violations of applicable anti-
corruption laws.

Compliance Controls & Monitoring

The Company has established internal controls aimed at ensuring compliance with
applicable anti- corruption laws.

o SOX 404 Internal Controls; Accounting & Auditing Controls

o Guidelines in Handling Request for Donation which provides the review
and approval process for donations to ensure compliance and
transparency.
o Gifts Policy and Policy on PLDT’s Gift-Giving Activities

o Third Party Due Diligence

- Vendor management, accreditation, and performance review
- Corporate Governance Guidelines for Suppliers
- Anti-corruption and corporate governance provisions in procurement
contracts
- Suppliers’ briefings on relevant Company policies

Training and Communication

Compliance with applicable anti-corruption laws and Company policies is an important

aspect of the Company’s continuing education program on corporate governance and
business ethics. It is covered in the following training sessions and communication
initiatives.

o Annual Corporate Governance Enhancement Sessions for Directors and

Officers
o New Employee Orientation Training Program
o Corporate Governance Trainings (face-to-face, e-Learning) and
Refresher Workshops
o Advisories and updates, newsletters, news briefs, posters, videos and
other publications on corporate governance and business ethics

Enforcement

The Company’s Expanded Whistleblowing Policy encourages and enables the

disclosure of any violation of corporate governance rules or policies, questionable
accounting or auditing matters, and offenses defined in the Company’s Personnel
Manual, which include violations of applicable anti-corruption laws and Company
policies. The policy safeguards the confidentiality of whistleblower complaints, allows
anonymous reporting, and protects whistleblowers and witnesses from retaliation. The
policy also provides the procedures for the handling, investigation and processing of
whistleblowing complaints and the enforcement of penalties.

Violations of applicable anti-corruption laws and Company policies are subject to the
penalty of dismissal and such other penalties provided under relevant laws and policies.

Narrative Report
PLDT myDSL is one of the Philippine economy’s unheralded success
stories in these times of political tumult and high world oil prices.
Through savvy marketing, advanced Internet infrastructure and integrated
networking facilities, it has grown to dominate the DSL market with an
estimated 84,000 myDSL subscribers nationwide. It commands an incredible
70 percent of small and medium-scale business clients throughout the
Philippines. PLDT myDSL is also the leader in servicing the Internet cafe and
network gaming markets nationwide. Netopia president Raymond Ricafort said
that in a survey, 6,700 Internet cafes out of the total of 8,000 Internet cafes
nationwide use PLDT myDS.

It is incredible about this roaring success is PLDT myDSL’s lowering costs

through the years. It was P2,500 per month in 2003, then P1,500 per month at
speed of only 128 kbps. In July this year, they slashed their price to only P999
per month and tripled the broadband speed to 384 kbps. Even for business
packages, the rate is an affordable P3,000 per month at higher committed
speed of at least double the P999 Plan.

The expanded rollout of Salesforce across the business will further enhance
communication and engagement around customers and help PLDT offer a
differentiated service experience.

For now, PLDT has achieved the agility it needs within its operations to further its
transformation. “We now know our customers better, can engage with them faster and
pick-up new opportunities immediately,” said Mr. Alberto.