Philippine Long Distance Telephone Co. (PLDT) said yesterday core net profit rose a better-than-expected 11 percent but signalled that growth could flag as soaring inflation bites.

"Our sustained growth in the first quarter indicates that the teeth of inflation and rising prices have yet to bite deeply into our business," Manuel Pangilinan, chairman of PLDT, said in a statement.

"Nonetheless, we realize that a global slowdown will undoubtedly take its toll on all businesses eventually."

Shares in the Philippines’ largest listed company dropped 1.92 percent to P2,560 ($60.50), helping to drag the general index down 1.37 percent after data earlier on Tuesday showed annual inflation hitting a near 3-year peak of 8.3 percent in April.

Soaring inflation spells bad news for consumer purchasing power and could trigger a possible interest rate hike next month.

Napoleon Nazareno PLDT president said " we are observing the market, and we are happy that were not yet been affected by inflation but depending on how we will be affected later on, we will improve our product and marketing" He said.

PLDT has postponed the set initial public offering of its ePLDT knowledge processing arm SPi Technologies Inc., this year, Ray Espinosa ePLDT president and CEO said that the company would reset the IPO of SPI next year.

"I think that the first-quarter results might be a bit misleading in the sense that PLDT probably won’t grow as well for the rest of the year," said Prince Yeung, an analyst with AB Capital Securities in Manila.

"In the first two months of the year, inflation was not as bad as in March and April and we are expecting inflation to peak around August."

PLDT, the country’s largest telecoms group, has already forecast that its core net profit, which strips out currency swings and derivative gains, will rise by 5 percent this year to 37 billion pesos, more than halving from last year’s 11 percent expansion as weaker economic growth eats into sales.

Core net profit in the first quarter of 9.3 billion pesos was bolstered by a 6 percent increase in service revenues and strong growth in mobile phone subscribers, which continue to defy expectations of a slowdown.

PLDT added over 2 million mobile phone customers in the first four months of the year, putting it well on track for a forecast 7.2 million new subscribers for the year. At the end of April, PLDT had over 32 million mobile subscribers.

Globe Telecom, had 20 million mobile phone subscribers at the end of last year.

Shares of Globe finished down 2.26 percent.

Both companies are focusing on expanding their broadband and data businesses ahead of an expected cool-off in the mobile phone market in the next few years.

PLDT, which is partly owned by Hong Kong’s First Pacific Co Ltd and Japan’s NTT Group, said wireless broadband revenues had more than doubled in the first quarter to about 919 million pesos.