PLDT Inc.

Good afternoon and thank you for joining us today to discuss the company's financial and operating results for the first quarter of 2020. A copy of today's presentation is posted on our website. For those who have not been able to do so, you may download a copy of the presentation from www.dlt.com under the investor relations section. For today's presentation, we have with us Mr. Manny Pangilinan, Chairman and CEO, Mr. Alpan Lillo, Chief Revenue Officer, Ms. Annabel Lim-Chuatz, Chief Finance Officer, Denny Ray Espinosa, Special Assistant to the CEO, as well as members of the PLDP Management Team. Before we start the presentation, we'd just like to remind everyone that later in the Q&A session, you will have to type in your questions, which we will read out loud. At this point, let me turn the presentation over to Ms. Annabel Chua to start the presentation. Good afternoon, everyone.

Welcome today to PLDT's first quarter 2020 results briefing via Microsoft Teams. I hope everybody can see the slides that are being flashed on screen. Let me start by saying that we saw the continued growth momentum from 2019 in the first quarter of 2020, with limited impact from the Enhanced Community Quarantine or ECQ, which took effect only towards the tail end of the first quarter. Our service revenues rose by 9% to 41.5 billion pesos in the first quarter, a new high in quarterly revenues. This increase was primarily driven by data and broadband services. The consumer individual business group once more set the pace for growth, posting 20.2 billion in revenues, 20% up from the first quarter of 2019. PLDT Enterprise generated $10.1 billion in revenues, 3% higher than the previous year, while PLDT Home increases revenues by 5% to $9.6 billion. The consumer and enterprise business groups combined grew by 11% to generate 39.9 billion of service revenues, 96% of the total. To make up the balance, the international and carrier business group posted 1.6 billion of service revenues, which are 25% lower than prior year. Next slide. With a 9% increase in our service revenues, our EBITDA increased 8% to $21.6 billion in Q1 2020, as the increase in our revenues more than compensated for the increases in our operating expenses. EBITDA margin remained at a healthy 52%. Our first quarter telco core income is 6.9 billion pesos, lower by 5% year-on-year as the rise in EBITDA was offset by higher depreciation and financing costs resulting from higher capital expenditures, the offshoot of the PLDT Group's sustained network rollout program. Next slide. Viewed from the vantage point of the last three years, we've seen our service revenues climb each year and at an accelerated rate of growth. Notwithstanding the onset of COVID-19 and the government's imposition of the ECQ starting the second half of March, the first quarter 2020 service revenues surpassed our fourth quarter revenues and represented a historic high for the company. Next slide, please. The achievement of such record high of 41.5 billion service revenues in the first quarter was underpinned mainly by the rise in data revenues, which now account for 71% of our revenues versus a 45% contribution back in first quarter of 2017. Moving on to the next slide, please. The 9% revenue growth in the first quarter of 2020 reflects the continued importance of data revenues, which have become the key driver of top-line growth, offsetting the impact of declining legacy revenues from voice and SMS. In Q1, data services maintained its upward momentum with a year-on-year growth of 19%. The share of data revenues out of total revenues has risen to 71%. In particular, mobile internet revenues jumped nearly 40% versus the level a year ago. Mobile data usage continued to be driven by customer demand for video services, social media, mobile games, and other services delivered to subscribers through our various giga load packages. About 71% of the handsets being used by mobile phone customers today are smartphones. Home broadband posted a 9% increase in revenues with improved installations of fixed and fixed wireless broadband connections. Corporate data is up 2% and data service center revenues are up by 6%. Moving on to the next slide, we show how our EBITDA and telco core income has changed from prior year. Our EBITDA increased 8% or 1.6 billion pesos from 20.1 billion in 2019 to 21.6 billion in the first quarter of 2020, as the increase in our service revenues of 3.5 billion pesos fully absorbed the rise in cash OPEX and subsidies of about 2 billion pesos. EBITDA margin remained at 52%. Looking at the bottom half of the chart, our first quarter telco core income is lowered by 0.3 billion year-on-year because higher depreciation and financing costs resulting from higher CAPEX offset the 1.6 billion increase in EBITDA. Next slide, please. When viewed against the quarterly EBITDA results over the last two years, our 21.6 billion EBITDA Ebitda in the first quarter is the highest for a quarter other than the EBITDA in the fourth quarter of last year. It's also higher than the average quarterly EBITDA of 20.8 billion pesos registered last year. Next slide, please. Our telco core income of 6.9 billion, while lower than last year's first quarter earnings, is still ahead of the average quarterly telco core income of 6.8 billion last year. In light of uncertainty surrounding the impact of COVID-19, we have not provided earnings guidance for the year. Next slide. Next slide shows our statutory reported income results. Reported income was 5.9 billion pesos, 12% lower than last year. After taking into account our equity share in the results of Voyager Innovations, and the Riva losses on our investment in Rocket Internet Shares. We're also pleased to note that Voyager has received strong support from its current shareholders to the tune of $120 million in new investments that will meet their funding requirements. Current shareholders continue to believe in the prospects of Voyager, particularly with the good traction that's been seen during this period for digital financial services. Now, moving on to the next slide, we show some balance sheet metrics. PLDT's net debt as of the end of March amounted to about US dollar 3.4 billion US dollars, while net debt to EBITDA stood at 2.03 times. The gross debt of the company was 4.05 billion US, with maturities well spread out and only 6.7% of which were unhedged. Fixed rate loans accounted for 84% of our total debt, and our average interest cost of debt is 4.8%. Of our 46 billion pesos planned borrowings for the year, 30 billion has been signed, and we are currently in final documentation stage for another 10 billion pesos of local bank long-term loan facilities. We availed of 4 billion of short-term loans in March, as during the lockdown period, we have allowed an extension of payment periods of the monthly bills of our post-paid subscribers. Unpaid subscriber balances are being amortized over a six-month period. Next slide, please. Our capex in first quarter came in at 19.6 billion. While PLDT's original CAPEX guidance for 2020 was 83 billion pesos, we now anticipate that 20 to 25 percent of our CAPEX budget will be deferred due to the impact of the ECQ restrictions on movement and on supply chain. Our network rollout activities have been constrained by the reduced mobility of our network teams since the ECQ was imposed. While the lifting of the restrictions is expected to be a prolonged process, we also expect that the pace for the restarting of our network rollout activities to be drawn out. So we do continue to prioritize projects that uphold our service quality in order to support our customers and the public for their business and social activities under these new conditions. The imposition of ECQ also compelled people at home to turn to internet and online collaboration tools in order to work and study from home. Our network has held up pretty well with a surge in data traffic of about 20% and a shift of data traffic from offices to homes with a rapid move to work from home. In April 2020, we reallocated 2G-assigned frequencies in 1800 MHz from 2G to 4G, thus further increasing the mobile data capacity of SMART's network. Now the next slide, we show here some selected highlights of our network. So in the first quarter of 2020, PLDT and SMART continued their efforts to expand and modernize our fixed and mobile networks. As of the end of March, PLDT increased the coverage of our fixed network to past 7.5 million homes, 4% more than what we had at the end of 2019. We have a built capacity of 3.6 million fixed broadband ports available to serve those working or studying at home. In the same period, the total footprint of PLDT's fiber optic network expanded by 5% to about 338,500 kilometers of fiber cables. We also are pleased to note that PLDT has undertaken An upgrade and modernization of our transport network and we had just completed the first phase of that transformation program in time to serve the increased requirements of data traffic during this period. For SMART, we further enhance our mobile data coverage by adding about 1,400 new 4G-powered base stations, raising the total to about 26,000. We also added about 700 base stations to get to about 14,400 3G base stations. So together, we are able to serve more than 94% of our country's population with mobile. Next slide, please. We saw SMART's mobile data traffic explode compared to previous periods. Our mobile data payload rose to 634 petabytes in the first quarter of 2020, double the traffic in the first quarter of 2019, and 25% higher than the traffic at the end of last year. Thank you very much. As traffic grows, our network has remained resilient. The superiority of our network was validated by the latest mobile network experience report released in April by OpenSignal, which found that SMART remained ahead of competition in terms of video experience, upload and download speed experience, voice app experience, games experience, and 4G availability. Now at this point, I turn over the presentation to Alpan Lelio, our Chief Revenue Officer.

Hi, good afternoon. Thank you for being here today and I hope everybody is keeping safe. Again, just to highlight what Annabel said, I think we had a very strong performance for the first quarter. There was a weakness in the last two weeks of March, but I think we ended the first quarter even higher than our highest quarter last year. So that's pretty good news for us. Again, we're delivering this to show that the company is very resilient, a lot of collaboration done internally to be able to continue to serve our customers. and that has been our our focus now so if i may go to the next page please so during the the first quarter uh we continued with our programs creating meaningful connections and i go deep into this in the next few charts but really making sure that we push on our wireless business uh being uh again Annabel said 77 percent of our business there on data home we continue to also provide the connectivity obviously through fiber and Fixed Wireless and really the focus and both here in the room with us focused on enhancing the customer experience by making sure that we're able to install quicker and repair quickly also. Enterprise has been a focus area also for us, pushing fixed line broadband and data. and also Wireless Broadband, which has been a requirement, tail end of the first quarter and into April when the lockdown was in place. And again, enterprise offering solutions that are already becoming the next normal, the BCP, Business Continuity Programs, and I think this will be part of every business' way of working now. Work from home component together with office environments. and we deliver this to automation, obviously. Second quarter, we continue to push this. We push dependable connectivity when it really matters most to all our customers. We're individual wireless, engaging our subscribers, making sure that we're able to address their needs, focus again more on data services, allowing our people to work from home, and solutions, as I said earlier, that is serving workers who are working from home. For home, initially our main focus was for safety of our employees, of our customers, so we papered off in our connections early part of the lockdown and really focused just on repairs. Thank you very much. Enterprise, being a part of our business, we've launched a hashtag one with you campaign, making sure that we address all your requirements, providing a new roster of offerings depending on the business that you're in, and obviously enabling virtual sessions like this for our customers as companies continue to operate through virtual means. Next page, please. so I won't go into detail here but these are the programs that we had during the COVID as you are aware we had our payments extended now up to May 31 and our billing that will come out in June is really your current and a balance of payment that will be divided into six equal months so that we don't have a bill shock as far as customers are concerned We offer free speed boost, free data boost, discounted products and services, free access to certain government websites, news and hotlines, DOH, DPWH, even Red Cross, and also DepEd. And again, as I said earlier, enhancing and continuing to improve our installation repair, especially now that our field personnel are well-equipped to to take care of themselves. And also free course that we offer to our OFWs via free app that's being offered by PLDT Global. Next page, please. So just to run through again, these are the programs updating and engaging customers through data with our smart LTE fast network, which is a network that has been considered by third parties as a passive mobile network in the Philippines. We have a program to upgrade the LTE systems and devices so that more customers will be able to use data and our major push on Giga and Giga storage specifically during this period. Part 2, please, forward. Next page, please. And these are the things we are doing in the second quarter for wireless individual. Productivity made possible through digital solutions. Online has been a platform that we're focused on in this next new normal. This will be a driver of our business and we are focused on delivering a good platform online. Pushing for smart giga work and giga work plus. Again, work from home. Talk & Text is offering a cashback reward for its Talk & Text 20th anniversary at TNT Big Bente. And lastly, again, a lot of demand now. So we are relaunching SmartPro LTE and LTE Advanced Pocket Wi-Fi, again, to address the connectivity requirements of our customers. For next page please, for home, this has been, we started the year right, we're pushing hard on fixed wireless. Of course, our competitive advantage is fiber. We still have a lot of fiber capacity that we can offer our customers, so that will be a main priority, but we'll be able to offer also fixed wireless. And as I said, smart grow or pocket Wi-Fi as we drive the market depending on the customer segment that needs our service. Next page, please. Quarter two, continue to enable everyone from home, wireless shifting online selling and servicing to our online platforms. We have a stay-home campaign where we have fiber speed boost, free paid Wi-Fi, double data installment payment programs, and we will continue to still enhance our ops operations for the increased demand, and we are trying to fulfill the demands of our customers. Next page, please. For enterprise, we're trying to make sure that businesses are able to work simply. So a productivity made simple. We're offering packages and new products in terms of, I guess, collaborative suites, telecommunication using Meraki and fiber-based with Meraki. As I said, we ignited a campaign for SMEs, hashtag one with you, and making sure that they're able to help them grow, especially in this time of pandemic, and the use of support of O365 launch that we had in the first quarter. Next page, please. And we will continue to push this, equipping businesses for the new normal, and we are partnering with large, medium, and small enterprises across to be able to address their needs and requirements and to help them recover during this pandemic after the lockdown will be lifted or relaxed in the next few weeks. So that's it.

Thank you very much.

I think I'm the last speaker here. So good afternoon to all of you and thank you for joining us in this briefing. I only have three points to make in terms of conclusion. First is on the full-year prospects. We think it is a little early for us to give you a clear view on how the full-year core income would pan out. We have indeed ran several scenarios internally, but we're finding out there are many variables to deal with in this scenario. Context environment, some of which are unknown at this point, such as, for example, the quarantine period will be extended and to what extent, if it's going to get lifted, the government stimulus package, credit availability from financial institutions, and overall economic conditions. I believe the government has reported out That's where we are in terms of the guidance on our telco core. But the second point relates to the revenues. The momentum that we saw in 2019 continues to be carried forward in 2020. First quarter revenues, the aggregate of home Thank you very much. principally because of the ECQ impact, but higher compared to last year. So if you combine the 1Q growth and the 2Q revenue projections, the first half revenues will be ahead of last year. The CAPEX, we are expecting the CAPEX spend to be down by 20% to 25%. of the 83 billion pesos we disclosed late last year or early this year. So it will be down to about 60 plus billion range. That is not a matter of choice for us. It just reflects the current conditions where there are supply chain difficulties from abroad in terms of the shipment of the relevant equipment that we're importing and supply chain conditions or difficulties locally as well. And of course the ability of our labor force to install the pairs in the relevant barangays. On dividend payout, we're maintaining a policy of 60% of telco core. That's, of course, subject to no significant changes, adverse changes in the economy or in the financial position of the company moving forward, which we don't see, actually. So, that's about it.

We're now ready to take your questions. As a reminder, you might type your question on the Q&A panel found on the upper right-hand side of your screen. So the first question would like to clarify how much is the decrease from the planned 83 billion CAPEX in 2020 and which business segment is affected by the decrease in CAPEX and why?

Good afternoon.

As the MEP said, the capex decline is about 20% and that is mainly driven by our inability to spend it.

It's not a choice. The normal business like rollout, connecting our customers will not be as much impacted by the capex spend as much as it is impacted currently by the inability to access certain locations which are restricted at the moment because of ECQ and general quarantine. So the delay will not be felt so much this year as it probably will be felt next year. but it gives us also substantial time to catch up in the second half of this year. So it is too early to say what exactly which business will be impacted. From a current perspective, I personally believe that the business as usual will be able to continue with only slight impact. Maybe some of the new projects, 5G for example, will see a few months of delay because of the delay of being able to spend.

The second question is, can we get some insights on current subscriber behavior? What kind of plans are consumers subscribing?

Review on subscriber base.

What kind of plans are subscribers picking up?

Okay.

Insights on behavior.

Yeah, for mobile, it's really your giga offers that are picking up. and I think 50-55% of our top-ups are now coming from the Giga packages. Jane is also on the line, so she can also add. For home, it's fiber and fixed wireless that are growing, both are growing, and obvious connectivity at home. Butch is here also.

Yeah, if I can share for home, the biggest product that exploded post-lockdown was really fixed wireless. It was good that we were able to start launching our fixed wireless product towards the end of the year. So we were able to somehow capitalize on that demand and that explosion. On the fiber, definitely our programs and our plans at the 1299-1500 level is also gaining a lot of traction. But what we are foreseeing is that in post-COVID, now that we have been able to do a speed boost where our subscribers at 1299 are able to feel the impact of a 25 Mbps minimum speed We feel that with the new normal, they are going to require this kind of speed as well and not be content with the original speed of about 10 Mbps. So for home, these are the plans and products that are actually gaining a lot of traction. We hope to launch post-fade fixed wireless very soon. So we feel that will be another product that is going to hit the market and have strong demand.

Sir, if I may, for individual, we actually did experience some initial challenges in terms of usage during the early parts of the ECQ, right, given the mobility issues and maybe cash liquidity issues. But we've actually managed to address some of those challenges. And therefore, from a lower top-up, our top-up for the month of April actually went down 700%. But this May, we're actually seeing that it's going to bring up levels that we had observed in the first quarter of 2020. In fact, the top-up performance most likely will be higher than Yago. So this is really driven by customers using more data products. And our data products are actually priced higher than our legacy products. And we've observed that they're actually buying higher denominations of 200 and above. So these are higher denominations with longer validity. So the focus really is to ensure that we create more data products that address the needs of customers. So even if we had observed lower activity because some customers had no access to load, on an average basis for those left transacted, they're actually taking more and buying more.

But if I may just add to that, on wireless, especially on top-ups, I think we had a very strong first quarter on top-ups, and as we went into the second half of March, that slowed down significantly, obviously, because of what Jane is saying. But post-Easter, so Easter Monday up to this day, the volume has picked up again, and it's at the level of the first quarter. Okay, the next question

Do you have any idea how much PLDT spent on the virus, donations, supports for the community and how much was expensed in the first quarter and how much more do you expect in the second quarter?

Well, we do have, if I could speak to that, we do have an idea of how much PLDT has so far spent. and not only, of course, PLDT, but the other group companies, Meralgo, the Tallways, Maynila, and so forth.

But, you know, we don't, as a matter of policy, we don't publicize that.

We're just there. I think if there's one particular governor call and say, you know, we're in need of food, can you supply us rice, et cetera, et cetera, I said, yes, of course, we'll do that. So, you know... It's across the board. Our hospitals, we are participating actively, for example, in testing because the government wants to ramp up, develop to 30,000 tests a day. Our hospitals and the groups are participating in acquiring test kits and in upgrading the laboratories of our hospitals located in the hot spots. And we intend to to mobilize mobile laboratories in order to supplement the capacities of our laboratories for testing. So, I don't know what else we, you know, quarantine facilities, we've equipped them with water, power, telcos, and whatever else the government can access. I'd rather not give you a number. We're there. I think in every tragedy that has struck this country, I think we're proud to say that we're there. You will see the Maralco linemen. Repair people and trucks and equipment being sent to areas, typhoon areas, for example, typhoon affected areas, even if they're outside our franchise, like the Batanes and later. So we have an idea of the cost, but I think it's sufficient to say that we're there, no?

Okay, here's the next question. With regards to fixed installations, how much of the installation team is out versus pre-COVID levels?

Jorn, you want to take that?

Yes, I can take that.

So, we are probably at 60 to 70% on a daily basis, and that's because of the The COVID rules we have implemented to protect our customers and also our teams down. But what we did was we moved to a seven days shift. So we have everyday people going out for five days a week and then the teams change. So we have one third typically doing back office work and two thirds are out. Together with our suppliers, which help us on ground in serving our customers, they are also at the moment at about 60-70% of the capacity before ECQ and it's going up every week. We are almost back in terms of total installed capacity to where we have been before ECQ. The main constraint we have today is that there are A pretty high number of locations who do not allow us access despite of the IATF IDs we have and special letters from the ICT who want to encourage the barangays to give us access but we cannot go everywhere so we are not able to repair everywhere and to serve every customer need. Otherwise, I think our capacity is coming back and I think by end of this month we will be back to normal rollout capacities.

The next question, can we get clarification on the guidance of low-mid single-digit quarter-on-quarter contracts? How is this split between fixed and mobile, and what assumptions are being brought in? I'm wondering what's driving the material difference in guidance between yourself and your competitors.

What? Who wants to take that difficult question?

Well, I think all three segments, as MBP mentioned, will show growth vis-a-vis 2019. And I think it's been really a collaborative effort across the company to make that happen in terms of even during the lockdown, It wasn't only the CRO team, the network was there, the legal was there to get our IETF card so we were able to get out there as soon as possible. Of course, finance helped out, legal, regulatory. I mean, everybody just chipped in and really the focus for us is really just to serve the customer. We're really just focused on what we can do and best we can. and that's serving our customer. So hopefully with that and the past decisions on a very good network, investments that has been made the past two years is benefiting us today, even though there's a surge of about 20 to 25% in traffic across the board, both home and obviously wireless. Our customer experience remains to be very good and we just have to continue that and continue to serve our customers. Enterprise, for sure, our customers are challenged and we will continue to hold hands with them and help them pick up where they left off and we will just continue to serve whatever solutions, connectivity, requirements they need. For example, BPO, during the start of the lockdown, They were forced to work from home and there were massive requirements on work from home devices and that's why about 40,000 to 50,000 of the fixed wireless solutions from home had to be transferred to the requirements of enterprise because there was a demand. So again, there's a major push on fiber. We still have a lot of ports we can sell. That is still our competitive advantage right now. Fiber, I think, is still a more solid service, dedicated service to you and guaranteed speeds that we can offer you vis-a-vis fixed wireless. But we are offering both and a third offering we have is the packet Wi-Fi. So it's just really focusing on what we can do best for our customers and that's just our main objective is to serve our customers.

Yeah, maybe just a comment on competition. So, of course, we do compare our performance with their performance on a periodic basis because that's a reference point. And why is it an important consideration for us? I reminded our management team that the standards we should set for ourselves are related to the potential of our business, right? So if we have a superior network now and we think there's latent demand still for the wireless side, the home side, and the enterprise side, we should push the business to the standards we're setting for ourselves. So that for me is the main criterion by which we should plan it. Especially at this inflection point, whether by choice or not, behavior and practices are pivoting towards the digital side of things. And that should give us opportunities. Opportunities have emerged for the group to really take advantage of the potential that lies ahead. For us.

There's a similar question here. It seems like more resilient with regard to the ECQ than the competitor, especially on the mobile side. In fact, there were higher mobile data subscribers quarter and quarter and good growth in overall data traffic. Some loss in ARPU but not significant. Do you think there is some element of market share gains in the second quarter numbers? Other factors behind the relative stability in mobile spend in particular?

Jane, you want to pick the top?

Yes, we've actually seen significant growth in our data users on a year-on-year basis. We gained around close to 5 million fresh data users and there's a lot more in our base that are still on legacy or basic call-in tech. So we're actually quite confident that our usage for data and therefore our revenues for data will grow in the coming months. And certainly, we've gained some shares on revenues. from competition. I think for the period, the growth in the industry for mobile in particular was largely due to our performance in smart.

The next question is for our outlook for enterprise. Are we seeing customers scaling down operations?

May I ask a question?

What's your outlook on enterprise? Are you seeing customers scaling down operations?

Well, yeah, and I'll ask Jovi also to chime in, but just to answer that quickly, I think, of course, there are customers that are impacted by it and rethinking also how they progress post-lockdown. But there are also opportunities, as I said, for example, BPOs, there are opportunities where work-from-home solutions are provided for. and there's a major requirement and this becomes really part of the new way of working. It's not anymore just a BCP, a business continuity program, but it really becomes a way of working moving forward, a combination of office environment with work from home. So there are opportunities in that space, but we're here to obviously help out our challenged customers, enterprise customers where they've been impacted by this pandemic. Jovi, you might want to add a little bit more.

Yes, thank you, Al. So, yes, the complexion of the enterprise segment today is kind of mixed. So, there are a lot of, especially the small and medium enterprises who have really been impacted. And predominantly, businesses have just shut down. Now, that being said, we are seeing pockets of excellence in some industries. I mean, like BPO, as Al alluded to, in the first two weeks of the lockdown, we're all scrambling. But We have seen a resurgence. In fact, the latent demand that we have on connectivity is quite high and a lot of discussions are now happening on a per industry basis for us to be able to prepare for a post-COVID scenario. So rather than taking a look at this situation from a pessimistic angle, the enterprise group of PLDT remains positive and we're very focused now in terms of how we can help particularly industries on how they are going to do business moving forward. Now, the capabilities of the group spans across not only connectivity but also now on the EPLDT side when you take a look at IT systems that are very important in a post-COVID scenario. I think businesses were just not that prepared for a pandemic. Now, a lot of the companies now are preparing for post-COVID scenarios wherein they will be more prepared So, we're looking at a surge in our data center revenue. Cybersecurity is a hot topic now. Even our hospitals now are being attacked by hackers, even in this time of pandemic. So, there's a lot of activities that are ongoing, and we think that there is going to be a different kind of virus. So, if we have frontliners... The doctors and the hospitals out there, in our data centers, we also have our own frontliners, but they're inside the data center making sure that all of the systems are up and running 24 by 7. So again, to recap, a lot of people can take a pessimistic view of the enterprise side, but we feel that with all of the activities and all of the discussions we're having with industries, we look very positive in terms of the outlook for the second quarter and also for the second half of the year.

The next question is on refarming. Just curious on which bands are currently being refarmed and which bands right now are actually being used for LCPs. How much additional capacity and percentage can that provide, assuming refarming targets are used?

Bjorn? Yes, I'm here. Okay. So what we have been doing, and this is already completed two weeks ago, we have been taking 5 MHz of 1800 MHz spectrum, which we are currently using both for 2G and for 4G. We have taken 5 MHz from 2G and moved it to 4G. That we did on almost 4,000 sites in the Philippines. And depending on how much spectrum was being used before by LTE on those sites, the capacity can increase can be between 5 and 15, 20%. Currently, we are using 700 MHz, 850, 1800, 2100, 2300 and 2600 for LTE, so there's a broad variety. The whole process took only 10 days. It could be done completely remotely because of the modern base stations. Everything was software defined and people could do it remotely, even the optimization afterwards. No quality impact for GSM. So our GSM customers have the same level of service as before. And what we did in addition was also to, on some 100 sites, like 150, 180 sites, We used actually a spectrum dedicated for 5G, that's 2600, and moved it to LTE. There the capacity increase is massive because this is massive MIMO technology and we could gain 30-50% on those sites. And we have done this in particular on those sites which had experienced a lot of traffic. I think that answers the question.

Okay. The next question is about zero-balance retailers. How prohibitive are the logistical constraints to address the supply-side bottlenecks? Is there a way of digitizing the process of replenishing credits of dealers?

Yeah, I guess Alex might be on the line also. He can be, you know, I mean, if you talk about frontliners being doctors and also the installers and network guys of PLTT Smart, the sales guys also are frontliners. They've had to really put their lives at risk also just to reach out to our retailers. As you know, there are about 1.2 million of them, and at some point, there were a lot of zero-balance retailers. That was the initial... Thank you very much. I've come up with their online platforms and I think our online websites have been very active. The volume has started to pick up both from wireless and home. So definitely technology will only improve this moving forward and from an analog point of view a way of working to more digital.

Here's the next question. Can you resume your network rollout during GCQ?

Yes, we are actually, we never really stopped. There was just the first week where it almost came to a still stand, mainly because of lack of protective equipment for our people. But since that supply is guaranteed, In March, the rollout went down by 65%, so we had only a third of the original capacity. In April, we were back at about 60%, and I think it will continue to improve in May, so that our rollout, and this is mainly related to mobile network, will be back on track probably in one or two months from now completely. But we are still able to expand a substantial amount of sites. Those who are most challenged, if we can access them, we do expand. And on fixed, I mentioned that before, we are almost back on track in terms of rollout of fiber to the home. So insofar, the answer is clearly yes, we can. As far as we get the permission to install, that's the major constraint now going forward.

The next question is on Voyager. Please share guidance on how big the profits and losses, profits or losses, we can expect from Voyager.

Is DOI on the line?

Yes, both DOI and SV are on the line.

Thank you.

Hi, this is SP. So for us in Voyager, when we look at the three lines of business, the wallet, the merchant enterprise, and the remittance network, the smart paddler, all three businesses are showing strong growth, even in the current COVID period. We are seeing pockets of some stress especially with our travel merchants but across the wallet we are seeing more than doubling versus last year across merchant acceptance we are seeing strong growths even in e-commerce and of course in areas like pharmacies and supermarkets and then on the smart padla network the domestic remittance has been very strong because that's been the lifeline for a lot of people to send money and receive money from cities to provinces and the likes of that So we have an investment plan to grow aggressively in 2020, but we are realizing efficiencies on our growth side. So at this stage, our plan is to hold our losses to the same level as 2019 while delivering significant growth and realizing efficiencies from the growth at this stage across all the businesses.

The next question is on bad debt provision levels trending into the second quarter. Given PLDT's larger exposure to contract revenues, given the sizable fixed-time component, do you see material rise in defaults? In some other markets, we've seen this balloon to up to two times even before the impact of full quarantine.

Yeah, please, listen. Yeah, let me answer that. During this period, of course, we have suspended what we call treatments and disconnections at this point in time. and we have given payment relief and extended payment terms effectively for our customers. So as Al mentioned earlier, what we have decided to do as a pragmatic matter is to allow the unpaid balances to be amortized over a six-month period. So clearly, the assessment will be done in terms of the appropriate levels of provisioning depending on what we see in terms of collection rates in the next few months. It will hinge largely on how, I guess, the economic performance... This will be how people are able to come back and pay. So that's something that we will have to assess in the second quarter and in the third quarter going forward, depending on our experience when things come back.

There's a question on how the ECQ affected daily operating expenses, and if yes, how much has daily expense burn increased?

I think there are pluses and minuses. So for example, as mentioned earlier, we have had to put certain facilities in what we call a lockdown mode. So we have asked people to stay in, we have provided for food and other provisions for those who are in lockdown facilities. So in that sense, there's extra spend for those. But there are other areas where we are able to see reduced Let's say overtime, reduce utilities use in some of our offices, reduce on-ground selling activities. So all told, I guess there are things that are up, things that are down. So I think part of the internal mandate is really to really keep a tight watch on our OPEX during this period. I think one of the things just to highlight in the first quarter numbers, we did advance the 13th month pay for our people. So typically that 13th month is paid in the last quarter of the year. So you typically would accrue the expenses over the year. But because of the advancing of that 13th month pay, then from a timing standpoint, that all got booked in the first quarter.

The next question, I'll leave two questions together. One is asking about color and how the consumer behavior and competition was during the ECQ. Any meaningful change in consumer behavior? And then is there any shift in behavior on the mobile side and the outlook on how consumers will adjust going into the second and third quarter of the year?

Jane, Jane, you might now answer the mobile.

So as I actually said earlier, we're seeing higher top-up basket sizes among our consumers. They're essentially buying higher denomination data packages. Our basket sizes actually increase on a queue-on-queue basis, at least April comparing it to the first quarter of 2020 by around Thank you very much. Once the ECQ is lifted, because now they're more exposed to the more sophisticated data packages that we have, we do expect that that behavior will continue and they will be using more of our Giga packages, Giga videos, Giga stories, Giga games, and we just recently introduced GigaWork actually. So those are higher priced versus our legacy call and text offers.

The last question we have is with respect to the current dividend policy. I think this was mentioned by MVP earlier. Will the 60% payout be sustained?

What's the question, Melissa?

Will our dividend policy be sustained?

Well, the policy stays. We're sustaining that policy as we speak. There's been no thinking about changing it. Now, of course, I don't know whether things could get worse in the course of this pandemic, but so far the The company is doing well, so I don't see a basis for changing that policy.

Yes, there are no more questions on the queue, so if there are no further questions, we just want to inform everyone that the podcast of this briefing will be available on our website after the call. We turn the floor back to Mr. Pangilinan for his closing remarks.

Well, thank you to everybody for joining us in this briefing. I think the next public event of PRDT is the annual shareholders meeting on June the 9th. and I hope we could right now we've gotten board approval to do it online I hope we could do it not online so anyway we hope to see you on the 9th of June in the meantime stay safe, stay healthy thank you, thank you to everybody

That concludes today's briefing. As always, should you have any further questions, please reach out to PLDT Investor Relations. Thank you for your participation.