PLDT Inc.

Good afternoon and thank you for joining us today to discuss the company's financial and operating results for the first half 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 the presentation from www.pldt.com under the Investor Relations section. For today's presentation, we have with us Mr. Manny Pangilinan, Chairman and CEO, Mr. Alpan Liga, Chief Revenue Officer, Annabel Lim-Chuo, Chief Finance Officer, Attorney Ray Espinosa, Special Advisor, Senior Advisor to the President, and other members of the PLDT Management Team. In terms of sequence, we'll start off with Al Pandillo, followed by Annabel Chua for the Financials, and a wrap-up and guidance from our Chairman. I now hand over the floor to Mr. Pandillo for the presentation.

Thank you, Melissa. Yes, you can go to the next page, please. Again, first of all, thank you for being here today and joining us in this call. You know, it's really a privilege to be in an industry where we can help people adjust to the new normal by keeping them connected all throughout. So during this year has been very challenging, as you know. Even at the start of the year, even before the pandemic, the Taal volcano erupted and affected also our operations, especially in Batangas, Cavite, and And then, of course, the pandemic happened in late March to the month of April. But our commitment, next page please, is that we will keep everybody connected. That was the commitment that we gave to our countrymen, especially during the COVID-19 pandemic that broke out in the Philippines. And not only in the Philippines, but also globally. So, next page. I guess, you know, we are in a position, and I think we have proven that the PLDP Smart is the Philippines' only integrated telco, able to deliver relevant services to our people during this pandemic, sustaining them by keeping them connected, whether they're at home, either working or studying, doing their groceries online, doing errands via their mobile phone, or paying bills and taxes online. Especially now that data You know, increasing usage of data is significant. So we continue to be relevant to our customers and offering a whole suite of services. Next page, please. This is what I mean by being indicative telco. We're able to serve all segments of the country, obviously from our mobile internet, where we have about 69 million individuals in our business. Aspiration there is to connect every Filipino mobile internet that runs on our LTE and 5G networks. Mobile broadband, which is really your pocket Wi-Fi, is also running on the LTE. 5G is a brand that we have had a long time, but now picking up because of the demand for mobile connectivity, especially for students and teachers in this new normal. So we have about 1.1 individuals in this space. We have offered also fixed wireless, which also runs on the mobile network, LTE 5G for home. But really, this is a complement only to our fiber offering, which is our superior product and flagship product for the home and also for our enterprise customers. So the fastest and unlimited, we can offer unlimited plants with fiber. So PLDD smartly leads the way in technology integration by offering all types of broadband technologies to really cater to all the segments of the market. And we want to continue to, you know, pour out, pour in significant resources in our integrated fixed and wireless network expansions. So the next page, please. For the first, I mean, for the second quarter, our performance on revenue, our 2020 revenue performance, we ended the quarter at 41.3 billion. We still delivered a strong performance, sustained momentum despite the pandemic. If you recall, we ended first quarter, which is all-time high for us at 41.5. So a bit of a decline, but not as much as we expected. But comparing it to the same period last year, we still grew at 7% or in test amount, 2.6 billion compared to same period last year. And this was really driven by... Next page, please. By the three segments, individual, which is your wireless business, grew by 12%, or in absolute terms, 2.1 billion to 19.6 billion. Home grew 8%, or 800 million, to 10 billion. And enterprises, despite the challenges that they faced, since a lot of their customers were also affected by the lockdown and a lot of them closed their operations, still grew at 7% clip or 600 million for the period. So our first half number ending first half is 82.8 billion. That is an 8% increase year on year or 6.2 billion pesos. So we definitely ended the first half very strong. and we will continue to push in the second half. The first half performance broken down into the three segments again. Next please, sorry. Individual grew by 16% to 39.8 billion or 5.4 billion increase from same period last year. HOME ended at 19.6 billion or 7% increase and they grew by 1.2 billion in revenues. The 1.2 billion is significant for HOME because if you recall the growth of HOME in 2019 over 2018 was 1.2 billion in revenue terms. So HOME was able to deliver the 1.2 billion in six months. For enterprise, again, having been challenged by the pandemic because of its customers, still ended with a 5% growth of 20.3 billion or 900 million pesos in peso terms. So it is very challenging times, but we continue to push and we continue to serve our customers and we want to make sure that we're relevant to the requirements of the customers. Next page, please. You have seen this, and we are proud of this. We have been judged by third-party mobile data analytics companies or agencies who claim OpenSignal that PLDT is smart as the fastest mobile and fixed network. And whether it's download speed, output speed, video experience, latency, we are ahead vis-a-vis any other competition in the Philippines. Next page, please. So you might have heard, we also launched our 5G last Thursday, July 30, in very limited areas, high-key areas. As we continue to look into this technology, we will continue to roll out in more areas later. Thank you very much. like Realme and Vivo products that will be 5G capable. Again, we remain steadfast in maintaining our network's priority. So our priority is to continue expanding the network, both on fixed and mobile networks to really support, as I mentioned, the customer's growing data habits. And we also want to increase the number of LTE smartphone users in our sub-case. Smart has increased the number of 4G LTE stations during this period, rounding up to about 27,000. And our population coverage now is at the 95% level. So PLDT, as you know, has the widest fiber infrastructure in the country, close to about 360 kilometers of fiber nationwide. 11% versus 2019. So we will continue to level up our network as we know that this is our competitive advantage against any competitor here in the Philippines. Next page, please. We've also embarked on improving customer experience for our customers. So starting this month, we have embarked on national fiber migration of our ABSL customers to fiber. This is an 18-month nationwide fiber migration program, and we will push this to make sure that we're able to not only improve experience but improve coverage for our customers. Next page. For our enterprise business, they did launch an offering a few weeks ago called Beyond Fiber. So beyond connectivity, we offer curated digital solutions from collaboration tools to productivity tools to even e-commerce, online e-payments solutions. So again, we want to make sure that we're able to help the businesses recover from the lockdown and the pandemic. An example are the BPO companies where they needed work-from-home solutions during the pandemic to make sure that they were able to continue their business. So we will continue to push for created digital solutions for our customers. Next page, please. And of course, we are not only beyond fiber, but really beyond connectivity as we also, you know, banking from a very strong network, we endeavor to provide our customers with exclusive content localized to the Filipino market. So in line with this, we have actually forged a lot of relevant partnerships for our customers. Next page, please. This is a list of... Next page. This is a list of the partnerships that we have already... We already have or are working on. YouTube, obviously, we've had a partnership for a long time. Same with Facebook, Netflix. We're working on Vue, which should come out in the next two months. HBO Go. We do have local content on iOne and GMA. And just recently, in fact, last week, When the NBA came back, I mean when they restarted the NBA, there's an exclusive deal with the group, with TV5, Signal, and Smart to cover the NBA games. In particular to Smart, we own the digital assets of the NBA content and any prepaid customer of Smart who buys or Talk & Text who buys Giga Video will be able to live stream NBA for free. and same with both subscribers on Smart Signature, Smart Infinity, they can live stream NBA for free. Next page, I think we've mentioned this in the past, in this new normal, there are also new opportunities and we know that we need to expand our vertical solutions to transform industries from e-working to online shopping to e-learning to e-health and cybersecurity. PLDT Smart is playing a catalytic role in the massive digital transformation of the Philippines. So for us, this is not just a business opportunity, but really a civic duty to provide the solutions and connectivity to all the people of the country in order for them to survive or succeed in the new normal. Next page. So our CAPEX, for the past five years, our strategy to really invest in the network has really... We have spent $260 billion the past five years. Initially, 2020, we were planning to spend $83 billion, but during the last briefing and because of the lockdown, we did say that that might drop to $63 billion. But now that we are able to Go back to some of the network activities that needed to happen during the lockdown. We're able to go out now, except in some locations where it's still an ECQ. We have raised our CapEx projections for 2020 to $70 billion. So that is still CapEx revenue ratio of about 40%. So we are investing to really continue improving our network and improving customer experience. For the second half, we will focus on three areas. Just to summarize, improving network quality, strengthening our digital content and platforms, and our North Star is really championing customer experience. A very important, next page, a very important, a big story this year, and also close our hearts as a group, is really making sure that we're able to help the country develop the Thank you very much. and maybe even Signal and Radio Based Learning so that we can really address the 32 million students that need to go back to school and the 1.2 million teachers that need to work with the students. So this is a very important initiative for us and we are helping DepEd hopefully develop our e-learning ecosystem. And as you know, during the pandemic, the MPB Group had a big response to the COVID-19 to our tolong kapatid, helping government. We provide connectivity to LGUs, hospitals, quarantine facilities, and COVID front line housing facilities. We also give free access The government websites and free calls to government hotlines. In cooperation with other companies of the MPB Group, namely Maynilad, Meralco, and Lex, as always, we partner with the Philippine Arena to volunteer the biggest We Heal Us One center in the country, in Bulacan. So we will continue to support government, obviously, during this time, and All our initiatives are focused on helping our fellow Filipinos. So lastly, my last page really, again, we grow our business by helping our customers rebuild their lives. We want to remain relevant to them. And that will be our main focus in the second half. But we will also remain laser-focused on delivering performance, but also reinventing ourselves to become more customer-centric and really become a digitally-powered organization. Thank you very much.

Thank you, Al. So welcome everyone to our first half 2020 results briefing. So let me start off by saying that despite the severe and unexpected disruptions caused by the COVID-19 pandemic, PLDT maintained our growth momentum from 2019 to the first half of 2020. And as a result, we saw quite healthy financial results during the period. As Al had already highlighted, Our service revenues rose 8% to 82.8 billion in the first half, and this is a new high in terms of semester revenues. Now, the 2Q revenues were better than initially expected, coming in at 41.3 billion, which, while lower than the first quarter, was not as low as we had indicated earlier, and it represented a 7% increase from prior year. Consumer individual business, which felt the most impact of the quarantine restrictions, with 2Q being lower than first quarter, but nonetheless, it saw continued strong growth of wireless data usage, which resulted in our 2Q revenues for the individual segment coming in higher by 7% year-on-year. Sorry, by 12% year-on-year. For enterprise and home businesses, Two Q revenues for both of these customer groups increased from the first quarter levels despite the challenges from the pandemic. So when you look at it combined, the consumer and enterprise business groups combined grew by 10% year-on-year in the first half of the year to 79.6 billion. and on the other hand, our international carrier business posted 3.1 billion of revenues which are 30% lower than prior year but this included the impact of the removal of mobile interconnect revenues starting January of this year. So without this, international revenues are down but at a lower rate of 10% and this is really due to the drop of international roaming revenues. Next slide, please. With the 8% increase in service revenues, equivalent to 6.2 billion pesos, we were able to cover the increase in our OPEX of 2.9 billion, resulting in our EBITDA growing by 8% to 43.2 billion in the first half. Our EBITDA margin remained at a healthy 52%. Our depreciation expense and financing costs were higher year-on-year as a result of the investments we have made in our network rollout and expansion programs. We're also pleased to highlight that under these unusual times, we achieved a $13.9 billion first-half telco core income, which is higher by 5% year-on-year. Our statutory reported net income grew slightly by 1% to $12.3 billion. Moving on to the next slide. So when you look at our service revenues over the last three and a half years, you see that The revenues continue to climb quarter-in-quarter, and notwithstanding the impact of COVID-19 and the government's imposition of the community quarantine, our first quarter and second quarter service revenues this year still represent historic highs for the company. So Q1 revenues were up 9% year-on-year, while Q2 was up 7% ahead of the same period. Next slide, please. Showing the same numbers, but broken between data and non-data revenues, you'll see clearly that data was the main driver of our top-line growth over the years, outpacing the downward movements in our legacy revenues from SMS International Voice. Now, for this semester, data revenues grew 18% or 9 billion pesos. Next slide, please. When you look at the 8% revenue growth in the first half, This really reflected the growing importance of data, particularly during a period where data access has become critical for customers staying and working from home. The first half, our data revenues of 59 billion accounted for 71% of our total revenues and up 18% year-on-year. Mobile internet revenues moved up 34% versus a year ago to 29.3 billion. Data usage continues to be strong, driven by demand for mobile video services, social media, mobile games delivered to our customers through various legal load packages. Our mobile traffic usage was 1.4 exabytes, which are more than double from the traffic in prior year. Home broadband also posted an 11% increase in revenues with the demand for home connectivity bolstered by the lockdown. So while we had challenges in installs during March and April, we were able to steadily ramp up our installations of fiber and fixed wireless broadband connections in May and June to even higher than the pre-ECQ levels now. Corporate data and data center revenues were higher by 3% of the combined 12.5 billion of revenues. And we see emerging opportunities to serve the enterprise market in the new normal. Now, moving on to the next slide, please. We show here how our EBITDA and our telco core income has changed from prior year. Our EBITDA increased 8% or 3.3 billion from 40 billion to 43.2 billion in the first half. As the increase in our service revenues of $6.2 billion fully absorbed the rising cash OPEX and subsidies of about $2 billion and an increase in provisions of about $900 billion, the margin was a healthy 56%. Our first half Delco core income at 13.9 billion is 700 billion or 5% ahead from last year, driven by higher EBITDA, partly offset by higher depreciation and financing costs resulting from the higher CAPEX. Next slide, please. Here we show our quarterly EBITDA numbers, and you see here that our 2Q EBITDA was stable versus first Q, notwithstanding the dip in revenues Q and Q. So viewed against the quarterly results over the last two years, our 21.6 billion EBITDA in the first quarter and the second quarter are the highest for a quarter. other than the quarter in fourth quarter 2019. So the 21.6 billion average is also higher than the average quarterly EBITDA of 20.8 billion registered last year. Next slide, please. This is on telco core income. So our telco core income of 7 billion in 2Q is about 0.1 billion higher than 1Q. The average quarterly result is also ahead of our 2019 quarterly average telco core income of 6.8 billion. In light of the uncertainty surrounding the impact of COVID-19, we had not provided earnings guidance for the year, but we are certainly aiming for 2020 telco to be stable versus 2019 at approximately 27. Next slide. This morning, the PLDT Board declared an interim dividend of 38 pesos per share for payment on September 4. The dividend is in line with our policy to pay out 60% of our telco core earnings. If you calculate it based on the end June share price of PLDT, the dividend yield for PLDT holders is about 6%. Next slide shows our statutory reported income results. Reported income was 12.3 billion. Thank you very much. All the shareholders of Voyager signed up to commit $120 million of new funding for Voyager with $65 million of this commitment infused in May. So we continue to look positively at the prospects of Voyager, particularly with the traction seen during this period for digital financial services. Moving on to some balance sheet metrics, PLDT's net debt as of end June 2021 amounted to US dollar 3.8 billion while net debt to EBITDA ratios to the 2.19 times. The gross debt amounted to 4.75 U.S., which included the $600 million new bond issue of PLDP, which was consistent of a $300 million long 10-year issue, that 2.5% coupon, and another $300 million U.S. 30-year issue, 3.45%. Now, with these tenors, we were able to extend our debt maturities so that 50% of our debts now mature beyond 2025. While we have increased the mix of our dollar debts approximately 19%, our unhedged debts as of end June was limited to 4.4%, given our dollar cash position. Going forward, as we refinance our peso debts from the dollar bond proceeds, we'll continue to manage our FX exposure with hedges, and we will aim to keep the unhedged portion at somewhere between 10% to 15%. Fixed rate loans accounted for 85% of our total and our average interest cost was at 4.78%. Moving on to the next slide, our capex in the first six months came in at 31.4 billion. So as Al indicated earlier, while our original capex guidance was 83 billion, we now expect our spend for the year will be up to 70 billion, which is almost at the same level as our 2019 capex level spend. Despite the challenges and restrictions during the quarantine period, we made adjustments in the months following the lockdown and gradually scaled up our CapEx bill. We do continue to prioritize projects that uphold our service quality in order to support our customers and the public for their businesses and social activities under these new conditions. I must say that our network held up pretty well with a surge in data traffic about 25% during this time. The shift of data traffic from the offices to the homes with a rapid move to work from home. In April 2020, we reallocated 2G-assigned frequencies at 1800 MHz from 2G to 4G LTE, which allowed us to increase the mobile data capacity of smarts network. We also expanded our international links to support the higher demand for Internet Connectivity. Next slide please. Here we show that PLDT and SMART continued our efforts to expand and modernize our fixed and mobile networks despite the pandemic conditions. So some select highlights from our network. As of the end of June, PLDT increased the coverage of our fixed network to past 7.8 million hosts. So that's 8% more than the level at the end of 2019. We have built capacity of 3.7 million fixed broadband ports available to serve those working or studying at home. The same period, the total footprint of PLDT's fiber optic network expanded by 11% to about 358,700 kilometers of fiber key. For the wireless side, SMART further enhanced our mobile data coverage by adding 2,500 new 4G LTE base stations, raising the total to about 27,100. and then for 3G, there's another 1,200 added to get to 15,000 3G-based stations of the energy. So when you combine our 4G and 3G, we are able to serve more than 95% of the country's population with mobile. And if you add 2G in the mix, we actually serve 96% of the country's population. Next slide, please. We saw mobile traffic explode compared to previous periods. As indicated, our mobile data payload rose to 1,368 petabytes in the first half of 2020, which is double the traffic of first half 2019. In Tokyo alone, the mobile traffic was 25% higher than the traffic in first quarter. So we expect the demand for data services to remain high with the growing dependence on online and the expected more extensive adoption of digital solutions by our customers under the new normal. As traffic grows, our network has remained resilient. The superiority of our network was validated by third-party reports released by OpenSignal and Bookla. So based on the report of OpenSignal, SMART remained ahead of competition in terms of video experience, upload-download speeds, voice app experience, and 4G availability. Bookla also scored PLD with the top download and upload speeds for fixed and SMART for wireless in this country. In this part, let me turn this over to Mr. Pangilinan for the latest outlook for 2020.

Well, thank you, Annabelle, and thank you to all of you for joining us in this briefing this afternoon. Well, I'd like to first say that our outlook for balance of the year, the second half of 2020, is guarded and a bit cautious. Given what you've seen today, the economy contracting by 16.5% in the second quarter, and of course, witnessing the second wave of the virus being, I think, significantly worse than the first wave. So we're concerned about, of course, the health of our people, and secondly, the Thank you very much. In the second quarter, despite the, in the middle of the pandemic, and we, our mission is to continue with that upward momentum and maintain that for the second half of this year. So that's on the revenue side. I think as Annabel indicated earlier, our Talco core, we're guiding to a level Very similar to 2019, if not better. Our dividend payout is at 60% of TelcoCorp and CAPEX were guiding to a higher number than what we had guided at the onset of the pandemic from 63 billion to 70 billion, which is similar, a level similar to what we spent last year in CAPEX terms. So... So we guarded the optimistic for the second half, but on the whole, we expect performance to be quite good for 2020. That's it.

We're now ready to take your questions. You may type in your questions by clicking in the Q&A panel on your screen. Kindly indicate your company name and your name and we will read out your questions. We received our first set of questions, the first one from Arthur Pineda. How do your July trends compare against May and June levels? Are we seeing sustained improvements or was there some degree of pent-up demand being filled in May and June?

We still see a good level. It's similar to the June levels, at least on top-ups. So we still continue to see that. We felt that in terms of seasonality, normally June is softer because people are preparing for We didn't see that in June. We saw that more in July, but we started August very strongly, so I think the momentum and the top-ups are still there. Now, on fixed, I think our capacity to install has also improved. July is better than June, and definitely August will be also better than July in terms of installation capacity that we can put on the ground. So, We still see that the trend is still good.

I think if I could add to what Al said, actually our top-ups for July are at our levels very similar to June, right, Al? So there's been no let-up in terms of the level of top-ups on the wireless side. On the top-ups for the fixed wireless side of our business, it has been going up, and that trend continues continue through to July, and probably the first few days of August are higher. So on the home broadband side, as Al indicated, the fiber, the fixed installations are higher for July, and I think we're also ramping up fixed wireless installs for July, and I think for the balance of the year, the trend is likely to continue, no? That's the goal. So there's been no diminution in both our effort and in the results so far we've seen on the revenue side of the business. And of course it's our desire to keep maintaining that momentum through to the end of the year.

Also from Arthur Pineda, what percentage of broadband subs are on fiber and what percentage are on copper? And is there any ARPU differential if a sub migrates from fiber to this?

It's about two-thirds of the subscribers are on fiber. And the rest is on copper. We announced a program to migrate about 600,000 customers which are still on the old legacy ADSL technology. This program has already started and will go through the next year. And this will be at no extra cost for our subscribers. Free upgrades.

Typically, your subscribers are slightly higher than ABSL. Not too much. Well, 200 pesos.

And, you know, you probably know that the ARPU on fixes has been about three times higher than on wires. So that's why we're quite optimistic about home broadband revenue for the second half. I think it will be much better than the first half.

His next question. Competing fixed broadband operators seems to be outpacing the incumbents when it comes to fixed broadband net ads. What is driving this as incumbents of superior homes pass, and what can be done to better protect the market share?

Any more detail on which?

I think it's referring to... Probably...

But it's not a new operator. It's not a newcomer. Yeah.

Well, obviously, what we're doing, you know, we can only improve what we can do, right? So, as I mentioned earlier, we're ramping up on our capacity to install, and that has been, we're working closely with the Group of York and making it happen. There's a number that we're targeting on a monthly basis, so we've increased it to a much higher level than where we are today. At the same time, I think we're making sure that our service is much better, the customer experience is much better.

So maybe we can also add to that that the July is an all-time high in installations. It's significantly higher than the months before. And it's not – we are happy with our progress, but we are not satisfied where we are. We will push higher this year. So I think we will soon be in a position to install many more ports per month than we were in the past.

There's a related question from Diane of Nomura. How do you plan to increase the utilization of the existing fiber ports, given it's been an issue for some time? Some of your peers are doing much better in increasing the utilization of existing ports.

Actually, utilization has gone up during this year, actually, by 10 percentage points already, and we have a clear target for end of this year. What utilization is

From the business, I've seen a program that will increase it 10% even more to year-end. So we will definitely focus on utilizing the maps that we have on the ground.

We have many more ports than anybody else.

And then finally from Arthur, can you talk about the bad debts? How should we see this trending in the second half?

Arthur, that's something that we would have to closely monitor. I think there will be two key items to look at. First, as you know, we gave our... Post-paid subscribers, six-month installment payment period. So that is starting to amortize. So we do need to see the success of collections for these people who are under installment plan. So that's one item we will have to monitor closely. The next really is the macroeconomic situation. So under the PFRS 9, where you look at expected credit losses, it's very sensitive to GDP indicators and inflation. So if the GDP continues to be negative, that will effectively augur for the need to provide for eventual losses. So those are the economic indicators that we do need to monitor. In the second quarter, we already indicated increase our provisions by about 1.4 billion compared to the first quarter. But this is an area that we will have to review more closely come third quarter.

Next question comes from Diana Flamora. Can you share some insights on competition so far in both mobile and broadband? Any comments on emerging fixed-line player Converge, which is also accelerating their fiber network rollout?

I think the results should speak for the performance that we've had. So I guess you have all the data with you. You can do the analysis. But we're very happy with our performance, despite the fact that we were, of course, the pandemic had difficulties. But more importantly, I think we're able to serve our customers during this most difficult time for them.

And on Converge, I think we definitely respect the competition there. We don't underestimate them. But you should also see that they are confined to Luzon. And they announced a big program to roll out fiber for backbone and to connect to other islands, which is the multi-year program. So from that angle, we are actually massively ahead because we connect almost all the islands here in the Philippines. and we connect to more countries internationally than anybody else with the highest capacity. So we have a very strong foundation. And with our efforts to improve our efficiency on install, I think we will be strong enough going forward to compete and to maintain our leading market share.

A related question from John Tay of PEP. Compared to an emerging competitor whose strategy is micro-trenching and able to grow its footprint fast, How does BLDT's rollout strategy differ, and what do you think are your advantages from a rollout perspective?

So first of all, we also use micro-trenching, but micro-trenching has its limitations, and the biggest limitation is there's a very shallow digging on the street, and it easily can be disrupted. One of our biggest challenges in our fiber network is the number of fiber cuts we are facing every day. Our strategy is that for the more important connections, we go underground. Namely, we dig 1.5 meters deep or deeper, while microtrenching is typically only 10 to 20 centimeters deep, which can be easily impacted even by a truck rolling over it. Even if you don't cut the surface, the fiber can break. It is a fast process. Also from John Teh, PLDT lost less customers than Globe for the second quarter straight. Do you think there are risks on competition on the mobile front? Do you think that competition has moved to fix broadband of labor?

No, I think people will still use the mobile phone. And we've seen an increase. Contrary to the other companies that you're referring to, I think we've actually increased our base. We've actually increased our data users, for sure. And even our data usage has gone up significantly in the second quarter. I think that's in the report of Annabeth.

Then lastly from John, regarding refarming, can you remind us which bands are now being used for 4G and how much incapacity do you think you have when these are freed up?

So the refarming we did was 1800 MHz and in fact it was 5 MHz of 1800 MHz. We added to, I think, 3400 sites in the Philippines. Five megahertz doesn't sound a lot, but if you combine it with the rest of the 1,800, it was actually a relief per site of 10% to 15% additional capacity. And in the constraints we had, that was significant. Currently, we are using, dependent on the location, 700, 850, 1,800, 2,100, 2,300, and 2,600 for LTE locations. and we have many sites where we have already oil bans put up in order to cope with the capacity constraints. And we are looking for more refarming going forward, either from 2G or coming from 3G.

Before we read the last question that's been sent in, in case you have any questions, kindly type them into the Q&A panel. This is the last question we have on hand. In which geographies would you say were the customers concentrated, and in which areas do you think there are lapses in your current coverage where you intend to expand to? How different is this compared to your competitors?

So I think the traffic move from the CBDs to the suburban and rural areas, they're where people's homes are. And there's no general rule. We actually cover 95% of the population already. That means also in those areas. It's more a capacity constraint that we didn't put as much capacity up in the past, which we have already fixed. If you look to our speeds, as confirmed by speed tests, in fact, we are now in July higher than we have been before. So I think we manage very well in terms of capacity. Still, there are areas practically all over the country where we are massively adding capacity, for example, in North Luzon and South Luzon and some areas of Mindanao. Although we are ahead compared to competition, it's not enough because we want to really reach all of our customers over time.

That's all the questions we have. Any further questions, kindly type them in. We'll give you a chance to type them in. Otherwise, we will end the call here. There's one from Seve of BPI. Could you share what you saw in terms of consumer behavior for mobile during the second quarter in terms of basket sizes? Would you say that the trends seen in the ECQ in March were fairly sustained? And second, Seve wanted to ask about the enterprise segment. He recalls that the indications were a flat performance, so could you provide color and what drove the growth? Was this because of new accounts in spaces like e-learning and telemedicine, or were there some resilience from your current accounts? Could you also share what the difference in terms of experience of large corporate subscribers versus MSME subscribers practically price?

We've actually seen significant improvements in critical business drivers and one of them is basket size. So our average top-up basket size is higher on a year-on-year basis and the top-up basket size July and August is even higher than the first three to four months of the year. So the highest basket size was experienced sometime May. And I guess this is really because people were stuck in their homes and there's some movement now. But compared to the first quarter of the year, it's actually significantly higher. And more than the basket size, we actually have more customers loading up. We have more subscribers with reload with higher top-up basket size resulting to essentially higher average top-up per customer.

Toby for Enterprise.

Good afternoon. Yeah, for enterprise, what we're seeing is that there has been a level of resilience for some of our enterprise customers. If you segment the large enterprise from the SMEs, we would say that the SME has been largely hit, majority of which have actually temporarily closed their operations. Now, that being said, we've actually released an SME stimulus package for us to be able to help the smaller companies Thank you very much. So BPO has been operating, albeit that their agents are actually working from home. So that has been the driver of the growth so far. And for the second half, actually, we're seeing that the same trend is going to continue. So a lot of the enterprise are moving into their digital assets now. So we're helping all of them to really, rather than rebuilding their businesses, really more of reinventing their business to the new normal. And that would be a lot of technology enablement that we will be providing. Thank you, Jane. Thank you, Julie.

There's also the last question from Seve. Just wanted to get the sense of what you're seeing on the ground in terms of tower rollout, both owned and shared, after the release of the Common Tower Guidelines by the DICT and the recent streamlining efforts by the DILG.

So, as you may have captured, we have actually signed up six tower companies. For an initial rollout of more than 180 sites, there's much more in the planning and we are also talking to more tower companies. I think generally you can say that the pickup is relatively slow because our demand is bigger, but I think it's as difficult for the tower companies to get set up as it is for the telcos itself. If you ask about potential new entrant in the market, I think the numbers we are seeing are pretty low in terms of rollout, but that's not us to comment. If due to the recent announcements, the limitations in terms of rollout are being reduced, the permissions are moving faster, you will also see that automatically our ability to install more towers will pick up. And so, yeah, that's how we see it.

The next question comes from Joshua of Guild Securities. Monetization of mobile data traffic seemed to have stabilized. Please share what brought about this positive development.

Jane would be the best person, but it's really our gig platform that is already 58% or more. Right, Jane?

Yes, sir. Hello. So we continue to actually push the migration of our customers from 2G, 3G devices to LTE devices as well as LTE SIMs. And we've been quite successful in doing that as we saw significant growths in our LTE user base year on year. At the same time, we continue to promote our data packages, particularly our Giga platform, because we do see a significant increase in ARPU when our customers subscribe to our Giga data packs. So the intention is to actually expand that data platform to address other passion points of our customers so we can actually also sustain our growth moving forward.

There's a question from Kervin of Macquarie. Can you share with us any movement from DITA Telecom in terms of their rollout and any employees being poached by DITA?

This is what I just said. I think we cannot comment on DITA. What we are seeing is very little, but also we have talked to the tower companies and see if we can share some of the towers, but there's not much there. In terms of poaching, that of course happens. But that's a part of this industry. If there's a demand for people, people get poached. We do not have a big drain of people to detour.

There's a question from Herman of Abacus. When do you expect Voyager to break even?

Hopefully 2023, if not 2024. I think they did say...

We asked that question only recently, of course, where they said that they're keeping to the schedule despite the significant rise in their volumes during this pandemic. They're staying with the target of becoming EBITDA neutral by 2023 and EBITDA positive by 2024.

I love the questions together that are related. Amidst concerns that the telco industry is becoming increasingly politicized, are you concerned by the president's threat of expropriation? Is there even a basis for this threat? And in spite of the 5G launch, how will PLD address the recent remarks by the president in the last season?

With great difficulty. Well, you know, we... We hear what the president has said. We share his concerns about the quality of the services we provide. So we just have to concentrate on our mission, regardless of mission or a mandate from him, to raise the level of our services, which covers a broad range of topics like coverage, speed, upload, download speeds, Video experience, latency, and so forth and so on. Reliability of the network, which I think our network, as Annabel said, has done pretty well during this pandemic, despite the restraints put on our people to expand the network, to repair and install what needs to be repaired or installed. So what we would like to see is to sit down with the regulator, the NTC, to agree a common set of metrics by which we could be measured, including the cost of delivery of the gigabytes to the Filipino consumer, so that we're guided as to who's doing well, not doing well, doing their job and not doing their job, because those metrics are the metrics that rating agencies like UCLan and OpenSignal use in assessing performance of other telcos In other countries. So for us to be referenced correctly, we have to read those measures that correctly puts us in the right place. And to be judged, I mean, obviously there's a country average, but there's also a PLDT number that is out there that's visible to everybody. So I think we should be more transparent as to how we are doing And then last two questions from Joshua of Guild.

Can you give us updates on the fixed wireless side of the home broadband business? How do you see the profile of fixed wireless and fixed broadband customers?

Butch, are you online?

Butch? Yes, in terms of fixed wireless and fixed, definitely for the home segment, our priority is the fiber. We are ramping up the installations on fiber. We are ramping up our capacity to be able to install and repair fiber Again, we shared with everybody that we're doing a copper-to-fiber migration that is a key imperative for home subscribers, not just to improve the quality of service, but also the ability for home to upsell and provide other areas of services and products to our fiber subscribers. In terms of fixed wireless, it is a balancing act that we are doing. As much as we want to attack the market with fixed wireless products, we have to be able to balance the network capacity and our robust superiority in network today, which we feel is paying off dividends. If you look at the growth of smart wireless or individual, A big part of that growth is driven by the network superiority and the customer experience of smart subscribers. We cannot just launch without studying the impact to our wireless subscribers, the fixed wireless product for home. So we're doing a balancing act on that front. I think we've done a good job. If you look at the performance for the first half of the year, While Globe beat us in terms of fixed wireless subscribers, I think if you look at it holistically, look at it overall, and because we have maintained network superiority, better quality of service, I think overall, if you look at the numbers, we perform much better. So priority remains to be fiber. Fixed Wireless is a balancing act, but we will continue to drive Fixed Wireless as well. Thank you, Butch. Thank you.

The last question, of the 48 billion budget allocated for network and IT capex, how much will be used for mobile and how much will be used for fixed?

Sure. So the 48 million is not including the last mile, just to everybody understand. So the installation of fiber to the home is an extra budget. So the 48 is for the mobile network, the core network, transport network, and this is a highly merged network. So it's actually not so easy anymore after we did all the migration to say this is not fixed, this is mobile. But about half will go into rollout of cell sites and upgrade of capacity, and the other half will go to transmission networks, to core networks, and so on and so forth. But that's just a guesstimate. It's not highly precise. Our target has always been to build a highly synergetic network. If you have a fiber, you can connect. An enterprise customer, you can connect the fiber to the home, you can connect the base station. And that becomes a big advantage now as we have progressed because now as fiber to the base station becomes the standard. Every time we put a fiber to the base station, we can connect an enterprise and we can connect homes.

That was the last question that we had. If there are any further questions, just type into the box in the Q&A box. Thank you, Melissa. Maybe if I could just do a bit of a summary as to how the first half

How it did for the telco industry and most likely could get repeated because there are many elements of the first half that are likely to get carried over to the second half. If you look at the industry statistics and you split the revenue streams into three, Let's start with the wireless. The wireless, and that's an area where Converge is not present, and Detour is not yet operated, so it's really globe and smart. So the industry revenues has actually dropped. on the wireless side. And Smart grew despite the industry decline. So we took the revenues from Globe. A phenomenon that happened many years ago when Smart's own revenues declined and Globe managed to take over our revenues. So that's what's happening on that side of the business. So in a way, I think it's a manifestation of the fact that the pandemic has had some impact on disposable income of individuals, right? Now, when you look at the enterprise bid, it's probably one of the hardest, if not the hardest hit sectors, sector of the economy. And I think to the credit of the enterprise group, they have managed to maintain, if not grow, Even moderately, their revenues for the period, and they're committed to maintaining that momentum, even if it's a modest momentum, forward into the second half this year. The hardest hit is what Jovi said at the MSME, so we have to look at that sector and how we can help them, but the large enterprises appear to be Thank you very much. Thank you very much. The industrial side of Meralco has shown some recovery, but the commercial side is sort of, I would say, dead in the water, right? And so that's where the impact has been. I think that's true as well for the telco services on the enterprise side of the business. Now, home is probably at least the battleground, at least for this year, until the enterprise and the individual sectors have recovered. So there you have three players, Converge, ourselves, and Globe. And that will be a very, very interesting situation. The context of your question is that we have not performed as well as we should have performed on the home broadband side, and we would be the first to admit that, at least not lately. I think for the second quarter, We've seen very good signs of PLDT finally getting its bearings on the installs both on the fixed wireless and on the fixed side. Now, having said that, I think we simply want to emphasize that given the metrics in respect of the margins and the data usage for fixed wireless and for the FDTH, the economics are Significantly in favor of FTTH rather than fixed wireless, both from a margin standpoint and both from a customer experience standpoint. Because you all know that the fixed wireless uses the wireless network. And so to the extent it's a shared medium, your service levels get affected if you add more and more subscribers onto your network. And The usage factor, at least in our own experience, for fixed wireless is about eight to nine times the usage of somebody who's on the mobile internet. So we're pushing our fixed wireless, but up to a point, because we want to make sure that our customer experience is maintained at the levels that is satisfactory to both a fixed wireless subscriber and certainly to the mobile subscriber, which is the bigger part of our business. Now, so in the margins on the FTTH are really much bigger, you know, three times as well. And the usage, as I said, the fixed wireless is much higher. So we cannot totally, however, having said that, we cannot totally abdicate that particular segment of home broadband to our competitors, right? Much less abdicate our market share to Converge. So we have to compete on both sides, but maybe not as much on the fixed wireless side. Now, the question to you, and I don't have the answer, but please think about it. 5G is here. Not in a big way, but it's here. Two years from today, 5G will add significant capacity to both The ability of the folks with a good 5G network to deliver home broadband on the wireless side will be there. Perhaps in two years, perhaps in three years. So the question to you is, what is the role of Converge in that market scenario? Because it will come. So on that note, Thank you so much for listening, and we hope to see you in, what's the next one? November.

And that concludes today's briefing. As always, should you have any further questions or clarifications, please feel free to reach out to PLDT Investor Relations. Thank you for your participation. Stay safe.

Bye-bye. Thank you.

Thank you.