PLDT Inc.

Good afternoon and thank you for joining us today to discuss the company's financial and operating results for the nine months of 2020. A copy of today's presentation is posted on our website. For those who have not been able to do so, you can download the presentation at www.tldt.com under the Investor Relations section. For today's meeting, we have with us our Chairman, Mr. Manuel Pangilinan, Mr. Alpan Lidio, our Chief Revenue Officer, Annabel Enchua, Chief Finance Officer, Attorney Ray Espinosa, Senior Advisor to the President, as well as other members of the PLDD management team. At this point, let me turn the floor over to Mr. Falniga to begin the presentation.

Thank you, Melissa, and good afternoon to everyone, and thank you for joining us today. Today, we would like to present our nine months to 2020 financial operating results. I will start off with a short presentation, then I will pass off to Annabelle for the financial highlights. So as we all know, we are still in an environment when COVID is still upon us. So there are still people who are suffering. You know, unemployment is very high and we understand the condition that we are still in today. Having said that, next page, please. Obviously, internet connectivity has been very critical during this time. It is the foundation for us for the digital economy. We have been working very hard to actually start off digital ecosystems that are needed by our cost. So we've been, these nine months, we've been very laser-focused in terms of, you know, coming out with customer-driven product and service innovations. We continue to invest in our network even after the lockdown. Initially, during the lockdown, as you know, we had problems in our mobility, but now that after the lockdown, we're able to restart our network projects. So we are continuing with our nationwide fiber rollout. And as we also indicated during the first half report, we have embarked on an ADSL to fiber migration. During this time, we also launched commercially are 5G in certain sites. So we will continue to roll this out as we speak and also for the next few years. And at LTE, which is still a focus this year, close to 99% of cell sites that are LTE-enabled already. So we want to make sure we secure our network superiority. Today, we cover 96% for the wireless population coverage. We cover 96% population coverage for wireless. We do have the most extensive fiber footprint in the country. We've added to the numbers that we presented during the first half presentation. So now, after the third quarter, we are now at 395,000 kilometers of fiber, cables late, and we will continue to expand this, and this will reach 400,000 towards the end of the year. and we will continue to roll out even first quarter next year. We have past, homes past 8.3 million and 3.84 million ports. We also have the nation's widest mobile data coverage with 9,892 cell sites, 56,799 base stations, 95 core and data centers and three cable landing stations. All these metrics will obviously continue to expand cell sites, base stations and also landing stations will grow to, I think, five by next year.

So we measure ourselves against competition.

This is a metric that we focus on so that we are able to Provide for better customer experience to our customers. So we consistently outpace local competition. We are even above, obviously, the Philippine average. We are at 19.45 based on the UCLA report. And in Metro Manila, with all technologies and all phones, you can actually get 26.64 Mbps. But if you do have the right handset, the right chipsets, or the right handset that you use in metromolecular, you can even hit 41.77 Mbps for our wireless service. So, in terms of speed test of UCLA, again, we are highest with smart, prefer to globe, and then for our fixed line, we are also much better than competition. Next page. So again I mentioned this earlier we did launch SMART 5G this year and we will continue to roll this out and this will be a major focus for us and really an ultra wide band platform that we have in 5G and we will build our use cases as we roll out 5G. So these are the major key drivers for the third quarter. For individual, we launched Giga Life App, which is very strategic for us from a digital engagement point of view with customers. So we will continue to enhance this as we move forward. But I'm happy to say that we have launched this in the third quarter. We continue with our product launches and 5G commercial rollout as mentioned earlier. For home, now that home has been changing behavior for our customers, where home is where work is, where study is, and where play is, we have also enabled solutions for work at home and study at home for our Filipino families. For enterprise, focusing really on developing digital ecosystems. So they want to enable e-industries, for example, health or education, which is very critical in our roadmap. So the enterprise will continue to provide, create solutions for e-industries. And for international, really managing the long tail. They've done a good job trying to really manage this long tail. So for, you know, on top of connectivity, we were very, very busy in a lot of programs and offers in the market. We obviously had the NBA content exclusive to Smart, where you could really live stream NBA if you were a Smart subscriber. As I said, we launched Giga Live. We have our weekly Giga Fest activities. We launched Giga Study, Giga Games, Giga Pro. Enterprise launched during the lockdown at BEYOND Fiber, which is a BEYOND connectivity solution, especially for MSMEs, 5G, as I mentioned. We had a concert during the birthday of MPP in July, where actually PLDT Home offered speed boosts to certain customers. and the top right shows an actual shot, a picture shot taken in Clark where the PBA bubble is happening and we're using smart 5G and we're really broadcasting for the first time on over 5G and maximizing our relationship to international partnership with Orange. That's why we're able to manage the long day for our international business. So happy to report for third quarter, our core revenues, service revenues ended at 43.7 billion. This is 11% higher than last year, or 4.2 billion in terms of revenue terms. This is the highest quarter ever for PLDP Group, surpassing the 41.5 billion first quarter of this year. And I think Annabel will show later that It's really a steady growth in terms of revenue for the past 11 quarters, except for the second quarter where basically because of the lockdown, there was some softness in the business. Next page. And broken down into the three big pillars that we have, and all have shown strength, resilience, strength, and growth. Individual grew by 15% to 21 billion, an increase of 2.7 billion from a year ago. Home, very strong 16% growth. Really, this is a recovery or a big performance for home this year. 16% growth, 1.5 billion in PESO terms versus last year, ending the quarter at 10.7 billion. They ended the second quarter actually at 10, and they increased it now to 10.7 billion. And enterprise, despite the issues, the difficulty they've had, a lot of customers, getting out of business and having to restart their businesses, still grew a clip of 8% for 800 million. But for all three segments, this is really contributing all-time high revenues. Next page. And for year-to-date nine months, we are at 126.5 billion, also a 9% increase versus the same period last year, or 10.4 billion pesos. Individual ended at $60.8 billion, a growth of 15%, or $8.1 billion versus the same period last year, nine months. And home grew at 10%, ending nine months at $30.3 billion. And 10% and $2.7 billion increase versus last year. And for enterprise, ending the third quarter year to date at $30.9 billion, or 6% for $1.7 billion. Pesos versus same period last year. I mean, just quickly just saying that a very soft second quarter, as you all know, but we increased quarter on quarter 6% to end at 43.7 billion again. Next. And really just major, I guess, a scorecard or divisive breakthroughs for us at the end of nine months, we continue to have market leadership in service revenues. We've strengthened our position in fixed, especially that we have increased our capacity in terms of installation for our fiber service, and we will continue to enhance this as we speak. There's a surge in demand for home broadband, so we are also increasing our capacity to be able to install for our customers. We've gained wireless market share, again, for six consecutive quarters now. We are now number one in wireless data traffic, number one in data users, and the TNT brand is the biggest prepaid brand now in the country. So just very briefly, doing all those activities and programs and launches, we also know that we have our responsibility to the community. So the mantra of our chairman of No Learning Left Behind is education is very important. very close to our hearts, so we are helping DepEd and other institutions in our programs with the PLVP Smart Foundation.

Next.

And really being a network of good. PSF, again, is very active in terms of its relief operations or help that we are able to give our communities. And lastly, next page, as you know, this is still very new, we have had a major effort to restore Our communities have been hit by typhoon Rolly, especially Albay, Catanduanes, and Camarines Sur. We are not 100% restored yet, but between 70% to 80% in most locations, and our teams are there right now. trying to bring back 100%. Either working with the local electric co-ops to bring up the poles or put a microwave and desat facilities in place. But what we have also done is we've offered a Libring Tawag and Libring Charging booth in the communities that are needed, that require such services. So Libring Tawag and Libring Charging. So at this point, that's my report. I'd like to pass on the floor to Annabel Chuan.

Thank you, Al. Let me go through the financial highlights for our nine months that passed. As Al had highlighted earlier, we're very proud of the fact that we came in quite strong in our third quarter with individual, enterprise, and home businesses All registering all-time highs. So on a combined basis, these businesses are up 13% from same quarter last year and 6% higher than the second quarter. On an overall basis, 43.7 billion, 10% up versus last year and 6% also up versus the second quarter. Next slide. On the back of this 10% rise in revenues, we saw our EBITDA also up by 12% to hit 22.7 billion, our EBITDA margin of 51%, and our telco core income registering 7.1 billion in the quarter, or 14% ahead of the same period last year. Moving on, we show here the results over the Thank you very much. When you look at it by business pillars, the individual business had a bit of a moderate dip in the second quarter, but post-Easter, we did see our top-ups hit record highs and have been stronger month-on-month. So at 21 billion, that's again an all-time high in terms of quarterly performance, leading to the 60.8 billion, that's 15% ahead of prior year. Enterprise, as Al mentioned, notwithstanding all the challenges in the external environment, we were able to serve the digital requirements of our various enterprise customers. So the numbers have been increasing every quarter from 10.1 going up to 10.2 and now 10.6 in the third quarter for an aggregate of 30.9 billion. Again, 6% higher than prior year. Homes, pretty encouraging. We saw a breakout in the third quarter at 10.7 billion. So that's a 16% increase over the same time last year and 700 million ahead of the previous quarter. So at 30.3 billion, that's also a 10% rise over a prior period. Moving on. The 9% increase in the nine-month revenues, again, supported a 9% increase in EBITDA to 66 billion. We were able to manage our cash OPEX such that it only rose by about 4%. And I'll talk about some of the issues around provisions later. Telco Core Income was 21 billion, 8% ahead of last year, with some increases in depreciation and financing costs at the back of our higher investments in the CapEx. Next chart. Here we track our quarterly performance since the start of 2018. So the key takeaway here is that we have really seen consecutive growth every quarter since that time, other than a slight dip in the second quarter. The other thing to note is that the growth has been accelerating in terms of the pickup from the prior period. So we're seeing not just a growth, but an acceleration in growth. And now we are at this 43.7 billion all-time high. Next chart is the same. This time we break the revenues by data versus non-data revenues and it's clearly data that has powered the growth for PLDT Group over this time frame. Data at 90.8 billion is 72% of our revenues now and accounts for an 18% rise. That's in the next chart. When you look at the Where data grew, about half of our data is coming from mobile internet, and that's up 31% year-on-year. About 76% now of our days own smartphones and have been actively using data. We saw a record high of 36.8 million active data users during the third quarter. From a traffic standpoint, the amount of mobile traffic used by our The number of subscribers is practically doubled from what it was a year ago. On home broadband, that's the next largest segment in terms of the data service story. That's close to 24 billion or 14% higher than last year. We all know that with the work from home and study from home development, the demand for home broadband is at an all-time high. We've seen the service applications practically double from what they were before. We pushed our installations up from about 40,000 average last year to now 70,000 approximately in the third quarter, but that's still not enough to serve all the demand that we see out there. So there's a concerted effort to continue to bring up the number of installations we're able to accomplish to more than 100,000 by next year. Corporate data and data center, which are part of our enterprise revenue segments, were up about 3% year-on-year. So the growth in the data was more than able to shield us from the declines that we see in SMS and voice, which are now a smaller proportion of our total revenue pie. Next chart, please. As explained earlier, the higher service revenues allowed us to see a 9% increase in EBITDA and more than covered the higher cash OPEX and provisions and subsidies during this time. And then the higher EBITDA offset by some increases in depreciation and financing costs led to the 8% increase that we saw in telco core income. Next chart, please. This one is the EBITDA number, again over the quarter starting the first quarter of 2018. So this year, we started off at 21.6 billion in the first quarter, similar levels in the second quarter, and we saw a 5% rise by the time we hit the third quarter to 22.7 billion. The average of these three quarters was at 22 billion, so that's also clearly ahead of the 20.8 billion quarterly average that we reported last year. Next chart. Just as a commentary, there were a bit booking of higher provisions during the third quarter. So we booked additional 3.5 billion, sorry, 3.5 billion in the first half, an additional 2.9 in the third quarter for a total of about 6.4 billion, a little over 5% of our total revenues. So this is in recognition that there are some challenges around the collections that We are experiencing as part of the relief that we gave to our subscribers during the ECQ period. But what is noteworthy here is that starting June, our collections actually have already exceeded the pre-ECQ levels. On a year-to-date basis, we've collected about 86% of the billings. During this nine months, and then we're pushing for this to rise to over 90%, or in fact, closer to 95% by the end of the fourth quarter. So we'll take stock of the level of provisions in the fourth quarter, depending on how the collection efficiency levels will be by the time we hit the year end. Next chart, please. So on a telco core income, I guess with the steady rise each quarter from 6.9 to 7 billion to 7.1 billion this third quarter, the average is at 7 billion versus 6.8 billion average last year. So our goal initially was to at least match last year's telco core income. So we kind of are feeling confident that we should be able to do that if not slightly surpass last year's performance. Next chart. So just to complete the story and the P&L for reported income, that's 19.7 billion after taking into account our share in Voyager equity losses for us at 1.3 billion and certain other adjustments to our investments. I just wanted also to report that we have completed the sale of all our remaining 1.9 million Rocket Internet shares ahead of the public listing and tender offer of the company. So we were able to generate an additional 2 billion pesos of extra cash proceeds that will help us fund our requirements this year. The other thing to note is that the reported income is 23% ahead of Thank you, Charlie. So moving on to the balance sheet side, With our net debt at 3.9 billion U.S. and gross debt of 4.6 billion U.S., we actually saw a slight improvement in our net debt to EBITDA ratio to 2.13 times versus 2.19 and a half year on the back of the stronger EBITDA performance. We've been able to manage our liabilities such that more than 50% of the maturities are extended beyond 2025. Overall costs of debt is about 4.69%. Again, an improvement over the costs of 4.8% last year, and in fact, even the 4.78% average in the first half. Next chart is really to talk about our capex. We came in with a 43.1 billion capex for the first nine months. A bit of slowdown during the second quarter because of the lockdown challenges, but we do expect that for the year we will hit at least 70 billion at the level pretty similar to what we did last year. So that implies that about 27 to 30 billion of capex in the fourth quarter that we expect to pull. For the 70 billion or so capex, 52 of that is really dedicated to our network and IT investments. 13 billion supports the business requirements, particularly the install and last mile and CP requirements for generating additional sales. And then about 6 billion for data center and other requirements. A lot of projects ongoing at the same time, both on the wireless and the fixed time. We continue to increase our LTE coverage and expand our capacity. We continue to expand our backhaul and transport capacities. We have ongoing work to add 37 terabits per second to our existing 55 terabits per second network capacity for backbone, building out more ports, about 500,000 ongoing builds, supplement our 1.4 billion port inventory, upgrades of DSL to fiber, and then additional sales site build out as well as the start of our 5G rollout. All told, we can expect our topics of service revenue ratio to be about 40 to 41% this year, compared to 45% capex to sales ratio last year. Next chart. The spend in the capex translates to accomplishments that we are summarizing here in this chart. A bit of a report card of all the rollout accomplishments for both fixed and wireless side. 8.3 million homes passed, 40% up from year end. 3.8 million ports, inclusive of 1.4 available for sale. Our fiber footprint is unmatched by anyone in this country at 395,000 fiber kilometers. And as we speak, we are working on an expansion by another 81,000 kilometers for our fiber footprint. On the wireless side, LTE base stations, 28,700, and then Thank you very much. Numbers are even starter in terms of the 80% LTE adoption ready and only 12% remaining on 2G and 8% on 3G. In the next three charts, I just tried to put together some of the results of external third-party surveys that report on the health and quality of our network performance. This first one is from UKLA. Thank you very much. It's an average of about 30 Mbps for mobile, about 19 Mbps, but that's an overall nationwide average also across 4G and 3G. When you zoom in on Metro Manila, the average speed is actually getting very close to 30 Mbps, about 29. And then when you have the right handset, a subscriber can actually experience on our network about 42 Mbps speed. The next chart shows another result of OpenSignal, where we focus here on the LTE availability score and our video experience score, just to highlight that we are doing better across all the regions in the country, and we are also outpacing competition. The next one is another, I guess what they call more scientific study that's done by UMLAG. It is an attempt to measure the quality of service for our mobile network. The other two were really more crowdsourcing test results, but this one is really done by experts. And we're pleased to note that we scored 750 In the third quarter, which puts us in the good category, that's clearly improvement over what we have been able to report over the past few quarters, and we've been working very hard with the experts here in terms of continuing to optimize and improve our mobile network performance. And we are not stopping there because our benchmark now is not just in-country, but we're really looking at a performance that will match those of our ASEAN neighbors, and eventually global telcos as well. So with that, I'll turn it over to our chairman, Mr. Pangilinan, for a wrap-up of our 2020 outing.

Thank you, Annabel, and good afternoon to all of you, and thank you for joining us this afternoon. We provide you briefly our latest news for 2020, particularly the fourth quarter prospects. Dealing with the revenues first, we expect the momentum established in the first three quarters to continue for the fourth quarter, such that across the board, wireless home and enterprise, we will see continued growth. And it is likely that the fourth quarter revenues in all three revenue streams will be will produce another historic high for PLDT. So the full year, therefore, will be an historic high for the company. In terms of TelcoCorp, flowing from that, EBITDA will rise and TelcoCorp will rise. We expect the full-year TelcoCorp to be higher than the 27.1 billion we reported last year. How much higher is a function of many variables, including our record of collections and how much provisioning Annabel might wish to make for the fourth quarter. Dividend payout, we're maintaining 60%. Maybe we'll look back if things really turn out to be very well. CAPEX, year to date, so the third quarter was about 43 billion, and we expect total year to land between 70 to 72 billion for the full year. So that's basically it to complete our 2020 review. I turn it over to Melissa for Q&A.

Okay, we're now ready to take your questions. You may type in your questions by clicking on the Q&A panel on the upper right side of your screen. Kindly indicate your company and name. We'll read your questions around. First set of questions come from Kervin Cesayan. Can you comment on competition? We see Globe increasing marketing spend to push more SKUs in the third quarter. Is there any effect on PODT?

Well, obviously, Globe will not be sleeping. They're offering packages in the market. We have also our own offers, and I think it just shows you that with a very strong third quarter. So we expect, of course, competition to be there, but we will just, I guess, continue to also offer our own packages in the market. So right now, I think we're cognizant that they are promoting their own products, but we are also doing the same.

I think that if I may add to what Al said, I think that once we see 2021 Data demand to continue to be robust. The competitive landscape will change because DETO has announced that they will be commercially available. Their services will be commercially available by the end of the first quarter, maybe start in the second quarter. They'll definitely be around in 2021. Converge has finished its IPO, so probably slightly stronger in 2021. And of course Globus, as I indicated, is not going to stay still. So they will be competitive or more competitive in 2021. It will be an interesting year from a competitive standpoint. Part of the picture will be determined by how fast or how well we recover economically from this COVID. To be honest, we thought that the vaccine would have been approved. by October or November. We have not seen that yet, albeit that maybe there might be one or two. I'm talking about the states, U.S. pharmas or U.K. pharma companies. And I think the deployment will probably be not as early as we had expected, and therefore that could determine the pace of economic recovery of our country as well as other countries' issue.

Just a follow-up question from Kerbin. Do you have any thoughts on the build-up from ETOM?

Of course, we're observing their statements and also what they're doing on ground, and I think they have been able to put out some sites. Their target is, as they state, 1,300 sites for the first quarter next year, will not be enough to meet their own targets, namely 37% of population coverage. It's not possible to be achieved. I think they make progress and I think that was to be expected, but it's far behind what you need to really be competitive. So we believe that they will be probably going live in the timeframe they announced. They will not be able to meet their own targets. And it will be a very localized competition. It will not yet be a competition on the whole country level. This will take quite a while, so it's, I think, something we will be able to defend.

There's a question on Converge. Converge is seeing high growth in subs. Are we seeing subscribers going to Converge? And also in the press release, you mentioned that broadband installation was already 72,000 per month, but the actual increase in fixed-time subs was only 90,000 per quarter. Just want to reconcile these numbers by net ads per load versus installations.

Just maybe to address that, OneConverge has said that 90% of their connects are actually new subscribers, so it really just indicates for all of us that The potential for more household broadband penetration is really there for the picking. Second, with respect to the number, the 72,000 is the gross additions, and then the 90,000 for the quarter is the net ads. If you recall, in the second quarter, because of the Bayanihan app and the lockdowns and everything, we really did not strictly impose our churn policies. So there's a bit of a catch-up in terms of disconnects that we had to book and recognize during the third quarter.

The next set of questions are from John Teh. The first one is with respect to our data allocation for prepaid mobile in the last few months basically increasing despite diminished use in mobility. Do you think this is not dilutive to ARPU as it was previously?

What question?

The rationale behind increasing data allocation for prepaid in the last few months?

I think initially, when the quarantine happened, we did increase the data allocations to support the requirements of the market. But we've also made adjustments to our thumb loads for prepaid home wireless. So when you look at it overall, actually, our yields in the third quarter improved over prior quarters.

Next question is with respect to 450,000 FTTH boards in the third quarter alone. PLDT added about 50,000 boards in the third quarter. When you said you were adding 500,000 boards, over what period would this be? And do you think the competitors' additions are successful?

No, I think, first of all, I think one quarter doesn't make a net worth. It's just a snapshot. And we have at the moment about 1 million ports or 800,000 ports ready to sell. We will add another 500,000 ports within the next three to four months. And then for next year, we're currently in the planning stage, but we will definitely add substantially in order to meet the market demand.

The next set of questions are from . Congratulations for the very strong results. Three questions from IM. The first one is, there's been impressive growth in the fixed wireless space. Could management share how we should look at upselling or upgrading this fiber base, both in terms of DSL to fiber and fixed wireless to fix? Should we expect some uplift from most of the DSL subscribers?

Yeah, I guess on that question, yes. We did announce during the first half results that we were embarking on a migration from ADSL to fiber. That's already happening now. That's about 600,000 of those customers, and a third of that hopefully will be completed within the year. So obviously there's an upgrade on the ARPU when they move to DSL. And also, you know, aside from surge in demand, I think There's also a requirement by most customers to also upgrade their service because there are more people now using one pipe in the home and maybe the 25 Mbps is not sufficient. So they upgrade to 50 and some of them are upgrading to 100. So there's also a requirement for them to increase their offerings.

Next question is, could you discuss which segment contributed the bulk of net ads for fixed-line broadband year-to-date? Would it be subscribers that are churning from other networks, existing fixed wireless subscribers who are migrating, or first-time subscribers?

I think it's a mix of all, because there is unserved demand, there's surge in demand, so customers now want to upgrade to a better service, as I mentioned. Fixed wireless has been an offering that has also spiked for us during this period, If they want the consistency of the, you know, either 25 Mbps or 50 Mbps, they do go up to a fiber connection. And of course, again, there are also a lot of first-time subscribers because, again, behaviors change and people now need broadband at home. So I guess all those three segments contribute to the growth that we're seeing today.

You know, our main focus on the home broadband is really the fiber, right? You know, the kind of fiber miles or kilometers we've been building over the years. And as fixed wireless is okay, we manage our numbers with respect to the ads on fixed wireless because we don't want to unduly decongest. Thank you very much. but it's still a number that we manage. We don't go the full hog. I think the main thrust of our home broadband is really the fiber and we continue to do so. That could change with the full deployment of 5G because that could give the wireless infrastructure a fairly wide degree of capacity. Something that Converge doesn't have. So you should bear that in mind.

Next question. What are you seeing on the ground from the regulator and the tower companies in terms of common tower policy to provide more color in terms of the trajectory of closing commercial agreements with the tower codes and the rollout of common towers?

Sorry.

Regulation and tower policy and the status of the negotiations with the tower companies.

I think on the common tower policy, we have actually complied with the common tower policy. The policy of government is to allow as many common tower players as possible and as well as encouraging all of the mobile operators to avail of the services of the common tower operators. On our part, We have actually engaged with quite a lot of them already and have signed the firm contracts covering around 200 of these towers as phase one. There will be a more substantial number for phase two and as we bring on more common tower providers We are quite happy to share these towers obviously with Globe and Ditto since that has actually been our statement early on that when it comes to new builds of towers we will be supportive of a common tower development even as we have to develop our own because we cannot at this stage We simply rely on the ability of these new common tower providers as far as their local capabilities are concerned to build, to entrust all of our tower requirements to them. But over time, we will be able to see that more and more the tower companies will be engaged by us to put more and more of our equipment on their towers as they improve their capabilities.

Next question, how much is the MRP expense required to form?

The program is ongoing, but I guess as a rough estimate, it will be somewhere in the ballpark of 2.6 billion pesos in terms of one-off MRP premium that we pay for early retirement.

Next question is, are you able to disclose split between mobile and fixed talent?

It's about 50-50, but as we build our networks very synergetically, it's very difficult to say up to the base station actually what is fixed on mobile. We reuse the fiber for any service, so fiber to the base station can also serve the fiber to the home and can serve an enterprise customer at the same time. So as a kind of guidance, about half goes into mobile, about half goes into fixed.

Can you share your expectations on 5G coverage? Where do you expect to see this by year-end 2020 and year-end 2021?

2020, we will probably end with about 500 sites. That will be enough for some dense urban area coverage. It's not a large coverage yet. But for the next year, we are currently finalizing our plans, but we will for sure significantly step up our efforts to roll out 5G.

Next question is, what percentage of your wide broad customers are first timers versus churns and other players?

Would you be able to answer that question, Butch? A lot of them, I think, would be first timers. Because, again, there is a surge in demand during this time. So, in fact, there is still a big unserved demand. But mostly, I think it's first-time subscribers.

The next question is, may I ask the reason behind the strong mobile data revenue?

I guess we monitor a few metrics in this one. One is really our Subscribers would reload, and we have increased that by 9% compared to the same period last year. So we increased subscribers with reload to the tune of 3.1 million subscribers. So more people now are using our service. Second, it's really pushing them to LTE devices because as they Go from 2G to 3G, there is an uplift in ARPU, almost double. So that's the reason why adoption for data and giga packages is very key for us, because once they go towards the giga plans, that's really most probably double the ARPU if we were just 2G.

Next set of questions are from Bernice Volko of Atram. Can you share any capital plans for 2021, both for total and specifically for home broadband?

Well, I think maybe we can't answer that question today because we're still undergoing our budget process, but hopefully towards the end of the year or early next year, we'll be able to share that data with you, that information with you.

Next question.

The initial cuts. on CapEx were breathtaking.

But I think, I guess just to add to what the chairman said, I think we know that we have to continue to spend on our network. We have to make sure that our network is more superior and really at the end of the day we want to make sure we have the best customer experience.

It's also this competitive landscape as we enter 2021 and onwards with more players, will also be a battle of resources, right? You know, in terms of who has the bladder to invest in networks, because that's a key consideration in terms of service coverage and customer experience, right? That is also determinant. Of course, there are other major factors like products and other marketing persons.

There's a question on provisions. What is the expectation of additional provisions and charges?

I think that's subject to our year-end review process. Principally, it will depend on, one, the collection levels that we're able to achieve by the end of the year. Again, it's really the general economic outlook, right? So we have to consider things like what is the expectation with unemployment, inflation, GDP growth, et cetera, as part of the whole exercise of estimating our expected credit loss.

Next one is how much demand in terms of applications per month were there in October for wired home broadband? And how many gross installs were there in October, if possible? May we know September? And does PLDT have a backlog for installations?

Backlog, yes. Backlog quite a bit.

Quite a bit. I mean, that's why our... We are ramping up on our installation capabilities and capacities. So there is, you know, our capabilities is below what market demand is. So there is a backlog and we're trying to address that.

And a related question, how big is the untapped market for home fiber considering the emergence of Converge? Would you consider the untapped market in this segment to be still significant?

Yes, I think it is. I think there are about 95 million homes.

I think total fixed broadband is 3.8 million for the whole market, but that includes the proper DSL, right? And then 3.4 million for fixed wireless web, also the potential. to be upgraded to fiber. So the country really only has about 7.2 million. But if you look up fiber narrowly, I think it's a big potential.

And the importance of fiber connected to home has increased for people. This means also the willingness to pay has increased. So more people will be able to buy or will want to buy fiber. So the market has grown through the pandemic.

Yeah, I think one way to look at it more broadly is that, you know, there are anywhere between, the numbers are not precise, 25 to 27 million households for this country, right? So that's not necessarily an adjustable market for FTTH or even fixed wireless. So it's a question of affordability, right, the price points. So we think that there is maybe 8 to 10 million homes that can afford the current price points on FTTH. So that's broadly the market for Fiverr. Then maybe it could go higher. Then you got 5G to address the lower layer of affordability. So yeah, it's potentially a big market. Like third quarter, we added just part of the revenue thing, just to pursue the point on fixed and fixed wireless. We added about 200,000 each. About 200,000 each for both fixed and fixed wireless. So we added a total of 400,000. But in terms of the revenue impact for the quarter, The FDTH 200,000 is significantly more than the fixed wireless. But of course, we won't turn it away, right? The fixed wireless revenues. But that's the arithmetic for now.

Next question is, has PLDT and SMART been using e-talents assisting a new competitor, the Delco schools? What is their strategy to replace e-talents that have been posted?

Oops, are you referring to us?

I think we have been lucky so far.

Yeah, I'm sure they're talking to some of the people, but we haven't really seen any major departures.

Let's say there were no departures which we didn't want.

Next question. From Gerardo Naparal, what are the biggest regulatory hurdles PLDT is experiencing currently? And are there any, sorry, are the various government measures, Bayanihan 1 and 2, tax reform, helping or hurting PLDT?

I think on the regulatory front, the recent The law that was passed by our Congress, Bayani and Duac, and the laws on permitting have actually helped us significantly in securing permits at a pace that was faster than it used to be, but there have been pockets or areas where LGU permits are still slow and we are addressing that by actually engaging with the national government authorities like the DICT and also working directly with the local government units concerned. So it actually becomes a more proactive, interactive process now on our part given that the policy has been set by law and by the president himself. One area that is important to us obviously is our ability to secure additional frequencies as we roll out 5G. That would be addressed to the policy of the NTC on how they want to allocate these frequencies, these valuable frequencies. Given especially that in developments in the U.S. and in Europe in particular, the particular bands, frequency bands have been identified already for 5G. So we're quite keen to work with government and get our fair allocation of this radio frequency for 5G. I think that would be good for us if the new tax reform package is passed. It will bring down the corporate income tax rate from the current level of 30% down to 25% over time. So that would be good for us. I would think that should improve our bottom line.

The last two questions. Are you able to estimate what the cost differential would be for an integrated player such as yourself versus a single business fixed broadband operator? What kind of cap is an open advantage to you generally?

So it's of course not so easy to compare because A, we don't know exactly the cost situation of that one. But I would say the following. The benefits of an integrated operator is that we can leverage, for example, our fiber network multiple times. We leverage for fiber to the home, where the cost is very skewed to this last mile. But we can also leverage at the same time for enterprise businesses, and in particular to connect healthy eBay stations, and much more importantly, 5G. 5G without fiber will not work. and therefore we have a high synergy between the various networks and we have actually in the last couple of years deployed the strategy we call it follow the fiber. Wherever there is fiber, we can connect any business, fiber to the home, fiber to the enterprise and fiber to the base station. And lastly, I think in a combined mode as we are, we are able to also invest into international connectivity like nobody else can. You currently have already 16 cable systems we are participating in. We are investing in more. There are three more upcoming. We have three cable landing stations, at least two more coming up in the next year. And I think that's something which a single fixed broadband operator cannot do. In particular, when they have to grow outside of the big metros, it becomes very costly to lay all the fiber in the country. We could do that because we are using the fiber not only for the purpose of fiber to the home. We're also using it for mobile and for networks.

I guess to add to that, that's from a network perspective, right? But at the end of the day, I think as an integrated telco, we're able to offer more products in the market that spans across wireless and fixed. So we have your mobile internet, you have your packet Wi-Fi, you have your fixed wireless and your FTTH. It just gives us, I guess we can offer our customers, depending on the segments and depending on affordability, various offers.

The next question is, can you share what the average lead time is from application to installation?

Well, can I tell you what the aspiration is? Well, our aspiration is 24 hours. And maybe repairs of 40 hours, right? But that's aspirated. We're not there yet today. And I think this is an area we're really focused on, you know, improving capacity. Because today, if there are facilities and you're, you know... It can happen almost immediately. But certain areas that we don't have the facility, then obviously it takes more time. Plus the additional capacity that I guess we're working on.

But the vast majority of the new applications, we actually can connect in below two weeks if they are in an area where we have already a port available. That's very often the delaying factor that if a port is not available, we have to build. Because of the high demand. Yes, because of the high demand. And we have to go through the permission process and the restrictions which are there. So this is impacting the time to rack quite a bit.

I think somebody asked a question about talents, right? We have employed the talents. The first thing is just to address... I think in fact, Ray, did you lend or give up? A major officer of Morocco who was in the installs business of the Morocco Wars, that's Bernard, and he's been doing a great job in the installs of PLDT. The demand is so strong that we still have quite a bit of backlog. Our Asian House, we're going to employ more and more outsource companies to raise the level of our capacity to install. Then the repairs, similar thing. We're employing people to address the repairs issue. And the Customer Experience, right? The complaints, both on voice and on social media. We have recently hired a lady from Peru, Miss Peru, because she used to work with Telefonica and was in that principal line of responsibility with Telefonica in Latin America. Telefonica is a big presence in Latin America. So she used her last assignment with Telefonica in Colombia. So she just arrived a few weeks ago. So she's helping us out on the customer complaints and so forth and so on. So we're mindful of that.

The last question, could you share what are the drivers for the quarter and quarter improvement in mobiles?

I think I answered that earlier in terms of really pushing people to use more data in bigger platforms and us having more subscribers with reload. So that continues to grow. And I guess if you look at it, I think for the nine months, I guess you know the numbers of our competitors, you could see that our mobile business grew. and took on all the growth of the industry and maybe the decline of our competitors. So our wireless business is very, very strong. And yes, maybe we are getting some growth drivers that are trying our service.

There's a follow-up question. What are your plans for the future workplace? Do you foresee long-term need to set up work-from-home arrangements mixed with in-person office presence?

Well... COVID has sort of affected our perspective of the workplace. We were moving in the direction of a campus type of head office on some say 10 hectares of property somewhere in the south. But this COVID has affected that perspective and we're looking at Thank you very much. are either out there in the field or can work from home. And I think the estimate is only about 40% of the 16,000 actually need office space. The balance could be office space, but it's a hoteling kind of revolving occupancy. So I think we have to look at that. And so I can't give a definitive answer, but yeah, so we're examining.

Thank you again for joining us this afternoon. And I guess we will not speak with each other until the full year results. So in the meantime, on behalf of all of us,

We wish all of you a very Merry Christmas. It's probably a subdued Christmas for the people, so a little sad, but anyway, those are sincere greetings to all of you. Thank you.

That concludes today's briefing. As always, should you have any further questions or clarifications, please reach out to PLDP. Thanks for your participation. Stay safe.

Thank you. Thank you. Bye-bye.