PLDT Inc.

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. Al Pandillo, Chief Revenue Officer, Ms. Annabel Limchua, Chief Finance Officer, Mr. Joachim Horn, Next Generation Technology Solutions Advisor of Smart Communications, as well as other members of the PLDT Management Team. At this point, let me turn the floor over to Mr. Pandillo to begin the presentation.

Thank you. Thank you, Melissa. Good afternoon to all. Just wanted to really, you know, happy to report our unaudited financial results for the year 2020. It is a stellar performance that we were able to achieve in quite a difficult period. But we were only able to do that really by working together to achieve our goals. We were passionate about the work we do. We knew our purpose is to serve our customers and the malasakit of our employees. We work together to really empower Filipino lives. It really started with the hard work of our chairman, MVP, who was here every day at work during the lockdown. So it just embodies our commitment for our customers. So if I may go to the next slide. These, I feel, are the six success pillars we had for 2020. First, really about people. We were not only customer-centric and focused all our programs to address the requirements of our customers, but we were also employee-centric. We wanted to make sure our employees were safe in serving our customers. We had a big effort on PPEs, vitamins, and medicines to make sure that our employees were taken care of. We even went to work from home. But end of mind was to be able to also serve our customers safely. Second, our ways of working during this pandemic was different. We were able to really hyper-collaborate. We used technology to make it happen. We were able to decide quicker. We were more agile. We made decisions. And because of that, I think that also resulted to the success that we had in 2020. Third, brand love. I think we were very active in terms of our campaigns, really showing that we wanted our brand to be top of mind to our customers. all the programs we have embarked on we wanted to be relevant to our customers and in doing so hopefully we've been able to increase the brand level of our companies both PLDT and Smart. Network and technology despite the initial hiccups during the lockdown in late March to April we were able to still recover on our plans for the year and we spent almost the same level of capex to 2019. Great job, our network and technology group, by really finding ways to be able to deliver the service, continue the service, and making sure that we are ahead in terms of competition, in terms of our capabilities and cost of experience, which is really the fifth bucket, a focus on cost of experience, making sure that we are the benchmark of the industry and we have benchmarked ourselves against and other countries in the region. And I think that's the cost of experience we feel is deserving of every Philippine. Transformation started off in 2015 by MVP and will continue to be a pillar moving forward, but maybe underappreciated the past few years, but it has been a very significant progress in our transformation capabilities, not only in our technology platforms, but also in our processes. And we will continue to do this. We're not done in this space for sure. So that led us to a very strong year in 2020. with net service revenues of 171.5 billion, which is the highest full-year revenue in history of the company. So our revenue growth in terms of pesos is 13.8 billion pesos and 9% growth versus 2019 amidst the pandemic and the limitation of our work during the lockdown. And 70% of this rate are treatable to data. And if I go to each of the segments, wireless led the way, having grown by $10.6 billion, ending 2020 at $82.7 billion, which is a 15% growth compared to 2019. You see there the programs that we focused in. We launched the Giga Live. We talked about the passion for our customers, Giga Pro, Giga Video, Giga Games. and we were also very strong in TNT. We are now the number one brand in prepaid. We are very strong also in sports content and we will continue to develop content that is relevant to our customers and our push on Smart 5G. We were the first to launch Smart 5G and that is again going to be an ongoing initiative for us moving forward. For home, which is really a breakthrough year for home, ended up at 41.4 billion or 4.3 billion pesos growth or double-digit growth of 11%. And really the home being a new battleground in the industry where people really work and study at home and not just entertainment. And we are also doing a lot of initiatives to continue to improve Thank you very much. from small to big recover during this pandemic. And we have actually launched certain products also during the lockdown. Beyond Fiber was launched sometime in June. The biggest study packages, the e-health packages. We have even hosted a Philippine Digital Pump convention virtually during this time. And again, the focus of closing accounts at Google and Alibaba that focused also on a lot of activities for our data center. And for international, again, having a long tail in this business with our relationship with Orange, we're able to mitigate the decline. But there are also growth areas in international A2P and even Freebie, which is an app that's offered to all Ws abroad. In fact, it's not for the hit and roaming because travel was not possible. We would have ended the year almost flat against 2019 if not the decline for roaming. Hold on.

For 2020, a solid 9% increase or 13.8 billion year-on-year. With that top-line growth, our EBITDA increased by 7% to 88.8 billion pesos for 2020 at a 51% EBITDA margin. We saw a bit of increases in the cash OPEX, inclusive of the provisions. Without the provisions, our cash OPEX would have been up by 8% instead of 11%. Depreciation in financing costs rose as a function of the increased investments we've been making behind our network. With all of that, our telco core income came in at 28.1 billion, which is a billion pesos or 4% ahead of 2019. Reported net income was at 24.3 billion, a 1.8 billion increase year-on-year. Just showing the revenues on a quarterly basis, Over the last three years, other than a dip in the second quarter during the early days of the ECQ, we've seen an acceleration in our quarterly momentum with respect to top line growth. So we ended the year with a 44.9 billion revenues in the fourth quarter, which was 8% ahead of the same quarter in 2019 and 3% ahead of third quarter. So that was the highest quarter for PLDT with respect to our revenues. Likewise, in terms of our full-year revenues, we did reach an all-time high, 171.5 billion after a 9% year-on-year increase. So data clearly led the growth for the PLDT group, with data growing 18% across our mobile, internet, home broadband, corporate data, and ICT businesses. That data now accounts for 73% of our total revenues. Domestic voice, SMS, and international voice have been under decline, but things like SMS and international voice now have accounted now for a smaller percent of our total revenues of 4% and 2% respectively. This again shows the revenues and how they have grown over time, and you see here that data revenues have clearly led the way. with data revenues in 2020 being over four times the level in 2012. So from a voice SMS business, our business has truly become a data-driven one. Just to recap again, our EBITDA grew by 7% on the back of the higher revenues offset by higher cash OPEX and slightly higher provisions, so 88.8 billion for the year and 51% margin. With the higher EBITDA and some other higher income, We saw an increase in our core income, notwithstanding the increase in depreciation and financing expenses. So with respect to our EBITDA, the $88.8 billion is also an all-time high. We show here the development over the last three years from $68 billion to $83 billion to now an $88.8 billion for 2020 at a quarterly average of about $22.2 billion a quarter. With respect to our telco core income, that came in at about $7 billion per quarter, so aggregated to $28.1 billion for the year, higher from 2019 by 4% or 1%. So a bit of explanation in terms of how the telco core income and reported income relate to each other. We do have quite a number of One of non-recurring items that were booked in 2020. So we show here some of the key ones. We had a gain on the plus side and gain on the sale of our smart headquarters. On the minus side, we did have another round of manpower rightsizing with a One-time MRP charge of 2.6 billion and we did recognize accelerated depreciation for the remaining copper facilities we have given our plans to fully migrate copper to fiber as well as we took a view on shortening the life of our TG assets. So today, the PLDT board also declared a final dividend equivalent to 40 pesos per share, which adds up to 78 pesos per share when you count the interim dividend of 38 pesos. So that's a 60% payout based on the core earnings of 28.1 billion or a core EPS of 130 pesos per share. On the balance sheet side, we please report that our net debt to EBITDA ratio was at 2.05 times at the end of the year, quite a healthy gearing level, notwithstanding the higher cash capex requirements. Even when you pro forma the cash dividend payout for the final dividend declaration, the net debt to EBITDA ratio would be roughly 2.14 times. Debt maturities fairly well spread out. In terms of FX exposure, only 6% of our debts remain unhedged, and then 15% are floating rate. Average interest costs, 4.66%. Also please to note that our $600 million U.S. bond issue that we did in June 2020 was named by IFR as the Philippine Capital Deal of the Year. So on the CAPEX front, initially we had guided that the CAPEX may be lower because of the restrictions that we faced during the lockdown period, but we're pleased to note at the end of it all, we were able to come in very close to the 2019 CAPEX accomplishments. So 71.9 billion, largely focused on the technology side of 56.6 billion, but also about 10.5 billion directly related to business requirements particularly on the install side. For the 2021, our guidance is an 88 to 92 billion CAPEX investment for the year with the key targets that we spell out here 5G rollouts of over 3,800 base stations, 4G to introduce 4G to over 4,000 base stations, Additional ports for fiber of 1.7 million, additional 125,000 kilometers of fiber. We also continue to invest behind our data center capacity to serve the growing hyperscalers demand. So some of the key highlights from a network standpoint, you see here that we've been able to roll out and grow our network across various metrics notwithstanding pandemic. 9 million homes passed at the end of the year with over 4 million ports available for home broadband and enterprise broadband. Fiber footprint of 429,000, unmatched by any competition in the country, and we're adding another 125,000 kilometers to this number this year. We continue the rollout for 4G as well as 5G. The 5G now, we are hitting over 1,400 5G-based stations as of the end of Feb, and that's a growing number as we speak today. In terms of coverage, we cover 96% of the population of the Philippines, with our wireless networks and 48% of cities and municipalities for our fiber broadband network devices. We're seeing that increasingly people are shifting to LTE 4G, so 74% of the base are using 4G now, and that is a number that continues to increase. And you'll see that the dependency on 2G and 3G is diminishing. So at this point, let me turn you over to Mr. Pangilinan for the latest news for 2021.