PLDT Inc.

Good afternoon and thank you for joining us today to discuss the company's financial and operating results for the first quarter of 2022. 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. Kindly note that this briefing is being recorded. A podcast of the event will be available on our website after the call. For today's presentation, we have with us our Chairman Manny Pangilinan, our President and CEO, Mr. Al Panlilio, Ms. Annabelle Limchua, Chief Finance Officer and Chief Risk Officer, Mr. Shailesh Vaidwan, President of Voyager Innovations at Paymaya Philippines, as well as other members of the PLDT Management Team. At this point, let me turn the floor over to Mr. Panlilio to begin the presentation.

Thank you, Melissa. Good afternoon and thank you for joining us today. Let me start by saying that I'm very proud to show you the performance for the first quarter 2022. We are showing a telco core net income of 8.2 billion, which is, I think, if I'm not mistaken, a quarterly high since 2015. So this is 9% higher than the same period last year, or 700 million higher than the 7.5 of last year. In terms of net service revenues, all-time high for net service revenues of 46.4 billion, which is a 3% growth versus the same period last year, or 1.5 billion pesos increase. And these are driven by the following segments, for sure. The one driving the major growth, the major driver for revenue growth is home at 13.6 billion, which is also a quarterly high for home. 25% increase in revenues for 2.7 billion. Wireless is down versus last year at 20.4 amidst the challenges of the lockdowns and the debt issues that flowed through the first quarter this year. But we are seeing a turnaround in the second quarter and the second quarter should be an improvement from the first quarter moving forward as we're seeing new programs coming in and our top-ups are Thank you very much. We are actually down 3% versus last year so we're also managing our expenses well in the first quarter and we have to continue to do so as we try to increase revenues lower expenses and then with the year hopefully achieve a positive free cash flow for EBITDA also an all-time high at 25.5 billion or 10% growth or 2.2 billion in revenue terms. Next page please. So let me align my presentation to our five strategic pillars that we have launched when we started our company transformation early part of this year. So the first pillar is really growing profitable new growth. So I just want to highlight certain revenue growth drivers for the quarter. For sure, on the home side, it's the increase of fiber net, fiber customers for the first quarter. We added 213,000 net ads in the first quarter. Below the third and fourth quarter numbers, but slightly above first quarter numbers as compared to last year. And we will continue to ramp this up. This has been also affected by the ODETT. As our crews have been refocused to restoration early part of the first quarter. Having said that, at the same time during this quarter, we've actually put in new ports. We put in 480,000 new ports to total 6.25 million ports. For mobile, we are seeing good pickup on mobile data usage, now at 8.5 GB per customer average monthly usage. We're across the 41 million data users also on wireless, and we're seeing also 837% 5G average daily usage on devices to 1.3 million customers running on 5G. And for our enterprise, the two growth pillars of our business beyond connectivity, obviously, are the cloud licenses, which increased around 6%, and data center, as we focus on this side of the business. And as we actually launched, we broke ground in the first quarter on 11 data, hyperscaler data center in Santa Rosa, Laguna. This will continue to grow and we will continue to make sure that we're able to address demand. So total data revenues for the quarter is now up to 79% compared to 76% same period last year. Next page please. So the second pillar is customer simplicity. We are continually making strides. Thank you very much. and we also deployed 76 Paybox kiosks for hassle-free payments in the stores as we are trying to eliminate the low-value transactions in the stores and focus on high-value transactions in our physical stores. But we are also moving payments to other platforms like Maya or Paymaya. So we want to establish a clear high-impact KPI as we continue to push for overall The third pillar is really making sure that we are industry-leading in terms of operations and having excellent operations as part of our major thrust in our transformation listed on the screen are the key initiatives we want to focus on and we feel this will really move the needle in terms of changing our operating model as we move forward. Focus on end-to-end installation, repair and maintenance, complex management, challenge strategy, and simplification for operating model, and many, many more. Next page, please. The fourth pillar is really a people-led Aurora transformation that shapes the new culture of PLDT. The best place to work is the ambition for PLDT Smart as we embrace new ways of working. Multiple change management programs launched to drive company transformation to make ourselves more agile. Thank you very much. The last strategic pillar for us is really doing business responsibly. Ensuring sustainable practices across network and operations are established. The Hyperscaler Data Center that we launched In Santa Rosa is built with sustainability in mind. So we have partnered actually with the London Pace Red Engineering to make sure that the beautiful Santa Rosa data center is not only energy efficient, it has also sustainable practices that we will implement in that data center. We continue also our fiber connection in Central Philippines and this improves network resilience and provide alternate routes for data traffic in event of any fiber breaks. And lastly, and again, this is just three of many initiatives in this space where we're tapping renewable energy for our sites where we've actually installed solar panels in Cebu and Iloilo offices and we will propagate this even more nationwide. Next page. So these five pillars are really on top of being delivered by world-class service enabled with next-level technology. We're also happy to report that OpenSignal has acknowledged a smart operator to beat in the field games as we topped 11 awards for speed and experience in Q1 2022. And this will be a continued focus to make sure that we continue to lead in customer experience and mobile space. We also continue to migrate our copper subscribers to fiber and we want to make sure that we're able to offer them the best service that we can offer. So we're ensuring that the migration is done seamlessly. And as I said, we want to continue to dominate the data center space And we've actually, again, launched a groundbreaking video on the Rosa this quarter, and the hope is for us to complete that by the latter part of next year as we continue to address the demand in this space and continue to push our businesses with hyperscalers. Next page. And lastly, I think it's really innovations to benefit all Filipinos during this quarter. I'm sure you've heard the past. We had a separate announcement about a couple of weeks ago. on the pioneering initiative on tower sharing. And what we have done is we've sold 5,900 of our towers, passive equipment for 77 billion. And this is a pioneering initiative that undertakes and supports the DICT's goal of improving tower density, which will lead to not only significant efficiencies in our In our operations and connectivity across the Philippines, what better customer experience at the end of the day. And last Friday, I'm happy to report that we rebranded, we relaunched Paymaya to Maya. It's everything in a bank and really the all-in-one money platform that's a seamless integrated digital banking services platform powered by Maya Bank. that offers savings and credit, the e-wallet obviously of Paymaya, and other features like cryptocurrency, micro-investments, and insurance. And on top of that would be the agent networks that has been built by Paymaya over the past several years. So at this point, I'd like to pass it on to Annabel for a more detailed report on the financials. Thank you.

Thank you, Al. So let me just recap again what Al had showed earlier in terms of our first quarter Overall top line results. So service revenues came in at 46.4 billion. That's a record high and a 3% increase year on year over the first quarter of last year. Home and enterprise led the growth with home at 13.6 billion or 25% higher year on year. In fact, when you look at the fiber only revenues within home, that's about 80% of the total Thank you very much. Thank you. Just to show the way our revenue has been building up over the last nine quarters, you'll see that from a 41.5 billion starting point in the first quarter of 2020, we now have registered 46.4 billion of revenues. And the increase also from fourth quarter to first quarter was 0.2 billion versus what usually happened like last year. for the first quarter dip versus the fourth. We didn't have that this year. So all told, the 3% increase resulted in an all-time high of 46.4 billion for your quarter. Next chart, please. So for home business, just to also show the growth trajectory over the same timeframe. So you'll see that from a 9.2 billion quarter base in the first quarter of 2020, We're now at 13.6 billion, having added subscribers last year of over 1.1 million, and now another 213,000 of FiberNet ads in the first quarter of the year. We continue to build out also our network, adding 480,000 fiber ports during the quarter, and our full-year target is to build an additional 1.7 million fiber ports. We've seen good ARPUs of about 1,300, for Fiber customers. And we believe that the potential for fiber growth continues to be there as the total market in the country has only a penetration of circa 20% for home fiber broadband. So the take-up and demand continues to be quite strong. Next chart, please. For individuals, More headwinds in this particular segment of the business from the impact of competition as well as the pandemic and now rising inflationary pressures. Nonetheless, we do see a strong patronage of mobile data usage. We have 41.6 million data users using an average of about 8.5 gigabytes a month and adding to our mobile data traffic of 30%. And as we push out offers for free TikTok, Giga Arena, we continue to expect data usage to be increasing. Next chart, please. For enterprise, solid performance of 11.6 billion or 7% year-on-year growth, increasing adoption of cloud data center racks, service, and of course, Thank you very much. Thank you very much. Even the lack of travel and roaming, not back to the levels where they were. But having said that, the international business is now a relatively smaller part of our overall business. Next chart. So overall, when you look at it from a cut between data and non-data, so data broadband clearly drives the growth at an 8% increase in the first quarter versus last year. and now contributing 79% to the total revenues for the period. So fast approaching the 80% mark. Next chart. So within the data broadband revenue pie, we do have a strong performance across mobile, home broadband, corporate data and ICT as outlined in this chart. And as you can see here also, the SMS revenues are down to 3% of total and then ILD now account for only 2% of total revenue. So clearly has become a data broadband business for us. Next chart please. In terms of subscribers, we have total 78.1 million customers across mobile, broadband and fixed voice. Strongest growth is in the broadband side. We now have 4.1 million total broadband across fixed and fixed wireless. with fix of 3.1 million, out of which 2.6 million are fiber customers, where we have added 213,000 during the quarter. And then fixed wireless makes up the balance of another 946,000 extra. The broadband sub-based, as I indicated, or even I indicated earlier, we added 213,000 during the first quarter, so that is slightly ahead of same quarter Thank you very much. Thank you. Combined growths, installs, and migrations still has been over 100,000 in terms of the monthly take-up. But we are pushing for higher numbers for this during the balance of the year. Next chart. On a P&L basis, so the growth in service revenues led to an EBITDA increase of 10% year-on-year. So we also have an all-time high EBITDA. Our cash OPEX subsidies and provisions was well managed. In fact, it's down 3% year-on-year at the back of lower need for provisions during the period. EBIT is also up 12%, and then telco core income of 8.2 billion is up 9% versus the 7.5 billion level registered in prior year. Next chart. Just to recap, the higher revenues coupled with lower provisions, lower subsidies, and allowed us to report a 10% increase in EBITDA. And then that increase in EBITDA drove the increase in TelcoCorp income and was able to offset the higher depreciation and financing costs that we have. And as I said, 8.2 is the highest quarter since 2015 for TelcoCorp. Next chart. It's kind of showing a bit the impact of a debt. So the numbers that we show in terms of the 25.5 billion of EBITDA does have 600 extra charge from repairs and other debt-related expenses that should not repeat itself in the subsequent quarters, although we would have another probably 200 million of repairs cost in the month of April from the debt. But with that, though, just kind of normalizing for a debt, Our EBITDA would actually have been higher by 12% or 26.1 billion in the first quarter had that not happened. On the customer front, services have been restored for both fixed and wireless in the affected area. We also show here a summary of the total impact from that super typhoon. The items we booked in the fourth quarter added up with the first quarter did have a negative effect of about 1.8 billion pre-tax and 1.38 billion post-tax. Next chart, please. So just to, again, show the way the EBITDA numbers have developed, seven consecutive quarters of growth leading to the 25.5 billion record all-time high for EBITDA. 53% EBITDA margin compared to 51% last year. Next, the telco core income of 8.2 for the first quarter compared to the 7.5 billion in the first quarter last year. Next, please. Just in terms of the full statutory income, it was 9.1 billion or 3.3 billion higher than 5.8 of prior year. So just to highlight some of the differences that we have between the telco income and the reported number, first off would be the share, our share in the Voyager performance. Voyager continues to be on a cash burn, so we have that. But there are other big one of items here. The first one here is the 7.8 billion Thank you very much. that signed up for this program. So they get a premium for retiring earlier than their retirement age. So there is an extra $4.8 billion challenge that will occur as part of that premium cost. But the reduction eventually in the compound benefits associated with these people would be about $2.4 billion. So then in two years' time, The other item that we want to highlight is the preferred shares redemption liability that we had reversed. If you may recall, PLDT previously had a subscriber investment plan where if you signed up for a fixed line, you do have to subscribe to certain preferred shares as part of your upfront payment. We had stopped that practice some time ago and then in 2011, the PLDT Board approved the redemption of all the outstanding preferred shares. We set up a trust fund in January of 2012 to cover the redemption of the shares and any unclaimed dividends in the amount of 8.2 billion. Ten years hence, we have the liability prescribed. We still have 7.8 billion in the trust fund that reverted back to the company, so there is A one-time benefit to us from the termination or prescription of that liability. So have served out the 10 years period for this. So that's 7.8 billion that we considered as part of our reported numbers, but not part of the telco core income. And we also did pay income tax on this one. Next chart. Just quickly on the balance sheet side. 5 billion U.S. dollars of gross debt, 4.4 billion net of our cash balance, representing a net debt to be the ratio of 2.33. Next, average interest cost of about 4% pre-tax, average life of our debt about seven years. Now, there is a prospect of prepaying debts maturing in 2023 and some even from 2024 using the proceeds from our tower sale transaction. that we would hope to do the first closing in second quarter and then subsequent closing in the second half of the year. So that would allow us to reduce our debts below two times after we are able to monetize our hours. Next chart. CAPEX. Our CAPEX for the first quarter was 15.8 billion. 3.3 billion of that was in direct support of our install requirements for the new fiber customers that we connected. About 11.6 was really put behind the network to allow our network to remain superior over competition. So with the 15.8 billion in quarter one, we do expect to wrap it up in subsequent quarters, and we're looking now at about 85 billion in terms of our CapEx guidance for 2020. Not quite as high as our 89 million last year, but also with the increase in our EBITDA, we should have a net positive differential in our EBITDA and our CAPEX expectations. So I think the tower sale transaction, we did explain this in quite full some detail Thank you very much. and then subsequent ones, the tranches will be done in the third and fourth quarters of the year. Next chart, please. So just highlights in terms of our network, the close pass is about 15.5 million as of the end of March with 6.25 million actual ports activated, inclusive the 480,000 that we added during the first quarter. And as indicated, we are aiming to close to 1.7 million, so we'll probably be adding at least 1.2 million more ports in the course of the next few quarters. And then fiber footprint has increased 8% to 803,000 cable kilometers with a presence of 62% of the country. Then total base station count, 76,600. That includes 7,300 for 5G. And we covered a population coverage of about 66% for 5G now, and 97% if you combine it with the 3G and 4G. Next chart, please. So some highlights for 5G. We are seeing about 1.58 billion devices active at 5G, representing about 3% of our active LATCH devices. Traffic continues to grow as we continue to build the 5G network and our speeds for 5G clearly ahead of the ones observed for competition. So with that, I think we'll hand over first to SV Shailesh, for a few comments about the PayMaya business.