PLDT Inc.

Thank you for joining us today to discuss the company's financial and operating results for the first half 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.dlt.com under the Investor Relations section. Kindly note that this briefing is being recorded. Podcasts of this event will be available on our website after the call. For today's presentation, we have with us Mr. Alpan Helio, President and CEO of PLDT and Smart Communications, Ms. Annabel Lim Chua, Chief Finance Officer and Chief Risk Officer, Mr. Orlando Bello, Founder and CEO of PayMaya Philippines, as well as other members of the PLDT Management Team. Our Chairman, Mr. Manuel Pangilinan, will join us.

Thank you Melissa and good afternoon to all and thank you for joining us today. Hopefully after this we can do face-to-face already next time we do a briefing. Again good afternoon to all and thank you for being here again. Happy to report our first half 2022 business performance and give you a glimpse of what is expected for the rest of 2022. So for the first half we closed Telco Core net income in the second quarter at 8.8 billion, which is 14% versus the same period last year of 7.7 billion. But if you add up our Telco Core for the first half, it's 17 billion, up 12%, versus last year's 15.2. In terms of revenues, all-time high in terms of quarter, ended the second quarter of 2022 at 47.9 billion. And First half service revenues of 94.3 billion, also an all-time high, which is 5% higher than last year's 89.9 billion. Next page, please. Having grown by 5%, next page, please. Having grown by 5%, in terms of expenses, we're able to manage our expenses by only increasing it by 1%, to 43.8 billion, due really to lower provisions, but again, just to This is something that we have to continue to take a look at as headwinds can actually come up to the business because of the current economic conditions that we're experiencing, not only the telco industry, but in fact, globally, this has affected all the businesses. I'm happy to report also that the first happy bid is at 50.5, which is also a full-time high, 8% higher than last year's 46.6 billion. And if you add up Thank you very much. Today, 79% of our business is really driven by data. And wireless, in terms of revenue terms, highest contributor at 35.7 billion pesos, growth of 2%, or in peso terms, growth of 700 billion from last year. The fastest growing, of course, for us is home, which is now at 24.6 billion, increase of 22%, for 4.4 billion in peso terms compared to last year. Corporate ended at 11.9 billion, or 11% increase, 1.2 billion increase in terms of revenue terms. And ICT has a healthy growth of 14%, or 300 million in peso terms. Again, focus on data revenues, and we will continue to support this in our CAPEX investments. And just talking about CAPEX, We are proud to say that we're still the largest integrated telco and we continue to expand our network. We have added 1.92 million ports compared to a year ago. We have at present 6.72 million ports available for service, which is compared to last year's only 4.8. We continue to roll out on our 5G base stations. We added 2,500 compared to last year. Ending the year, I mean, year-to-date of 7,289 compared to 4,776 of last year. And also, we continue to expand. Aside from our fiber ports, our fiber optic backbone, we are now at 837,000 kilometers of fiber. And we've already have 16.2 million homes passed in terms of our coverage in network. Next page, please. In the data center space, just to complete the picture on our ecosystem in terms of network, we've also added 612 racks in our data centers. Presently, we have 6,133 racks available for service. 74% of that is already utilized, and we'll continue to expand even more um borax into the system as we are making sure that we're ahead of the demand not only from enterprises but you know especially from hyperscalers a lot of the people that we talk to today and also looking forward to really a completion of the Santa Rosa hyperscaler data center by the year so everything is on track in terms of that project and again the first 1050 racks hopefully available by the fourth quarter next year. Next page. On top of the local backbone that I just talked about, expansion of the local backbone, we did announce last Friday the launch of a Jupiter cable system, which has tripled the international capacity of PLGT. So from 20 terabits now to 60 terabits. And from a total market share of Among all the DELCOs in the country, we have 65% market share in terms of international capacity that is going into the country. And we will continue to invest. We have two other submarine cable systems that we're investing in, ABC and Apricot, that should be in service in the next year or so. And again, expanding our capacity from international point of view. Next page, please. And I'm happy to report also that We're jump-starting our journey towards the greener fleet. What you see in the picture is the first e-vehicle that we will be using on service. We've ordered, actually, initially 10 of this. And today, we have up to 5,400 vehicles. And maybe it's an aspiration, short-term, for us to have at least 10% or 8% of our fleet that is EV. This is in partnership with Isakay of Nalanda. Lastly, next page please. Just wanted to report that we continue to transform the company. Three major driving force of this transformation are number one, really a solid plan in terms of a solid plan behind 2022 and the risking of 2022 especially in There are a lot of uncontrollable factors that are hitting the business, not only the business and not only the industry, but also the country. And we also want to set up ourselves for a stronger 2023 and 2024. We've also, it is an ongoing journey, enhancing the ways of working for PLDT, continue to break down silos, enabling teams to cross posts, and strengthening our execution muscles. Thank you very much. Pass it on to Annabel for the more detailed financials for the first half. Annabel, thank you.

Thank you, thank you, Al. So let me show you our first half results today. As we have said in our announcement earlier today, despite very tough market conditions out there, PLDT is quite pleased that we are able to record A record high in terms of our service revenues at 94.3 billion for the first six months of this year, up 5% versus a year ago. HOPE continues to lead the charge with a 28.1 billion revenue achievement in the first half, growing 24% year-on-year. And within the home business, the Fiber revenues now account for 23.2 billion Thank you very much. Thank you. does face certain challenges and is down 6% year-on-year, but I'll show you in more detail later how it is also tracking better. The international and carrier, which understandably continues to be on a decline because of the lack of roaming and other international termination voice business, that's down 17% year-on-year. Moving on to the next chart, I show here the breakdown between the first quarter and the second quarter revenues. And you see here that in the first quarter, we grew our revenues by 3%. In the second quarter, we doubled that to a 6% increase. The peso amount, that was a 1.5 billion increment in the first quarter, and it's almost doubled at 2.9 billion pesos, year-on-year increase for the second quarter. Breaking it down again by the major business segments. increased to $14.5 billion in the second quarter compared to $13.6 billion in the first quarter, so that's almost a billion higher in QQ, and it's up $2.7 billion in each of the quarters relative to last year. Enterprise has increased the growth momentum from 7% in the first quarter to 11% in the second quarter. And in the case of the individual mobile business, you'll see here that the second quarter results are better, by about half a billion over the first quarter, 20.4 to 20.9. And in terms of its comparison versus prior year, the decline is less at 4% compared to 8% that was happening in the first quarter. So moving on to the next chart, we just show here the same numbers over a longer trajectory of 10 quarters, and you see the 47.9 billion record high After five quarters of sequential improvements. Next chart. This next chart breaks the same numbers into data versus non-data revenues. And as indicated earlier, 79% of our revenues in the first half are from data. And in fact, it's already 80% in the second quarter, coming from about 70% at the start of 2022. and data having grown at 10% higher year-on-year compared to the overall growth of 5%. In terms of our subscriber base, we serve 77.3 million customers across our fixed, mobile and broadband categories. With the focus on the broadband number, there are over 4 million broadband customers across our fixed and fixed wireless platforms. Being the highest growth segment amongst all of this is 2.8 million customers having added 400,000 during the first six months of the year. In the next chart, I do show a more granular breakdown of how the 400,000 increase in fiber customers happened. We were able to connect over 90,000 in each of the first two quarters in terms of new All told, we added 550,000 new connects in the first half. and another 117,000 of migrations. But there was a bit of a higher churn, particularly in the second quarter as we run through the effect of the typhoon that which hit us in December 2021. We did restore service in some areas until March, April. And then after that, when services were normalized, we did see a higher churn from some of these customers. In terms of our P&L, as indicated earlier, we were able to manage our increase in OPEX to 1% helped by lower provisions EBITDA increased by 8% to 52% EBITDA margin It's also an all-time high for us in terms of our EBITDA. EBIT of 26.1 billion, 27% margin, that's up 15% year-on-year. And TelcoCorp, 17 billion, which is 12%, or 1.8 billion better than the same period last year. Breaking this down further into the next charts. So the EBITDA improvement was on the back of higher revenues and lower provisions, and then offset by higher cash effects. of notice that within the higher cash OPEX is the impact of having to spend about 1.1 billion more because of the requirements to restore service in the ODEP-impacted area. So had that not happened, our EBITDA would actually have been higher by 11% year-on-year to be about 51.5 billion. Telco core income was supported by the higher EBITDA set by higher depreciation and higher financing costs and the back of the increased investments we've made in our fixed assets network. Next chart, please. Yeah, so this shows the EBITDA over, again, a longer period. And as Al mentioned earlier, we've now surpassed the 100 billion mark in terms of our EBITDA for the last four quarters. So if you remember, that was our guidance for this year is that we will be able to across the $100 billion EBITDA this year, and we've already achieved that as of the end of June. Next chart, telco core income, 8.2 in the first quarter, followed by 8.8 in the second quarter. So when you look at the average, we've achieved $8.5 billion. That's the highest quarter average since 2014. And we are tracking well vis-a-vis our $33 billion guidance for 2022. Next chart, please. So today, the board did approve the declaration of interim cash dividends, totally 75 pesos per share. There are two parts to this. The regular 60% payout based on the TelcoCorp EPS in the first half, 79 pesos per share. Translates to a dividend of 47 pesos per share in terms of our regular payout. And then we did also declare a special dividend equivalent to 28 pesos per share that represents part of the proceeds from the tower sale. As you may remember, we had said that when we do the tower sale, 9 billion of the funds will be earmarked for a special dividend. On the back of having closed about two-thirds of the tower sale, We've declared a dividend equivalent of 6 billion pesos together with the interim payout. And then the balance of 3 billion will be paid at final closing together with the final regular dividend for the year. Next chart, please. So in terms of our other items that affect our P&L, We did pick up our share in the Voyager losses, equivalent to about 1.6 billion, offset by some gains and dilution of 0.5 billion. And then the other items, one-offs that we have in the first half included One, the gain from the sale and leaseback of our towers, 16.5 billion. The income from the prescription of the preferred shares redemption liability of 7.8, which we already reported in the first quarter. And then against that, we have accelerated depreciation of 16.5 billion, MRP cost of about 4.8 for the manpower early retirement program we have, and then some forex losses as a result of the depreciation of the peso to 54.97 by the end of June. So all told, our reported income is at 16.7 billion. It's a good 30% up versus the 12.9 billion in the prior year. Next chart, please. So just to recap on the tower sale and leaseback transaction, I think most of you are aware that we did sign an agreement to sell 5,907 towers for 77 billion. We managed already two closings, the first closing on the 1st of June and then the second closing just Monday, 1st of August. 39.2 billion for the first closing for 3,012 towers received and then 13.2 billion for the second batch of 1,013 towers. So we would hope to close out the remaining towers of a little less than 2,000 remaining over the next few months and finish that before the end of the year. So in terms of the proceeds that we have received, $7.1 billion is used to prepay debts, and then used to prepay another $9 billion of debts. And then a substantial portion is going towards the funding of our cash capex and other requirements, so that effectively represents an avoidance of additional borrowings for this year. and equivalent about 14.5 billion already, but will lead up to about 57.2 billion. And then special dividends, as I indicated earlier, earmarked 9 billion, of which 6 billion is already declared today. In terms of the gains we had on the tower sale, the next chart will show you that we effectively have sold the assets at a significant premium over the book values. and therefore a nominal gain of 26.6 billion, of which a substantial portion equivalent to 9.6 billion is being deferred as part of the leaseback arrangements under IFRS 16. So the net gain on sale and leaseback is about 16.5 billion pre-tax and then 12.6 billion net of tax. Then next chart. One of the things we did also as of the half year was to take stock of some of the assets we have in our books, and we've identified three sets of assets for early accelerated depreciation. So these ones are, one, 3G assets that we have, which we have already shortened the life to 2024, but given that the remaining usage of 3G is down to We also, as you know, have been migrating our DSL copper customers to fiber and that's practically finished. So now we are able to embark on the next round of upgrades from the VVDSL network to fiber. Again, about 5.9 billion of accelerated depreciation as a result of this decision to migrate earlier the BPDSL customers. There will be some additional add-on depreciation in the second half of this year, about a billion, and another 1.2 billion next year to finish the full migration of the BPDSL asset base. And then in terms of the third item, that's really relating our plans to move out of our Makati headquarters. So the assets and network equipment that were impacted by this decision, we've taken at 1.8 billion accelerated depreciation. So all of this as part of the reported income with respect to the one-offs that we had in the first half of the year. Moving on, yeah, from a balance sheet standpoint, Please note that with the proceeds that we have received from First OSE, we were able to bring down our net debt to about $3.9 billion U.S. and a net debt to EBITDA ratio of 2.16 times. Our maturities are pretty well spread out. In fact, when you look at the chart with respect to the 2022 and the 2023 debt mortizations, most of that will be covered. Thank you very much. So CAPEX, we spent about 46 billion in terms of our CAPEX in the first half of the year. 36 billion of that went towards our technology spend and our assets to support values of our business requirements, which I'll explain later. And then 6.3 billion are business CAPEX relating to the last mile install costs and CPEs with respect to the new connects in our home broadband. So CAPEX, as you know, is going towards supporting all our businesses for the growth of home broadband with the addition of more ports, 1.7 million new fiber ports to be built out this year, of which we've already built 950,000 as of the end of June, to support also the growth in mobile data traffic, which is increasing as well, and then the data center requirements. So we have the expansion of our Vitro-Mahati infrastructure Thank you very much. For the power sale, I think two-pronged effect. One is there are some accelerated capex spent to finish all the in-flight projects we have with respect to upgrading the power and other support facilities, the towers we sold. So we Thank you very much. We will be able to take advantage of the Build2Suit commitments with the new tower companies that we have. Both Edgepoint and 2.0 have undertook to build new towers as well as we also free to transact with all the other tower companies in the market with respect to new tower requirements. So next please. So some highlights in terms of our network. As I indicated earlier, we're expanding our ports to 6.7 million after having added 950,000. We now passed 16 million homes with our broadband network. Fiber footprint continues to increase and we're also growing our wireless network as well to support 97% coverage of the country 3G, 4G, and 5G. And then at the bottom you see here the distribution all the devices in use so predominantly really an LTE market at this point with 3G declining and 2G actually higher than 3G but also on the downtrend and then 5G emerging at three percent. So then lastly next chart will just show the growth in terms of the 5G device adoption, data traffic growth and of course Proud to note that we are networked for 5G ahead in terms of relative to competition. So at this point, I'll turn you over to Doy for a discussion on the Maya business.