PLDT Inc.

Good afternoon and thank you for joining us today to discuss the company's financial and operating results for the first half of 2023. 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 the Investor Relations section of our website at www.pldt.com. Kindly note that this briefing is being recorded. A podcast of this event will be available on our website after the call. QR codes for the presentation, the MDNA, the financial statements, as well as the podcast are on the screen and in the confirmation notices emailed to you. For today's presentation, we have with us our Chairman, Mr. Manny Pangilinan, Mr. Al Panlilio, our President and CEO, Mr. Danny Yu, our Chief Financial Officer and Chief Risk Officer, Attorney Marilyn Aquino, our Corporate Secretary and Chief Legal Counsel, Shailesh Baidwan, President of Maya Philippines and Co-Founder of Maya Bank, 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 presentations.

Thank you, Melissa. Good afternoon, Chairman. Good afternoon. Good afternoon, our analyst friends here today, here in the hotel and online. Thank you for being here. Happy to report the first semester performance of PLDT-SMART. I just want to start by saying that I guess all the efforts that we've been doing as a company very proud to say in this chart that we will reaffirm our top position for brand value and sustainability perception value. That's critical because brand is always critical in the way we run business and trusting, it shows me a big trust in the brand and in the company that we have. So most valuable brand at 2.6 billion, that's up 2% actually from last year as done by brand finance and the highest number one highest sustainability perception value with all the sustainability initiatives that we have been doing all this time so again i think core to our business i'm happy to report that we have been awarded as the basically we are the undisputed fastest integrated network both smart and plet were recognized by ukla This happened about two weeks ago, three weeks ago here. They came over here. They did say that fixed broadband has been a leader for five years in this country. So that's a feat, I think, that has not been done by any entity, for sure in the Philippines, but I think even globally. Then also a feat that we achieved was SMART was rewarded with the best mobile network for three consecutive semesters. And I think that's also a feat according to UCLA. So very proud of that. So as we went through the year and we were able to reinforce even more our core infrastructure, homes passed now is up by 6%. We have 17.2 million homes that we passed, and we continue to obviously expand our fiber infrastructure. footprint up 4% compared to last year. And next page, please. Because of all this, I think it is still a solid performance for the first half. Obviously, we can do better on revenues, only growing at 1%. But I think we have a healthy bottom line. Telco Core at 17.6 billion, 3% up versus last year. And EBITDA, 52.1 billion, which is not only a semester high, but also a quarterly high in terms of EBITDA. And we're able to improve also our margin from 52% to 53% EBITDA margin. So our pillars remain to be focused on strengthening the businesses, the three pillars, but also driving steady growth. Individual, trying to solidify strength in key segments and services. I think what has happened, individuals were able to reverse the negative trend for individual and has been showing growth quarter on quarter, seven quarter higher than the first quarter. So their data revenue as of the first semester is up by 4%. Traffic is up 15%. Home continues to lead in the market despite the challenges, up 3% on fixed revenue, which includes all the legacy revenues. But if you just take a look at Fiber, It's still growing at the double-digit clip at 11%. And for enterprise, elevating companies by enabling transformation, and that's the focus for both enterprise and SMEs. Healthy growth, both on data center co-location and cloud. And I think we will continue to push this as we speak, as this has been the focus the past few months. We also obviously embed ESG in our company's DNA. We have a lot of initiatives across environment, social governance initiatives. For example, in environment, we have an e-waste program where we are disposing of old cell phones with lithium batteries. And I think proper disposal is what we intend to do and to make sure that we're able to do that responsibly. And also with social, a lot of diversity, inclusive, um advocacies that we that we cut across and of course our pld smart foundation continues to be active in across um pillars of education obviously disaster response always has been key not only for psf but for the entire mvp group and special projects in particular for example in this case philippine navy but all the other programs like school in the bag and the like are actually still going on. And just recently, next page please, again PLDT and the MPP group was involved in the response to the victims of Typhoon Egay. We sent relief packs. In fact, today there's a medical mission that's already working or is already in Ilocos Norte, not only Ilocos Norte, but also Bulacan and Pampanga. as these are a lot of victims of the recent rains. So just to say that, before I pass on the mic to Danny, just to say that we are pushing to still remain strong at 95, and we will plot out some growth initiatives in the next few months to ensure that we become resilient and also remain resilient until hopefully we can also, you know, we're planning out for 100 years in five years now.

so danny uh good afternoon i'll be presenting the financial and operating highlights for the first semester of 23. service revenues for the first semester of 2023 rose by one percent to 94.5 billion opex including subsidies and provisions declined by two percent to 42.4 billion EBITDA grew by 3% to $52.1 billion, an all-time semestral high. EBITDA margin improved to 53% from last year's 52%. Telco core income, excluding the impact of asset sales and Voyager, rose to $17.6 billion, up 3% from last year. On segment basis... Home continued to be the main driver of growth with a 3% rise in revenue to 30.1 billion. Fiber-only revenues grew 11% to 25.7 billion. Our enterprise business grew by 2% to 23.2 billion. Our individual business remains stable year-on-year with revenues of 40.2 billion despite the absence of election-related benefits in 2022. Allow me now to go through the segments in greater detail. Home broadband revenues grew by 3%. Fiber revenues, which account for 85%, of the total home revenues rose 11%. The home broadband market remains underpenetrated, with unserved demand more at the lower market segments, thus more sensitive to price and inflation. Home ARPU is respectable at 1,488, Fibernet ads for the first six months of the year stood at 123,000. PLET's competitive advantages remain to be our superior network, strong brand equity, a portfolio of products at different price points using varied fixed and wireless technologies. Next, please. Data and ICT remain key drivers of our enterprise business, which was up by 2% to $23.2 billion from the same period last year. Corporate data rose 7% from higher fiber, managed IT, and IGATE revenues. EPLT ICT recorded 13% improvement in revenues, mainly from data center and cloud services. PLDT Global, on the other hand, grew 31% from IPLCs, data center, cross-connect, and carrier-hubbing. Opportunities for growth in enterprise will come from hyperscale data center business and increased focus on digital transformation by corporates, SMEs, and government. Next page. The capacity utilization of our existing 10 data centers stands at 71% versus practical capacity of 80%. Our 11 data center in Santa Rosa, Laguna is expected to go live in the first semester of next year. Next revenues for our individual business remains stable year on year, with the second quarter registering a 3% rise versus the first quarter. This was supported by a 2% increase in prepaid and a 7% increase in postpaid. Mobile data revenues were higher by 4% at $34.5 billion year-on-year, with active data users rising by 2%. Compared with the full year 2022, data usage per sub and data traffic continued to register improvements of 14% and 15% respectively. After the deadline for SIM registration on July 25 and the five-day extension, 52.5 million SMART and TNT subscribers had registered, representing about 99% of our active subscriber base and representing about 96% of revenues. To make up for the potential revenue shortfall, we will accelerate our efforts to optimize revenues and continue to make available great value promo offers supported by network expansion and superior customer experience. Thus, we expect the positive momentum in the first half to be sustained in the second half of the year. In the first half of 2023, 83% of consolidated service revenues were from data and broadband. By service type, mobile data grew 2% year-on-year, while home broadband and corporate data rose by 5% and 7% respectively. ICT revenues were 13% higher, which included an 11% rise in data service revenues. Consolidated EBITDA for the first semester hit an all-time high of 52.1 billion, up 3% or 1.6 billion compared with the same period last year. This was a result of the 900 million increase in revenues and an 800 million reduction in OPEX. Telco core for the first six months of the year rose 3% to 17.6 billion from last year. Higher EBITDA and lower depreciation fully offset increases in financing costs and income tax provision. On reported basis, PLDT income rose 10% to 18.6 billion, higher by 1.1 billion year-on-year. This was mainly from the gain of tower sales, forex and derivative gains, partly offset by MRP expenses. Last year, the company recorded a $7.8 billion gain from prescription of preferred shares redemption liability MRP expenses of $4.6 billion. Note that our share in Voyager losses stood at $1.2 billion, lower than last year's $1.6 billion. Today, the Board of Directors approved the payout of an interim cash dividend of 49 per share, representing a 60% payout of all of our first half telco core income per share of 81. Record date is August 17, with a payout date set for September 1. PLDT's balance sheet remains strong with net debt to EBITDA of 2.48 times as of June. We expect to reduce with the receipt of tower sales proceeds in the second half of the year. Gross debt amounted to $270.3 billion, of which 15% are dollar denominated and 5% unhedged. Interest costs for the first semester stood at 4.32%, while the average life of debt is 6.7 years. Total CAPEX for the first semester amounted to $40.8 billion, consisting of network and IT CAPEX of $34 billion and business CAPEX of $4.2 billion. Included in the CAPEX spend are investment in capacity to drive revenue growth and support continuing rise in network traffic as well as the construction of our Levin Data Center, among other projects. In line with our objective of bringing down CAPEX and aiming for positive free cash flow, CAPEX intensity for the first six months of 2023 has moderated to 41% from last year's 48%. In addition, the CAPEX of 40.8 billion is 11.3 billion lower than EBITDA for the period of 52.1 billion. The next page shows the usual network highlights. On the fixed network, we passed 17.2 million homes and cover 18,000 barangays, representing 43% of the total barangays in the Philippines. Total fiber ports stood at 6.1 million, excluding VDDSL of around 1 million. Utilization of these ports remain high as we carefully rationalize the rollout of new ports. PLDT's total fiber footprint remains unparalleled with a total of over 1.1 million kilometers. The population coverage of our 3G, 4G, 5G wireless network stands at 97%, about 83% of the total handsets on the network are LTE. The last page shows the number of unique 5G devices and 5G traffic increasing from end of 2022. As part of our network optimization to realize operational capex and spectrum efficiencies, we reduced the number of our 5G base stations from the end of 2022. Nevertheless, 5G speeds remain faster than the competition based on OCLA speed tests.