PLDT Inc.

Good afternoon and thank you for joining us today to discuss the company's financial and opportunity for the full year of 2020. A copy of today's presentation is on our website. For those who have not been able to do so, download the presentation at www.plb.com under the investor relations. Kindly note that this briefing is being broadcast. The broadcast of this event will be on Our codes for the presentation is on the screen and in the confirmation notices emailed to you.

For today's presentation, we have with us our Chairman and CEO, Mr. Manuel Pangilinan, Mr. Danny Yu, our Chief Finance Officer and Chief Risk Officer, Attorney Marilyn Aquino, our Corporate Secretary and Chief Legal Counsel, and Mr. Doy Veya, Founder and CEO of Maya Philippines, as well as other members of the PLDT Group's Management Team.

At this point, let me turn the floor over to Mr. Yu to begin the presentation.

Thank you, Melissa.

Good afternoon, everyone. I'm very pleased to share with you PLDT's financial and operating highlights for the year 2023. Consolidated service revenue for 2023 rose by 1% to $191.4 billion compared to the same period last year. On gross basis, service revenue grew by 3% year-on-year. Operating expenses were lowered by 2% or $1.5 billion to $87.1 billion The combined increase in service revenues and decline in operating expenses resulted in a 4% rise in EBITDA to $104.3 billion, a new all-time record high with EBITDA margin at 52%. Telco core income, excluding the impact of asset sales in Maya, registered a $1 billion increase to $34.3 billion, higher by 3% year-on-year. Next slide. On segment basis, revenue growth continued to be broad-based. Individual revenues accounting for about 43% of the total revenues grew by 2% to 81.8 billion. The home and enterprise segments registered new record highs. Home revenues grew by 1% to 60.4 billion, with fiber-only revenues having added 9% to 53 billion. Enterprise revenues gained by 1% to 47.1 billion. Let me now go through the segments in greater detail. The next slide shows that while the headline revenue growth ranges from 1% to 2%, there are underlying data revenue streams growing more strongly in line, if not stronger than the Philippine GDP growth. In the individual segment, mobile data accounting for 87% of the total revenues are growing 8% versus segment growth of 2%, reflecting the drug from legacy SMS invoice. fiber revenues posted a 9% growth versus 1% segment growth due to the impact of legacy non-fiber revenues. Under the enterprise segment, corporate data and ICT advanced 6%, albeit segment revenues grew only by 1%. Overall, excluding the drug from legacy revenues, total revenues actually registered a 6% year-on-year increase. The individual segment showed sustained quarterly growth in 2023, signaling early signs of recovery for a business that has faced many challenges over the past years. Against an improving backdrop and an early signs of market repair, individual revenues grew by 2% to $81.8 billion. As a result of various initiatives implemented by the business unit, average data usage rose by 19 percent while arpu grew by 17 percent worth noting is that revenues in the fourth quarter of 2023 gained six percent following a six percent rise in prepaid and four percent growth in postpaid mobile data revenues underpinned the growth with a six percent rise to 71.1 billion Active data user rose to 39 million as of end of December 2023, with usage having grown 19% to 11 gigabyte. Mobile data traffic hit 4,900 petabytes in 2023, higher by 11% compared to last year. Initiative to accelerate revenue growth in the individual segment include offer that increase usage and velocity, rationalization of packages the launching of innovations such as prepaid e-sims load a load and online retail channels as well as more efficient and experiential trade operations next please while home broadband revenues rose by only one percent fiber only revenues which now account for 88 percent of the total home revenues improved by nine percent or 4.5 billion versus last year pldt is of the view that there are unserved and underserved markets in the home broadband space these include new areas potential customers at the lower end of the market as well as niche markets at the higher end Unique to PLDT is the ability to leverage on both fiber and fixed wireless technologies to serve a broader market segment. An example of these are our fixed wireless broadband service that we offer in areas where port facilities are not available or to the lower end market on prepaid basis with less than 500 ARPU. Another example of leveraging on our integrated network is our industry-first always-on broadband service, which is able to deliver seamless ultra-high-speed connection, ensuring customers' uninterrupted access for work, study, and entertainment. In 2023, Fibernet ad stood at 234,000. PLDT continues to enjoy strong brand equity and superior network quality, making it a formidable competitor in the market. Data and ICT remain to be the key drivers of our enterprise business, which registered a year-on-year growth of 1% to $47.1 billion. Excluding the impact of pre-terminated or non-renewed contracts, enterprise would have grown by 3%. Revenues in the fourth quarter were up by 6% quarter-on-quarter. Corporate data climbed by 4% due to higher fiber and managed IT services. EPLDT or ICT recorded a 15% rise in revenues, mainly from data center and cloud services. The Santa Rosa data center remains on track with the first 10 megawatts capacity expected to come on stream by July this year. Full capacity is expected to be a year ahead of competition, with EPLDT well positioned to serve the existing robust demand from hyperscalers. In addition, our growth pipeline is fueled by our focus on enabling digital transformation initiatives of corporate SMEs and government, including the creation of smart cities and the first sovereign cloud. Our enterprise business has also achieved preferred success partner status with Cisco, Fortinet, Microsoft, and Google, demonstrating strong solution capabilities and a robust partner ecosystem. The tight management of costs across the board continued, resulting in the 2% or 1.5 billion drop in total operating expenses, including provisions and subsidies. Increases in repairs and maintenance, mainly due to increased electricity arising from expanded network, as well as the higher cost of services arising from SIEM registration, were more than offset by lower compensation, lower selling and promo, as well as lower provisions and subsidies. The combined effect of higher revenues and lower costs resulted in a 4% improvement in EBITDA to $104.3 billion, another record high with EBITDA margin at 52%. Exceeding guidance. Next page, please. Telco core income for the period rose by 3% to 34.3 billion from 2022, reflecting the impact of higher EBITDA and lower depreciation, partly offset by higher financing costs and tax provision. On reported basis, PLDT income expanded to 26.6 billion, mainly from the gain from tower sale and leaseback transactions, forex and derivative gains, but partly offset by MRP expenses in impairment of assets. Note that our share in losses from Maya stood at 2.2 billion or 1 billion lower than last year, in line with our expectation of Maya's break-even by the fourth quarter of this year. Today, Next, please. The Board of Directors declared the payout of a final dividend of 46 per share, which together with the interim dividend of 49 brings total to 95 for 2023. This represents a 60% payout in line with our dividend policy. Record date is set for March 21, while payment date is set for April 5.

Next, please.

PLD's balance sheet remains healthy with a net debt to EBITDA at 2.3 times lower than the 2.44 times at the end of September 2023. We are confident to hit our target leverage of two times with the anticipated increase in EBITDA, reductions in CAPEX, and with the receipt of remaining tower sales proceeds. Gross debt amounted to $256.9 billion, of which 16% are dollar-denominated and 5% unhedged. Interest costs for the period stood at $4.58 pre-tax, while the average life of debt is less than seven years. The total CAPEX for the year amounted to 85.1 billion, consisting of network and IT CAPEX of 69.9 billion and business CAPEX of 7.4 billion. Of the 33 billion of prior year's commitments, 21 billion was included in the 2023 CAPEX. The lower CAPEX for 2023 from 97 billion in 2022 is in line with our objective of bringing down CAPEX and aiming for positive free cash flow. Moreover, CAPEX intensity for years stood at 42%, lower than 50% in 2022. In addition, the CAPEX of 85.1 billion is 19.2 billion lower than the EBITDA of 104.3 billion. for 2024 our capex guidance is 75 to 78 consistent with our aim to continue to reduce capex next please this page shows the usual network highlights on the fixed network we passed 17.5 million homes covering eighteen thousand six hundred barangays representing 44% of the total barangays in the Philippines. We are present in 70% of towns and 91% of municipalities nationwide. Total fiber ports grew to 6.3 million as we re-accelerated port rollout. We continue to carefully rationalize the rollout to ensure optimal utilization. PLDT's total fiber footprint remains unparalleled with a total of 1.1 million kilometers. On the wireless front, population coverage for our wireless networks stands at 97%, about 82% of the total handsets on the network are LTE. The number of unique 5G devices and 5G data traffic continues to show growth from the end of 2022 based on open signals latest report smart leads with the philippines best 5g coverage and availability before we discuss the guidance let me turn you over to mr doivea to discuss maya good afternoon

happy to update you on on maya exciting times for maya as it leads the way towards revolutionizing financial services in the country we are making significant breakthroughs towards growth as we leverage our strong ecosystem to build the number one digital bank in less than two years we achieve this On the back of very creative and innovative banking services delivered to our payment customer base consisting of consumers and enterprises. Some big numbers. As of end 2023, we had 3 million depositors at 2.1 X year on year growth from 2022. That number is now 3.4 million. We ended the year with a 25 billion peso deposit balance, 70% higher than our balance by end of 2022, and that number is now 27 billion. Importantly, we disbursed a total of 22 billion pesos in loans, a massive 6.9 times year-on-year leap from 2022, and that's now 25 billion. On the enterprise front, We solidified our leadership as the payments backbone of the Philippines by empowering more and more businesses to accept various payment methods seamlessly. Our omni-channel offering has established Maya as the number one processor of payment transactions for credit and debit cards where we hold 51-52% market share and on QRPH transactions where we have a 44% market share based on Visa and Banknet data. Maya is now successfully bringing banking to the micro, small, and medium enterprises in the Philippines. We provide higher business deposit rates, deposit interest rates than traditional banks, and we offer up to 2 million peso unsecured credits to businesses that typically do not have access to credit. So for 2023, we posted a 4.4 times growth year-on-year on enterprise loan disbursements. We are committed to supporting the financial needs of businesses of all sizes through all-in-one digital banking. Now on the consumer side. On the consumer side, our all-in-one digital banking platform is driving multi-product adaption. with Maya as consistently the number one-ranked consumer app in Google Play and App Store among local finance apps. We have pioneered what is now known as high-engagement banking by integrating consumer payments with a bank account. We offer up to 14% per annum interest rates on savings accounts for consumers. As a result, banked customers transact two to three times more than payments only customers. Borrowers with savings accounts are more engaged and have lower default rates. Our consumer ARPU posted a remarkable 80% year on year growth in 2023. Our high engagement banking strategy resulted in the doubling of our depositor base to 3 million as mentioned earlier, and boosted our deposit balances to 25 billion as of December 2023. We also recently introduced a suite of savings and wealth-building products such as Maya Time Deposit Plus, Maya Funds, and Maya Stocks, which are all doing very well. Meanwhile, the enhanced Maya Card, the fastest-growing prepaid card in the market, enables users to use their Maya account globally. We are now the number one prepaid card in international usage among Philippine prepaid cards. All our customer transaction data are channeled to our AI powered credit scoring platform. As a consequence, we're now championing consumer lending in the Philippines by using alternative data. We have built proprietary AI models driven by machine learning, enabling a surge in loan disbursements in 2023. Last Tuesday evening, we launched a consumer campaign featuring Liza Soberano and Dali De Leon. I hope you saw it and you liked it. It's now trending virally in social media. So that's all for me. Thank you.

Good afternoon and thank you for joining us this afternoon. Let me start off with our guidance for the consolidated service revenue for 2024. We're guiding service revenue at mid-single-digit growth over 2023 revenues. We foresee continued increases in data broadband revenues attenuated somewhat by the legacy services, legacy products. that are negative, which continue to show negatives as they are replaced by the new data and broadband services. EBITDA has been guided at a similar manner, mid-single digit, supported by the top-line growth. But we need to continue to manage our costs, as we did a good job last year in 2023, where the cash OPEX 9 SHOWED VERY LITTLE INCREASE AND INTENTIONS TO PUSH EBITDA MARGIN ABOVE THE 52% MARGIN THAT YOU SAW IN 2023. TELCO CORE IS BEING GUIDED AT NORTH OF 35 BILLION FOR THIS YEAR AND DIVIDENDS AT REGULAR DIVIDEND OF 50% WITH A LOOK BACK FOR MOST LIKELY 10% ADDITIONAL AND THEREFORE 60%. of core for 2024. CapEx is being guided at between 75 to 80 billion, most likely below sub-80 billion for the full year, including carryover CapEx from 2022. But the bulk of the CapEx for this year will be the fresh CapEx, which I think Danny has described the usage of. Then also, Danny referred to greater free cash flow effort this year because we want to reduce our net debt to EBITDA closer to two times. It was reduced somewhat in 2023 to 2.3. And if you're able to sell an interest in our data center, then the intention is to devote most of the proceeds to reduce that, so that that should bring us some ways closer to two times net debt to EBITDA. I think that's basically it, Melissa.

So we're now ready to take your questions. For those who are online, you may type your questions in the Q&A box in the upper right side of the screen. You may also click the raise hand button and wait for me to call your name before you unmute your microphone. You can also send your questions via email to PLDT underscore IR underscore center at PLDT.com.ph. Please indicate your name and company name so we can get back to you for any additional information you may need. Allow me now to take questions from the floor first before we go to those who joined us online. There are microphones in the aisles. There were questions sent online by Gab and Pranav. Do you want to ask the questions yourselves or do you want me to read out the questions? Pranav.

Hi.

First for the fiber segment. Additions in the segments load, is this due to saturation in the markets you're present in and which segments you see it coming from moving forward? Yeah.

Thank you. I believe the question was on fiber growth and what we're seeing on fiber growth. I think when you have a look, I'll start off, I'll zoom out a little bit, because if you have a look at the presentation that Danny just took us through, it showed the home segment growing by 1%, which actually looks quite muted. Just want to remind everyone, what actually sits in the home segment are actually three big parts of our business. Number one is our fiber business, which actually grew 9% year on year. So our actual fiber business, which is our biggest area, it's a future business for us, is actually growing at a rate of 9% year-on-year. The second bit that's actually inside the home business is fixed wireless. Now, many of you would know in the market, we have actually seen a correction and a change in that. In fact, we're seeing fixed wireless subscriber numbers quite substantially decline year-on-year. We saw a similar amount. Fortunately for us, it's not as much as, say, for example, the overall market. So we're actually seeing an improvement in terms of market share there. In fact, when you have a look at our quarter three, our quarter four numbers, we are starting to see some growth as well come out of fixed wireless. So we're starting to use fixed wireless in areas where we don't have a footprint. We're also using fixed wireless to attack a different segment of the market. The third element that actually sits in our home business is actually our legacy business. Our legacy is whether it's our copper through ADSL, VVDSL, as well as our voice business and calling business. That is actually a really, in the past, has actually been quite a large business for us, but has been undergoing a lot of decline. And that's what's actually dragging down the overall home performance, if you look at our overall number. If you look at that, that itself was actually negative 3.1 billion, or a decline of 35% year-on-year. So when you exclude out some of the legacy businesses, the declining businesses, you actually will see our fibre business continuing to grow at a rate of 9% year-on-year. Now, having said that, would we like to see more growth in the fiber business as we've seen in the past? Absolutely. That growth is going to come from two areas. Number one, as we actually, as Danny had mentioned, in 2024, we plan on re-accelerating our deployment of our fiber network to more areas. You would already note in 2023, we actually had quite a humble 170,000 ports that we deployed today. far different from what we've done in the past. So 2024, we'll actually see a re-acceleration of the deployment as we cover more areas and make fiber available to more homes in the Philippines. The second one is actually making sure that we sweat our existing infrastructure where we are today. We are already starting to see a focus in terms of customer experience. That's making sure that the lines that we provide actually get the best network experience and making sure we service our customers as best as we can. As we focus in on some of those existing areas, it's also then having other products that will allow us to target the different segments of that market. Those segments, whether they're the high-end, which we've recently launched gigabit fiber to be able to service the fastest broadband service available in the Philippines, going up to 10 gigabits, or down to the lower segments where we also have prepaid fiber available to certain areas where we have excess capacity. So we do see continued growth available in the home market, and we will actually be using sort of that two-prong approach, two different ways of actually attacking it. One is rolling out, and the second one is sweating our existing footprint.

Just to follow up on that, you mentioned you have a prepaid fibrin select area.

Yes.

How's that trending so far?

So we've actually been in customer trials for prepaid. As we mentioned in the very, I guess when it was first launched and it was something that was heavily discussed, we've been very cautious about how we've actually deployed that. We want to make sure that it is revenue accretive and value accretive for all of us. We sit very differently. PLDT is in a different position than some of our competitors. We currently enjoy 55% to 65% to 60% utilization. So if you look at billable lines, we have 55% port utilization. If you look at it from overall, obviously you have some customers that you are in different levels of suspension and connection. You're actually sitting at about 62% utilization. So we have a lot more of our customers, a lot more of our ports being used. We want to make sure that we use prepaid fiber to target areas where we have excess capacity, as opposed to other players in the market which actually have significantly lower utilization levels.

Okay, thank you very much.

Thank you.

Sorry, I just have one more question. For the mobile segment, smart's been faring better in terms of getting new subscribers and actually staying ahead of your competitor. So do you see this as a long-term indicator of revenues in the segment? Do you see that picking up? And how are you seeing competition in the mobile space broadly?

Hello. Probably just to respond quickly to the question. Number one, we came from a SIM registration bill that was enacted and put in force last year, around the third quarter. So obviously, we saw a decline in our overall subscriber base. We have seen a healthier retention of customers, ending at over 58 million last year, combined for both prepaid and postpaid. Obviously, there's a lot of work now to do to rebuild the base, and we are pushing very heavily both on the postpaid and prepaid businesses. And we are also pushing a lot of efforts around the eSIM, which we launched on prepaid initially for digital delivery, and now also available in postpaid as well. So we understand that there's going to be correction. Customers who were on rotation previously are probably not going to be as engaged as before, because they have to go to the normal process of registration. And second, we also have to match this together with the growth in devices, which are sold in open channels year-on-year. Okay.

Thank you very much.

Thanks, Pranav. Gab, did you want to ask your question?

Hi.

Gabriel Madrid from PEP here. First question is on the $13.9 billion in asset write-offs in the fourth quarter. Could you please provide more color on that? Thank you. And follow up on that. Fourth quarter depreciation was slightly lower than the typical run rate. I think it was about 10 billion in the fourth quarter. Is that because of the assets that were written off? And do we expect that normalized run rate moving forward?

Okay, thank you.

Second question is on Maya. I believe it was mentioned in the previous briefing that Maya was in talks with existing shareholders of possibly doing another fundraising round. Is there any update on that?

After our $80 million funding round in December, at this point we are fully funded. So our focus is on growing the business, building more services and launching more services, enlarging the base. So that's where we are at this point.

Thank you. One last question.

Maya did the presentation to the board this morning about the results for the first two months because we are obviously closely tracking their their performance on a monthly basis because their target is to break even, right, towards the fourth quarter this year. So we want to make sure that they're on track to meet those targets. So the first two months showed an improvement, significant improvement in certain financial metrics. Their segmented EBITDA has turned positive for the first two months compared to their loss last year. That is the EBITDA at the operating level. If you take into account the corporate overhead, it's still negative EBITDA, but 50% roughly of what it was of the loss that they showed in the first two months last year. And similarly, on a bottom-line basis, the result is similar. It's 50%, a bit more reduction in their net loss for the first two months compared to last year. On that basis, their cash burn is also 50% thereabouts of their cash burn last year. And you have cash of about 3.5 at the moment, 4.4. And there's 20 U.S. left out of the 80 U.S. that Doi mentioned. So that's more than 1.1, 1.2 billion incoming sometime this month. So we think that that's providing more than enough buffer to accommodate our cash burn up to the third quarter. And our expectation is they should be at least break-even, if not slightly cash flow positive in the fourth quarter this year. And then 2025, we hope they can see the light of day.

Thank you very much. My last question is on CapEx. The continued decline in CapEx is encouraging, although the rate of decline is much slower versus other telcos. So I believe that's due to the CapEx overrun of 2022. So I just wanted to ask how much of that overrun amount is left to be paid out this year and maybe next year?

Okay, for this year, you can focus your focus projected capex of 75 to 78. Around 75% is capex, and the balance is for five years.

So the rest of the capex will be less than 20, so five years. So the balance will be fully paid out by the end of this year from the overrun?

Probably two more.

Two more years.

But only at declining days.

Okay, thank you very much.

Thanks, Gab. There's a question from those who joined us online. Arthur, your hand is raised. You may unmute your mic.

Hi, thanks for the opportunity. If I can go for three questions, please. Firstly on broadband, on the total fixed broadband momentum, that seems to be quite soft for the last two quarters. You did mention that fourth quarter was weighed down by seasonal issues, but are you seeing this moving back to positive territory into the first quarter of 2024? What are you seeing for the year? Second question was on mobile competition. What are you seeing on the ground? Are you seeing any increased activity or customer traction from the third player following their earlier capital raising? And maybe just one last question on the data center side on the expectations here. Do you see this as immediately accretive upon operation in the end of the first half or do you need to ramp up contracts first? I'm not sure if the capacities are already pre-contracted. Thank you.

I might.

Go ahead, Jeremiah.

I might start off first. On your question, Arthur, I believe it's around broadband seasonality and slowing down in the second half of last year, and what do we see for this year? I think if I paraphrase that roughly. The short answer is we had a limited rollout in 2023, and you can actually see some of those, the momentum actually start to come off. As Danny has mentioned already, we actually do plan in 2024 an acceleration of that rollout. So you'll actually start to see those things come online in the first half, where we'll be looking to monetize them as quickly as we possibly can. So we will actually expect to see that we'll start to improve some of the momentum, get the momentum back into the fiber growth cycle. Fiber side of the business, getting back into, I guess, not maintaining, but actually growing. It's actually growth rate. So if you look at it on a quarterly basis, you're seeing sort of eight, seven, eight percent. 9% growth rate, 7% to 8% in the last two quarters. We actually want to take that even further when you're only isolating out the fiber business, right? So obviously we still have some of the legacy to go that actually weighs down our number. But if you exclude that, we do expect to see actually fiber over the next, well, for this year, over the balance of this year, we actually do want to ramp up our growth in our fiber business.

There's a question on the data center, Jojo.

So on the data center, we have active discussions with potential partners, and that factors in the current capacity that we have of 28 megawatts plus the incoming capacity of 30 megawatts that we have for Vitro Santa Rosa when it opens in July.

So that's pre-contracted? The upcoming 30 megawatts, you expect that when it launches, it's already revenue generating?

We obviously have, you know, we still have to fully sell out the 30 megawatts, but we have a very exciting pipeline of opportunities for our 11th data center.

Well, the hyperscaler data center in Santa Rosa, Arthur, right? Arthur. It will be implemented in several stages. The first stage is only 10 megawatts, and I think there's one major hyperscaler that has signed up, which we cannot disclose yet. So we're quite confident that the 10 megawatts first phase will be substantially contracted for before we open. Now, with respect to the existing data centers, we're actually full up. And so there are plans to expand the non-hyperscalar data centers, particularly the one in Makati. Now, it's fair to say, I think we've disclosed that we're in discussion with several buyers or investors in the hyperscalar data centers, which are ongoing at the moment. But despite that, business continues to as usual in terms of talking to potential locators in Santa Rosa for the hyperscaler data center.

Arthur, did we get all your questions?

So I had the second question earlier was on mobile competition. Are you seeing that picking up following the recapitalization? And sorry, I just couldn't hear the answer on the CapEx a while ago because there was a microphone. If I could just get clarity in terms of the CapEx expectation.

So for the mobile question first, Alex.

Okay, let me respond first to the question mobile. So first, let me speak of what we do. So we have continued to deploy differentiated offers. We talk about longer validities, larger bandwidth, better experiences. With respect to competition, expect a lot more action online. And also a lot of the issues regarding sales and after sales are obviously revolving around social and digital media. A lot of concerns, though, on experience. I think it's already been mentioned that we're restarting our network build. And we're intensifying investments and improving capabilities to deliver product lines that are going to be of value and relevant to the customer. Now with respect to competition, expect them to continue to build as well. And we'd like to ensure that we're able to compete. I think the question here in the end is, how do you remain relevant and to continue to provide value?

dy there's a there are several requests for you to repeat your answer on the clarification of the impairment they couldn't hear you this actually pertains to an amortized subscriber acquisition cost of home churn customers or since the customers have already left us there's a need to write down

costs associated with the service this include includes uh cost of cpes installation and others are these not um taken out over the two-year contract is it not amortized normally within the two-year contract period no it's not i see

Historically, we amortize it over a period of seven years, but effective this year, we're going to amortize over six years. Understood. Thank you. That's for installation costs, but for CPE, we amortize it over a period of five years.

Arthur, thank you.

Yes, thank you. Thanks, Arthur. There's another raised hand from Racheline, Rachelle.

Hi, good afternoon and thank you for the call. I just want to get more color again on the data centers. So of the 50 megawatts, am I correct in understanding that only the 10 megawatts will be first online? And then so when will the full 50 be available?

Maybe Georgia sure, so the build for Santa Rosa is in three phases. The first phase that goes up in July is the first 10 megawatts. The remainder of the year will enable the remaining will enable another 10 and then the third. The balance of the remaining 10 will be enabled within the first half of next year.

Thank you very much.

Thank you, Rachel. If I may add to that, I think what we'd like to see as we're talking to foreign investors who are operators also of hyperscalers or simply data centers abroad is to bifurcate the business, the data center business into two. One is the hyperscaler side where they have to make commitments to us to bring in revenues from foreign locators in the Philippines for the hyperscaler data centers, anywhere between 30 to 50 megawatts capacity for each of those data centers. In respect to what I call the domestic data centers, those below 30 megawatts, which will address the domestic market, not only alpha enterprises, but also the MSEs that we can handle by ourselves. And they can take a minority or significant minority interest in the domestic data centers, which we can handle, right, all over the Philippines. So that's the way, that's the direction we're taking in terms of this data center, the business, right? So we don't have the capability to bring in You know by ourselves. I think it will enhance our capability if you bring in somebody who is a major data center player internationally. So that's that's the logic of being someone in on the hyperscale inside of our business.

Rachel, you're OK with that. Yes, thank you. Thank you. There are no other questions online. Will take a second round from the floor if there are any.

Hi, I'm Derek from CLSA. So I have several questions, first on the data center side again. For the planned stakes sale, how much are you planning to sell in terms of the stake? And I might have missed it earlier. Have you already earmarked CapEx for the next data center after the 11th? And my second question would be on Maya. You mentioned a total loan disbursement of $22 billion for Maya. Is this all loans to customers, or does this involve repurchase agreements and such? What's the actual LDR for Maya, and what's your strategy in expanding loans?

Well, as I said, we will bifurcate, or we intend to bifurcate the data center business. So quite likely, the hyperscaler side, because they're big data centers, so they insist that they will have majority. So most likely, either 50% plus one share or 51%, and we keep the 49%, right? On the premise that We told them, you commit to bring a certain level of new revenues and, of course, finance your portion of the equity required to expand not only Santa Rosa to bring it to the full 30 megawatts, but also new data centers either by ourselves with them or in conjunction with real estate developers here in this country. Now, in respect to what they call domestic data centers, we said we have to be majority.

they will be a minority so that that is not clear yet to decide with them whether we have 60 or at least 51 percent so thanks georgia on the capex for this the next data center so uh the design is so we are actively looking for the location for the 12th data center so yeah there's a couple of uh candidates but they have to be within a certain geographical location versus Makati, Clark, and Santa Rosa for it to be within, say, what you call a hyperscaler availability zone range so that you can maximize the cloud infra that is being put there. so after the selection the design will then determine the amount of uh capex that we will need for that dc right so so so it still needs to be planned but we have to essentially we're targeting that we have to build by late starting late next year if not early 2026. yeah in respect of the capex for the entire 30 megawatts the board has approved that project in its entirety but since its face every face has got to

Of course, they've got an approval for the first phase of 10 megawatts, and the next phase would be maybe another 10. So that is subject to final approval by the PLDT board and so forth and so on. Now, let me stress that the distinct advantages of PLDT and its data center is, number one, is, of course, the connectivity, and number two is the assurance of power. A number of these data centers require a certain proportion of power supply being renewables. So. I think it's only asked this group that can provide guarantee of power continued power supply despite and of course a proportion of that power supply being renewables.

I had several questions first on what type of loans this 22 billion consists of. There are mostly personal personal loans on 30 day 10 hours. And some of it, a small part of it, is business loans, which we are just starting to offer. So on the other questions, strategically, we're pushing SME loans in, well, currently as we speak. So that will comprise a bigger part of our loan portfolio for 2020-24. I can let SB describe other projects loans we are kinds of loans we are launching this year but on ldr current ldr is at 12 12 to 15 uh obviously that's uh still low a lot of room to uh to push it up uh towards the end of the year we'll probably push it up beyond 50 percent uh so that's uh that's on the ldr so sb on the loans

Two months back, and it's scaling up nicely. And then on the micro and the small enterprise, that's really the next area where we are focusing in a big way.

We've already started disbursing microloans since November last year, and now we are testing and launching the small enterprises. So these are longer-term loans, which help us, as Doy mentioned, to end the year closer to a 50% loan-to-deposit ratio. Those are the build-ups that we're working on.

Okay, you got it. Thanks for that. I think with your indulgence, we may need additional CapEx for microphones.

dy there's a request for you to repeat your answer because you didn't have your mic on in respect to the capex overrun how many how much of the 33 was already absorbed this year we have already recorded 21 billion out of the 33 billion thank you thank you any more questions from the floor or from online If there are no further questions, we'll now turn the floor over. Oh, there's one more question.

One question only.

Can you provide more color on the digital entity or the digit code that you're the disclosure in terms of the contribution or the expenses that may be involved?

Can I say more about basketball?

So we're actually forming what we call a digital company, or digico. So what we intend to do is harness the assets of the group. We feel that it's a good starting point. Ultimately, it's really all about providing service to the consumer. Of course, in a more digitalized fashion. So a lot of that, of course, it will start from the data that we have. Definitely, this is going to be based on the consumer's opt-in, and we intend to be able to bring together, address needs of the consumer, and address them in a better way. I think one thing that the Philippines doesn't really have today is our own expression of a digital service for ourselves. It's very ironic because we are very young, digital-savvy country. I mean, if you look at Southeast Asia, we're probably one of the most digital, very youthful, very creative. But unfortunately, we don't have our own real super app. Correct? It's still a very fragmented space. Yes, we do have Maya. Yes, we do have GCash, heavy on payments. But what about in terms of servicing? What about in terms of providing peace? providing the ability to conduct, let's say, my day-to-day activities online.

Many things that we can think about.

Is that comprehensive enough? Well, it's a very complicated animal when first presented to us. So we have to slice and dice. So the priorities, which Kat indicated, is data, right? Because when you look at the spectrum of the group companies, you start with the telco, which is the largest subspace, and therefore generates a lot of data. So the question is that we probably have the data, so-called data lake, but have we curated it to the point with the deployment data analytics to be presented to the board, for example, what's the buying pattern, what's the lifestyle of each of the subscribers, be it an individual or a corporate, right? So that replicates itself in Morocco, which is the second largest consumer base of the group. They have 8 million customers. We suggest five people per household, for example, That's more than 40 million people plus institutions, hospitals, schools, et cetera, et cetera, which are invariably part of the Neralco customer base. Then the next is Maynida with 2 million postpaid customers as well. And the last is the Tallways. The hospitals as well, they do generate a lot of data about not only health conditions, but the way they behave. With respect to the hospitals, they probably are the least schooled in IT adoption. The pain points, as you know, if you've been to our hospitals, would be the digitalization, the manualized medical records. When you check in, you have to fill up every time you do that. And, of course, the billing. It takes a while. It's like a hotel. They call every department and see their outstanding bills, which takes a long time. So that has got to be attacked individually, persuading each of the companies to create the proper data lake and curating it to get at least a 60-degree view of their customers. Then it will elevate to the next stage, which is how do you share the data? That's when you run afoul of data privacy and all the wonderful things about regulation. So that's the idea about about the data issues confronting DIGCO. Let me give you one example. Another example, tollways. We have about probably 800,000 vehicles per day crossing our tollways, right? And if you transpose that to Indonesia, where we're the largest tollways, we have 2 million vehicles per day in Indonesia. Now, we know we can count the vehicles, but we don't know who they are. When we get into, right now we are forcing our to remove the barriers. They can only do that if they have a more sophisticated, number one, payment system. So we have to tell them we must have 99% of the users of our roads on RFIDs. a more sensitive detection system so we could take photos of your license plate. But the photos will be useless unless we connect it to the database of LTO, which is government. And we suspect that the database of that government agency would be incomplete. It would be dirty. And what else? So we have to fix that database. So we're anticipating that. But Imagine how useful it would be in reducing congestion on our roads and therefore reducing capex. If we just can run through the normal tall booths, right? Or you have tall booths but nobody there, so you don't queue up. Similar to Hong Kong. You guys have been to Hong Kong. There's no barrierless. uh situation so if we're able to combine the tall ways of san miguel and art always so it's a single payment system no barriers and our ability to apprehend people whose load is either inadequate or no load at all But Filipinos being Filipinos, there will always be the Pasawai who will insist that they want to pay in cash. So we will need at least one toll booth for these guys. So yeah, but we're moving in that direction. And we should be able to tag. These were the IT job of Digico to tag your entry and to tag your exit. And automatically at your exit point, it's an automatic calculation of the fare that's due. And it's an automatic debit against your payment system. That's the landscape that these guys have to achieve with the cooperation of Togres, right? So, that's clear. Now, on the payment, we discussed that earlier. So, we have two. The payment vertical of the group is the payment gateway, which is Bayad Center, which is the biggest biller in the country with about 400 billion of gross transaction value. And it turns out, MultiSys has a It's its own payment gateway. So the marching orders is to merge the two to become the biggest payment gateway and to expand that business to the trillion-something level, right? And then Maya is our biggest wallet, but it turns out BEEP is also a digital wallet. The moment on all of our light rail system, but they're moving into the transportation sector. The PUVs principally, jeepneys, taxis, buses, even they can use the phone, QR code on the phone. Of course, we'd have to install readers on each of those vehicles. So that's the vision. In fact, we have a subsidiary, a subsidiary called Viaje, that are doing two things. One is the migration from fossil fuel to e-vehicles, and number two is the payment system, digital volatility on their e-vehicles. That's also part of the job of Digico.

Very good.

Any other questions? Last chance. So if there are no other further questions, we will now turn the floor over back to Mr. Pangilinan for his closing remarks.

I don't think I have anything more to add. I spoke too much. Anyway, happy Easter. Isn't it? Three weeks or something?

End of April. End of March.

So do your penance.

On that happy note. And that concludes... And that concludes today's briefing. As always, should you have any further questions or clarifications, please feel free to reach out to PLDP Investor Relations. Thank you for your participation and join us for some refreshments outside. Thank you.