PLDT Inc.

Good afternoon and thank you for joining us today to discuss the company's financial and operating results for the nine months of 2024. 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 .eldp.com under the investor relations section. I would kindly note that this briefing is being recorded. A podcast of this event will be available on our website. You may have to record. A QR code for presentations is on the screen and in the confirmation notice, email the user. Joining us today is our chairman, Mr. Mani Pangilinan, CFO and Chief Risk Officer, Ms. Dani Yu, 30 Marilyn Hukino, our Corporate Secretary and Chief Legal Counselor, and also here with us today is our new investor relations head, Mr. I.D. Agranis, 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.

Good afternoon, everyone. Let me share with you highlights of PLDT's financial and operating results

for the first nine months of the year. Our net service revenues for the first

nine months hit a new high of $144.9 billion, higher by 2% from last year. On gross basis, service revenue grew by 4% compared to the same period last year. Operating expenses remain stable at $64.2 billion. Consolidated EBITDA increased by 3% to $80.7 billion with margin steady at 52%. Telco core income, excluding the impact of asset sales in Maya, rose by 2% to $26.6 billion. On segment basis, our individual business recorded a $1.5 billion or 2% rise in revenues to $62.1 billion. Our enterprise segment registered revenues of $45.2 billion, 4% or $1.3 billion higher than last year. While our home revenues were stable year on year at $45.2 billion, Fiber only revenues increased by 6% or $2.4 billion to $41.7 billion. We continue to highlight that there are underlying revenue streams registering stronger growth than the headline numbers. This reflects the drug from legacy revenues. Overall, excluding the impact of legacy revenues, net service revenues rose by 5% with the growing segment revenues accounting for 88% of the total. For the individual business, mobile data, which represents 89% of total segment revenues, grew 5% year on year. More than global, the segment grew by 2%, which reflects the drug from legacy SMEs in voice. The overall home segment, on the other hand, remained stable year on year, but Fiber only revenues, which now account for 92% of the segment, actually grew by 6%. Corporate data and ICT accounting for 72% of the total enterprise revenues rose by 6% compared to the overall segment increase of 4%. Let me share more details

of the respective business segments. Service revenues for the individual

business rose by 2% in the first nine months of 2024, with postpaid and prepaid revenues higher by 3% and 2% respectively. Mobile data remained to be the growth driver, accounting for 89% of the segment revenues. Blended ARPU rose by 6%, mainly from a 7% rise in average usage and a 10% growth in data traffic. Notable for the segment is the continuing increase in active mobile data users to 41.2 million from 40.5 million as of end of June. We are currently revitalizing the mobile data playbook to reaccelerate the segment's performance. Part of this includes subscriber acquisition through continued site rollout, capacity expansion, and geo-targeted campaigns, upselling to higher value offers, and further stimulating usage through enhanced service offers and improved customer service. Fiber revenues, which account for 92% of our home business, continues to rise steadily, having registered a 6% -on-year growth. We continue to focus on managing churn and accelerating fiber installations. Improvement in service delivery continued to register industry-leading fiber churn levels of .7% in 9 months of 2024 from .91% in 9 months of 2023. Fiber installation capacity continues to ramp up. With 3Q 2024, fiber installed of 228,000, the highest since first quarter of 2023. Home fiber ARPU remain at around the 15,000 level with lower price plan offered selectively in areas where we have despair capacity. There has been a strong market production of new broadband products, which include a fiber-only all bundle, lower price postpaid fiber plan, and a home Wi-Fi 5G plan. Other network initiatives include leveraging on our fiber and mobile networks to grow the segment, including expanding in green and brownfield areas, as well as building and multi-dwelling unit fiberization. PLT continues to enjoy strong brand equity and superior network quality, making it a formidable competitor

in the market. Growth in the enterprise

is driven by continued focus on pushing enterprise solutions. The enterprise segment registered a 4% growth, with corporate data and ICT being the growth drivers, having grown 6% during the period. Included among the revenue streams that recorded improvements were core connectivity, higher ICT revenues from managed IT services, cybersecurity solutions, data center, and cloud services. Last, A2P messaging services. Locators in our Santa Rosa data center energized in July have started to come on board. Approximately 20 megawatts of a 36 megawatts IT load capacity are expected to be available by end of 2024. The Vitro Santa Rosa data center is well positioned to capture growth from a higher scale and AI data center demand ahead of competition. Amidst pressure from higher costs to operate, total OPEX for the period was marginally higher by 300 million, as we continue to identify and extract operating cost efficiencies. EBITDA at the end of September 2024 rose by 3% to 80.7 billion on the back of higher revenues. EBITDA margin was steady at 52%. Telco core income for the first nine months of 2024 grew by 2% to 26.6 billion, reflecting the impact of higher EBITDA partly offset by higher depreciation and financing costs. On reported basis, PLDT income rose 1% to 28.1 billion. Our share in losses from Maya continues to decline with Maya on track to achieve bottom line breakeven towards the end of 2024. PLDT's balance sheet remains healthy with net debt to EBITDA of 2.44 times as at end of September. We remain focused on bringing down leverage to the 2.0 times level which we expect to attain with the anticipated increase in EBITDA reduction in OPEX and with the balance of the tower sales OPEX. Discussions for the potential monetization of our data center business are still ongoing. Gross debt stood at 272.6 billion of which 14% are dollar denominated and 5% unhedged. The average interest cost for the period stood at 5% pre-tax in the average life of debt at 6.7 years. Total CAPEX amounted to 52.3 billion at the end of September consisting of network and IT CAPEX of 46.7 billion and business CAPEX of 5.7 billion. OPEX intensity or OPEX-2 service revenue stood at 34% for the period versus 37% in 2023. Of the remaining 33 billion commitment net of pandas is for major vendors. The remaining commitment has been reduced to 4.2 billion. For 2024, our CAPEX guidance is 75 to 78 billion consistent with our aim to continue to reduce CAPEX. The increase in the number of unique 5G devices and 5G data traffic continues into 2024 which we expect to be sustained as the price of 5G devices trends downward. 5G adoption is one of the

emerging growth streams of our individual business. Moving on to Maya,

our fintech investment. Maya Bank continues to be the Philippines' number one digital bank based on deposit balances which grew by 52% to 36 billion at the end of September. The bank continues to register robust growth in bank customers and borrowers. Loans this verse life to date stood at 67 billion at the end of September. Maya takes quite a lead on much speed to market, delivering multiple high tech banking products for consumers, SMEs and micro enterprises. With the Landers' cost everywhere credit card, a collaboration between Maya and Landers, Maya delivered the first digital bank credit card in the market. As mentioned earlier, Maya is on track to turn bottom line positive towards the end of 2024. We're also pleased to report that PLDT's score in the S&P Global Corporate Sustainability Assessment Jump by 13 points to 71%, the highest in the Philippines as of November. In October, PLDT also secured a 2 billion social loan from HSBC for the expansion of its fiber network to reach the fourth and sixth class municipalities. This is in line with its commitment to narrow the digital divide and support the government's initiative to connect the unconnected. Our outlook for 2024 continues to be one of guarded optimism. We expect revenues from our data and broadband businesses to grow by mid-single digits, excluding the impact of legacy revenues. With our continued pursuit of operating efficiencies and cost rationalization, our midline is anticipated to grow by mid-single digits. DelcoCorp for 2024 is expected to land north of 35 billion, in line with our commitment to lower the CAPEX headline number and CAPEX intensity over time. Our CAPEX guidance for 2024 remains at 75 to 78 billion. We remain committed to a 60% dividend payout, to bringing leverage back to our target 2.0 times net debt to meet the level, and achieving positive free cash flow before dividends by 2025. Thank you.

So we're now ready to take your questions. You may type your questions in the Q&A box at the upper right side of the screen. You may also click the raise hand button and wait for your name to be called before you unmute your microphone. You may also send your questions via email to .com.ph. Please indicate your name and company names so we can get back to you with any additional information. If you raise your hand from Louis Gilado, Louis, you may unmute your microphone.

Hi, good afternoon and thanks for hosting the call. Congratulations on the results. We just had three questions. The first one is, notice that fixed line voice continues to be quite healthy in this quarter, just like the prior quarter. If you could remind us what's driving that. Second question is, if we could get an update for the timeline of the data center's stake sale, and whether you've made a decision whether to sell a majority stake or a minority stake. And last one is, financing costs seem to be up double digit Q&Q year on year. Is there any like one off reason for that?

No, Jeremiah, take the first question.

Yes, sir. So good afternoon. So, Louis, is it?

Yes.

I'll start by addressing, I think your first question, which was fixed line voice. And the question was around what's actually driving that continued sort of revenue stream on the voice side. So that's predominantly, there's two parts of voice revenue. One is voice that's coming through from our copper subscribers. And with that has actually remained quite steady. If you look at the total number of voice on copper, that decline that we're seeing quarter on quarter year on year has actually plateaued out now. So it is now into the long tail component. But the second part of voice is actually we do have some voice in our fiber business as well. As you would know, in our Unli All product, which is our 1399 package, we have an unlimited telephony, unlimited broadband, five mobile SIMs, as well as signal ATV. So when you factor all of that in, we actually do have a voice allocation as part of that package. And that's why you'll see actually voice remain as part of the overall portfolio. And sometimes actually you'll see it grow a little bit because it's prominently an allocation basis.

Thanks, Jeremiah. That's pretty clear.

Thank you. Discussion on data centers are still ongoing. We hope to complete this by May of next year. Remember, this requires PCC approval. Then your last question, what was your last question?

Financing costs. Yes, financing costs for the quarter seem to be up double digit.

Generally, the increase in financing costs is mainly due to the increase in the average interest rate by 50 basis points. Plus, of course, towards the third quarter, we also had additional loan of about 15 billion.

Thanks, Danny. Very clear. Thanks, Melissa.

Thanks. Thanks. There's a question on the status of the tower sales. What is the outlook on the completion of

the sale? What's

the tower

sales,

attorney? Well, we're still going the process of trying to sell majority of the towers that are still not that have not been purchased, but have been covered by existing contracts. So that's

for the rest of the year. Well, I think we will be able to sell

more or less 90 percent of the remaining towers that we contracted to the last two common tower providers that we have engaged with. But we continue to sell other sites that we have covered in previous contracts. And so that's the... But we may have to do that until next year. But for this year, we will close around 90 percent of the towers that we have contracted with the last two common tower providers.

Thanks, attorney. There's a question on wireless. Can you describe the competitive situation in the wireless space? Mr. Martinez.

Well, hi.

Thank you for having me, guys. On that point, let me start by giving my philosophy that while the situation is one where I would say is oversubscribed, Philippines being 110 million population subscription of phones, numbering over 130 million, make sure you subscribe. And in your banking terms, probably you call it overbanked, isn't it? So in a situation like that, I think it doesn't make sense that players in this space compete on the basis of subscriber acquisition because that is going to be costly, that is destructive, and it's not healthy. In my view, what players should be doing is should be adding value in their offerings. That way, we all contribute to expanding the market. Then we just leave it to those who work the hardest to get their fair share.

That's my mantra going in. Is there any...

Mr. Riztan and John. Hi,

thank you for the opportunity. Just one quick follow-up, actually on mobiles. So the overall revenue actually dipped sequentially, and I think your competitor ascribed that to the impact of iPhones. I was wondering whether you saw the same for PLBT. More importantly, I think the net subscriber, there were net subscriber reductions also in the third quarter. So any color in that would be very helpful. Thank you.

Well, I wish I can say that whether it's a cause for problems in business, but I'm not one who would like to say that. I think it's a matter of planning. It's planning your network, planning your business. So we don't have to blame the weather if we call it a business.

Does that make sense?

Yeah, sure. But I think quarter and quarter there was a dip in mobile revenue. So I was wondering what you think might have cost that also. And there was I think 500,000 subscribers who churned out on a net basis. Any explanation for that would be helpful. Thank you.

Well, generally, generally, I think the other major player and us suffered the same kind of decline. But in our case, more than that, we did suffer a month where in a series of days within that month, September, that is, we had problems with network outages. So we look into that. We've made some quick fixes. But I think we are still going to make sure that we continue to have a more structural fix moving forward. So far, so good. It hasn't come back. And cross fingers. We'd like to end

the rest of the year on a high note. Thank you.

Thank you, John. Question on enterprise on the data center. What is the take up of the new data center in Santa Rosa? Sure.

Good afternoon. Thank you for the question. So we've opened the Santa Rosa or 11 DC. It's and we've on track. We've hit it out for 20 megawatts of capacity before the end of the year and leading up to 36 megawatts by by next year. So the DCSON, we have we have interest from enterprise customers and hyperscalers. We already have an uncorked tenant testing in the Santa Rosa. So there's already an actual

cost.

There's a question in the outlook for topics for 2025.

Our complex for this year is around seventy five to seventy eight. We're still in the planning stage right now, so we still don't have the number for 2025.

You might want Maya. Are they on track? Become profitable. And what is the timeline for it? They committed

to have a PNL break even by December of this year. So I guess they're going to be profitable the

whole the whole year of 2025.

I feel time.

There

is no definite

timeline for the IPO.

Any more questions? There is a question that was received in the email about the breakdown of our other expenses. We will deal with that offline and we'll send the required information.

Questions from home

or on what accounts for the better record breaking installs for the board?

Thank you for that question. Actually, it's multiple factors that have actually helped drive the improvement in our home business. I think at the beginning of this year, we mentioned this at the very, very get go, which was re accelerating our roll out. Twenty twenty three. We saw some challenges and we actually had a very, very minimal roll out in twenty twenty three. In twenty twenty four, we have actually picked that up and we have actually been able to roll out just over four hundred thousand ports, of which we're starting to see the the impact on our revenue. We've been able to increase the sales capacity. So coupled with more ports to be able to sell in new selling areas, we've been busy working with our sales partners to be able to ramp up the selling capacity. And we're starting to see that actually flow through as well. Finally, the the other major factor is in the second quarter, we made some major interventions. So we had a restructure in terms of our channel, partner commissions and our engagement with our sales partners. And we also launched some new products. So you would have seen an enhanced or only all product proposition where we provided more value, greater speeds and actually started to include mobile as part of the overall bundle. Second, we also introduced the eight nine nine value plan. So it's the first time that we've actually been introducing a sub one thousand vessel plan from the other team. And the third, we introduced prepaid fibre. So I think the combination of all of those things have actually helped drive an improvement in our take up in the third quarter. It's still far from where we want it to be. The marching orders are very, very clear, and that's to continue to ramp up to previous higher levels. And that's what we actually anticipate moving forward. So we're expecting to see an increase in our installations. Obviously, making sure that some of the weather does permit and not happen with some of the adverse typhoons, et cetera. But we are expecting and anticipating a continued ramp up in the home business going in through to twenty twenty five.

Next question is, could you provide more color on the press release this morning about the investment in bio? Any model of.

The very recently investment in

bio

to

sixty seven. So we're investing at the top of seven percent in bio. But that is not that investment with our BST approval. So we don't expect that to be implemented until after the second half. So with that is. That's supposed to help in the development of the current payment rate of bio in Austria, which is which we basically need for the Kiana business that we're building.

Any model next question is how to

make a request to. At least you could put additional explanation on the commercial.

In ten. Okay.

So

this is

Scott. So I think a couple of months ago we did mention our initial investment required at that point was just ten percent. We made that that investment alongside that full acquisition of multiple another of our payment companies that exist with the. Now, within the past month, we are very happy with it. So and we feel that there is greater synergy that we can derive by bringing all of our payment companies or companies together. So we understand that that's going to take some time and that really is part of a longer process. But we want to start with as our first mover into a bolder stance in the space.

Just to mention that field is interesting. Kiana is 45 percent.

Next question is on the talk. What is the impact of people on your operations? Mr. Boyd. What's the impact of the operations on our business?

Well, but need to be a challenger, which unfortunately comes in at the challenge at this time when he's challenging. Two major players when the whole industry is overbacked. It would be a different story if he comes in challenging. Existing major players when, let's say, the penetration rate is maybe 50 percent or less, but he's coming in at a time when it's overbacked. Anything he does will always be destructive. But. There is an elegant way of. Of addressing this because now with technology, you can have new targeting. You can be very selective, and that's exactly what we have been doing. So, but credit to Dito. They have taken their own pound of lead. But we made sure that they did not overstep the bounds. We hope that. We have carried out the message. We've sent the message to them enough that the way to compete is basically to add value to make customers happy and to expand the market. And hopefully in due time, they will actually align with

it. Thank you. Next question. What are your initiatives around AI?

Thank you for the

question. So AI continues to be a focus for the company. We see two main use cases or two main buckets areas where the PLD group. First one is it improves our ability to deliver exceptional customer experiences. So we have a couple of AI bots in the environment that help us be more efficient in collecting juice, for example. And we continue to work with the virus business units to ensure that we nurture up and coming use cases, be it voice, voice or text space or even video. The second area where AI is important is around operational efficiency. There's a couple of areas that we're targeting, but a lot of that is out to the edge of our OSS transformation initiatives that could enable us to be more efficient in many areas with regards to network operations. Things like accuracy and facilitation of how we scroll out, identifying faults in the network, proactively doing troubleshooting. And so there's a lot of good work that's being done throughout the company so that we can continue to nurture the power of AI. Next

question is also for you, Joe. What are the plans for a new data center?

So we've opened the 11th. We are looking already for the location. So yeah, we will build ahead of demand and continue to expand.

Please raise your hand or chat with your tech questions in the chat box if you have any questions.

We'll do a final round. There are no questions in the queue. There are no further questions. I'm handed by the floor, Mr. Liu, to give these concluding remarks.

Our Co-Founder for PLTT to give the concluding remarks.

Good afternoon. On behalf of MVP, I'd just like to thank everybody who joined the call today. I think we have a very challenging 2024, but looking forward to 2025, we expect a more robust performance for both PLTT and smart. And we're seeing that in our second half numbers and our second half growth. And so we look forward to being able to share with you our plans for next year during the next call. But as Mr. Pangilinan said earlier, just a couple of birthdays till Christmas. So Merry Christmas to everybody.

That concludes today's briefing. As always, should you have any further questions or clarifications, please reach out to PLT Investor Nations at PLTT underscore IR underscore center at PLTT dot com dot h. Thank you for your participation.