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 www.eldt.com under the Investor Relations section. A timely note that this briefing is being recorded. Podcasts of this event will be available on our website at www.eldt.com. A QR code for presentations is on the screen and in the confirmation notices email field. Joining us today is our Chairman, Mr. Manny Pangilinan, CFO and Chief Risk Officer, Mr. Danny Yu, Attorney Marilyn Aquino, our Corporate Secretary and Chief Legal Counsel. And also here with us today is our new Investor Relations Head, Mr. Guido Branes, as well as other members of the PLD League 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 remained stable at 64.2 billion. Consolidated EBITDA increased by 3% to 80.7 billion, with margins 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 drag 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 doubled the segment growth of 2%, which reflects the drag from legacy SMS and voice. The overall home segment, on the other hand, remains stable year-on-year, 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% year-on-year growth. We continue to focus on managing churn and accelerating fiber installations. Improvement in service delivery continue to register industry-leading fiber churn levels of 1.7% in nine months of 2024 from 1.91% in nine 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 spare capacity. There has been a strong market adoption 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. PLET 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, plus 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 hyper 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 dividends, 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. PLAT's balance sheet remains healthy with net debt to EBITDA of 2.44 times as at the 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 CAPEX, and with the balance of the tower sales proceeds. 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 costs for the period stood at 5% pre-tax, with the average life of debt at 6.7 years. 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. CAPEX intensity or CAPEX to service revenue stood at 34% for the period versus 37% in 2023. Of the remaining 33 billion commitment, Net of Advance 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 disbursed life to date stood at 67 billion at the end of September. Maya takes pride in its unmatched speed to market, delivering multiple high-tech banking products for consumers, SMEs, and micro enterprises. With the lenders cast 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 jumped by 13 points to 71%. the highest in the Philippines as of November 2022. In October, PLDT also secured a $2 billion social loan from HSBC for the expansion of its fiber network to reach the 4th and 6th 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 EBITDA is anticipated to grow by mid-single digits. TelcoCorp for 2024 is expected to land worth 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 EBITDA 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 pldt underscore ir underscore center or pldt.com.ph. Please indicate your name and company name so we can get back to you for any additional information you may If I raise hand from Louie, you may unmute your microphone.

Hi, good afternoon and thanks for hosting the call. Congratulations on the results. I 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 centers take 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 and Q and year and year. Is there any like one off reason for that?

Jeremiah, take this question.

Yes, it's a 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, the 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 only all product, which is our 1399 package, we have an unlimited telephony and unlimited broadband, five mobile SIMs, as well as signal pay TV. 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 predominantly an allocation basis.

Thanks very much. That's pretty clear.

The discussion on data centers are still ongoing. We hope to complete this by May of next year. Remember, this requires PCC approval. Then to your last question, what was your last question again? 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. There's a question on the status of the tower sales. What is the outlook on the completion of the sale? Question. What's sort of our sense of turning up?

Oh well, we're still in the process of trying to sell. Majority of the powers that are still. Not that that have not been purchased, but have been covered by existing contracts.

So that's for the rest of the year. Even well,

I think we will be able to sell more or less 90% 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 it. But we may have to do that until next year. But for this year, we will close around 90% of the towers that we have contracted with the last two common tower providers.

Thank you very much. It's a question on wireless. Can you describe the competitive situation in the wireless space? Mr. Martínez.

Well, hi.

Thank you for having me, guys. On that question, let me start by giving my philosophy that while the situation is one where I would say it's oversubscribed, Philippines being 110 million population, subscription of phones numbering over 130 million makes you unsubscribe, 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 own So 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 questions? I would love to answer any questions.

Mr. Rayston, can you join me? Sure.

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 typhoons. I was wondering whether you saw the same for PLDT. 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 weather is 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 fall flat on our business.

Does that make sense?

Yeah, sure. But I think quarter in quarter, there was a dip in mobile revenue. So I was wondering what you think might have caused 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, 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 few a month, where in a series of days within that month, September that is, we had problems with network outages. So we've looked 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. A question on the enterprise, on the data center. What is the take-up of the new data center in Santa Rosa? Giorgio.

Sure. Good afternoon. Thank you for the question. So we've opened BITRO Santa Rosa, our 11th DC, And with OnTrack, we fitted out for 20 megawatts of capacity before the end of the year and leading up to 36 megawatts by next year. So the DCSOM, we have interest from enterprise customers and hyperscalers. We already have an encore tenant testing in Ditro Santa Rosa. So there's already an active customer.

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

For CapEx for this year, it's around 75 to 78. We're still in the planning stage right now, so we still don't have the number for 2025.

Are they on track to become profitable, and what is the timeline for an IP?

They committed to have a P&L break even by December of this year. So I guess they're going to be profitable the whole year of 2025.

IPO timeline?

There is no definite timeline for the IPO. Any more questions?

There's 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.

A question from home or on phone.

What accounts for the better or record-breaking installs for the board? Never mind.

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 rollout. 2023, we saw some challenges and we actually had a very, very minimal rollout in 2023. In 2024, we have actually picked that up and we have actually been able to roll out just over 400,000 ports, of which we're starting to see the impact from a revenue perspective combined with the rollout that we've actually re-accelerated the second one is 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 all actually flow through as well finally the other major factor is in the second quarter we made some major interventions so we how to 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 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 899 value plan. So it's the first time that we've actually been introducing a sub 1000 vessel plan from ELDT. 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 hamper with some of the adverse typhoons, etc., but we are expecting and anticipating a continued ramp up in the home business going in through to 2025.

Next question is, could you provide more colour on the press release this morning about the investment in Bayad?

We are increasing the investment in Bayad.

So we're investing an additional 57% in Bayer. But that investment will require BFP approval. So we don't expect that to be implemented until after the second half of this year. So that's supposed to help in the development of the current payment rate of Bayer. in Austria, which we basically need for the Cayana business that we're building.

Thank you very much. Next question is from .

I can request Scott to put additional explanation on the commercial intent for the Cayana.

This is Kat. So I think a couple of months ago, we did mention our initial investment required at that point was just 10%. We made that investment alongside that full acquisition of MultiPayment, another of our payment companies that exist within the group. Now, within the past three months, we are very happy with what we saw and we feel that there is greater synergy that we can derive by bringing all of our payment companies or mid-tech companies together. So we understand that that's going to take some time. That really is part of a longer process, but we want to start with Bahayan as our first mover into a bolder stance in the mid-tech space.

Just to... Mention the field. It is interest in Kiana is 45%. Yes.

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

Well, But Dito being a challenger, I think unfortunately he comes in 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% or less. But he's coming in a time when it's over packed. So anything he does will always be destructive. But there is an elegant way 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 not credit to Detour. 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, Eric. Next question, what are your initiatives around AI?

Thank you for the question. So AI continues to be a focus for the company and we see two main use cases or two main buckets of areas where it can really help the PLDT group. First one is it improves our ability to deliver exceptional customer experiences. So we have a couple of say 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 or text-based 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 actually hinged off on our OSS transformation initiatives that could enable us to more efficient in many areas with regards to network operations things like accuracy and in facilitation of how we roll out, identifying faults in the network, proactively doing troubleshooting and so there's a lot of good work that's happening throughout the company so that we can continue to nurture the power of AI.

Next question is also for you Joel. 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.

to do a final round. There are no questions in the queue. There are no further questions. I'll hand over the floor to Mr. Liu to give his concluding remarks.

which Jimenez, our COO for PLTT, to give the concluding remarks.

Good afternoon. On behalf of MBP, 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 in 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 more days 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 Relations at pltd-ir-center at pltd.com. Thank you for your participation.