PLDT Q2 2024 Earnings Report

PLDT EPS Results

• Actual EPS: $0.67
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

PLDT Revenue Results

• Actual Revenue: $923.00 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

PLDT Announcement Details

• Quarter: Q2 2024
• Date: 8/13/2024
• Time: N/A
• Conference Call Date: Tuesday, August 13, 2024
• Conference Call Time: 3:30AM ET

Philippine Long Distance Telephone Company (PLDT (NYSE:PHI)) is the largest integrated telecommunications provider in the Philippines, offering a comprehensive suite of fixed‐line, wireless, broadband Internet, and digital solutions to residential, enterprise, and government customers. Founded in 1928, PLDT has played a pivotal role in the development of the country’s communications infrastructure, evolving from a traditional operator of long‐distance telephone lines into a diversified digital services provider.

PLDT operates two main business segments: its fixed‐line and broadband operations under the PLDT brand and its wireless services through subsidiary Smart Communications. The company’s network assets include an extensive fiber‐optic backbone, mobile network with LTE and 5G coverage, as well as data centers and cloud platforms that support enterprise ICT solutions. PLDT also offers cybersecurity services, digital payment platforms, and managed services, positioning itself as a one-stop provider for connectivity and digital transformation.

Headquartered in Makati City, PLDT provides comprehensive communications services across the archipelago. Its senior leadership team is led by Executive Chairman Manuel V. Pangilinan and President and CEO Alfredo S. Panlilio, whose strategic initiatives focus on network modernization, product innovation, and expanding digital ecosystems. Through partnerships with global technology and content providers, PLDT continues to strengthen its service offerings and support the country’s shift towards a digital economy.

PLDT Q2 2024 Earnings Call Transcript

Key Takeaways

• Consolidated service revenues rose 3% to PHP96.9 billion and consolidated EBITDA grew 3% to PHP53.9 billion with a 52% margin, marking a semester high.
• Mobile data continues to drive the individual segment, with data revenue up 8% year-on-year, blended ARPU increasing 14%, and active data users reaching 40.5 million.
• Home segment fiber revenues climbed 7% and fiber installs jumped 20% month-on-month in June, while fiber churn improved from 1.82% to 1.52% in Q2 despite a 1% overall segment decline due to legacy services.
• Enterprise revenues grew 4% led by a 7% rise in corporate data and ICT services, and the new VITRO Santa Rosa data center was energized with 20 MW of IT capacity ahead of hyperscale and AI demand.
• MayaBank solidified its position as the Philippines’ top digital bank with deposits reaching PHP32.8 billion, loans disbursed amounting to PHP46.8 billion, and the bank turning cash-flow positive in Q2.

Presentation

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Good afternoon, and thank you for joining us today to discuss the company's financial and operating results for the H1 of 2024. A copy of today's presentation is posted on our website. For those who've not been able to do so, you may download the presentation from www.pldt.com under the Investor Relations Center. Kindly note that this briefing is being recorded. A podcast of the event will be available on our website after the call.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

The QR code 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. Manny Pangilinan, Mr. Danny Yu, our Chief Financial Officer and Chief Risk Management Officer, Attorney Marilyn Victorio-Aquino, our Corporate Secretary and Chief Legal Counsel, as well as the business unit heads, led by Mr. Jeremiah de la Cruz of Home, Mr. Jojo Gendrano of Enterprise, Ms. Cristine Go for the Individual Business, and our Head of Network, Mr. Butch Jimenez. At this point, let me turn the floor over to Mr. Danny Yu to start the presentation. Thank you.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Good afternoon, everyone. Please allow me to present PLDT's financial and operating highlights for the first semester of 2024. Consolidated service revenues for the H1 reached another milestone at PHP 96.9 billion or 3% higher than last year. On gross basis, service revenues were higher by 4% compared to the same period last year. Operating expenses marginally grew by 1% to PHP 43 billion. Consolidated EBITDA rose by 3% to PHP 53.9 billion, a semestral high, with EBITDA margin at 52%. Telco Core Income, excluding the impact of asset sales in Maya, expanded by 3% to PHP 18 billion. On segment basis, our Individual Business registered a PHP 1.7 billion or 4% growth in revenues to PHP 41.9 billion. The Enterprise segment recorded a 4% revenue upswing to PHP 24 billion.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

While our Home revenues were marginally lower by PHP 177 million or 1% at PHP 30 billion, fiber-only revenues were higher by 7% or PHP 1.8 billion compared to the same period last year. Now, on these slides, while it may appear that the headline service revenues rose by 3%, revenues have actually grown by 7%, excluding the drag from legacy businesses. Thus, growing segment now contribute 87% of our total business from last year's 83%. For the Individual Business, mobile data, accounting for 89% of total segment revenues, grew 8% year-on-year. This doubles the segment growth of 4%, which reflected the drag from the legacy SMS and voice. While the overall home segment showed a marginal decline of 1% year-on-year, fiber-only revenues, which now represent 92% of the segment, rose 7%.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Unlike other telcos, PLDT Voice continues to contribute, albeit at a declining trend. Corporate data and ICT, which were 72% of the total enterprise ex-legacy revenues, were higher by 7% compared to the overall segment revenue increase of 4%. Now, for more details of the respective business segments. Service revenues for the Individual Business grew by 4% in the first semester of the year, mirroring the same improvements in postpaid and prepaid. Mobile data underpinned the growth. Blended ARPU was higher by 14%, mainly due to the 11% rise in average usage and data traffic. The Q2 saw a 4% rise in service revenues compared with the same period last year. However, it saw a dip versus the previous quarter due to limited customer mobility from school holidays and the rise in heat index.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Notable for this segment is the increase in active mobile data users to 40.5 million from 39.4 million at the end of March. Usage per sub grew to 11.6 GB, up 11% year-on-year. Among the initiatives to accelerate the mobile growth momentum are best value offers and geo-targeted campaigns. We are complementing site rollouts and capacity expansions with programs to transform our customer care into a tech-driven center of excellence to enhance customer service. Next, please. 92% of our Home revenues are from fiber business, which registered a 7% year-on-year growth. As we mentioned last quarter, we started to accelerate port rollouts this year. In tandem with this, we focused on improving the pace of our fiber installations. This should translate to higher gross adds moving forward.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

We're happy to report that from May to June, we saw a 20% increase in fiber installs. Home fiber ARPU remained at around 1,500 level, with lower priced plans offered selectively in areas where we have spare capacity. PLDT Home has fiber plans that cater to a wide range of economic segments, enabled by its integrated fixed and wireless network. These include Gigabit Fiber at the higher end, Fiber Unli All bundles for the mainstream, and Prepaid Fiber and fixed wireless for the low end. Our increased focus on quality of service and quality acquisitions are driving significant improvements in churn. From 1.82% in the Q1, fiber churn declined to 1.52% in the Q2. PLDT continues to enjoy strong brand equity and superior network quality, making it a formidable competitor in the market. Next, please.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Our enterprise business operated against a backdrop where the overall industry experienced a slowdown, as customers were more deliberate with their IT and data transformation decisions as they consider the impact of global trends, the fear of cloud, and cyber threats. Nonetheless, the Enterprise segment recorded a 4% revenue rise, with corporate data and ICT being the underlying growth drivers, having grown 7% in the first semester. Among the revenue streams that registered improvements were core connectivity and higher ICT revenues from managed IT services, cybersecurity solutions, and cloud services. Included in our enterprise offers are differentiated SD-WAN, managed networking, IoT platform, and a portfolio of services. We also continue to expand our capabilities in AI and cloud. The Santa Rosa Data Center was energized in July, with 20 megawatts of IT load capacity expected to be available by the end of 2024.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

This makes VITRO Santa Rosa well-positioned to capture growth from hyperscale and AI data center demand ahead of other operators. Despite cost pressures from inflation and high cost to operate, total OpEx was marginally higher by only 1% or PHP 600 million in the first semester, reflecting our continuing pursuit of operational efficiencies and cost rationalization. Consolidated EBITDA for the six months of 2024 grew 3% to PHP 53.9 billion, a semestral high, driven by higher revenues. EBITDA margin stood at 52%. Telco Core Income for the H1 of 2024 rose by 3% to PHP 18 billion, reflecting the impact of higher EBITDA, partly offset by higher depreciation and financing costs. On reported base, PLDT income was stable at PHP 18.4 billion.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Note that our share in losses from Maya continues to decline, as Maya remains on track to achieve bottom-line breakeven in the last quarter of this year. The Board of Directors approved a payout of an interim dividend of PHP 50 per share, representing 60% of our Telco Core Income for the H1 of 2024, consistent with our dividend policy. Record date is set for August 27, while payment is scheduled for September 11. PLDT's balance sheet remains healthy, with net debt to EBITDA of 2.38 times at the end of June. We continue to target taking leverage to the 2.0 times level, which we expect to attain with anticipated increase in EBITDA, reductions in CapEx, and with the balance of tower sales proceeds. We also remain actively engaged in discussions with potential investor for our data center business.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Gross debt stood at PHP 265.4 billion, of which 15% are dollar-denominated and 5% unhedged. The average interest cost for the period stood at 4.9% pre-tax, while the average life of debt is 6.85 years. Total CapEx amounted to PHP 35.1 billion, consisting of network and IT CapEx of PHP 32.7 billion and business CapEx of PHP 2.4 billion. CapEx intensity or CapEx to service revenue stood at 34% for the first semester versus 41% in 2023. Of the PHP 33 million commitment net of advances to major CapEx vendors, the remaining commitment has been reduced to PHP 4.4 billion. For 2024, our CapEx guidance is PHP 75 billion-PHP 78 billion, consistent with our aim to continue to reduce CapEx.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

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 lower. 5G adoption is one of the emerging growth streams of our Individual Business. Now, moving to Maya, our fintech investment. Maya Bank continues to be the country's number one digital bank on the back of the company's exceptional growth in deposit, credit, and merchant acquiring. At the end of June 2024, Maya Bank's strong product appeal was reflected in the remarkable growth in customers to 4 million. Deposit balances rose to PHP 32.8 billion, driven by Maya's innovative products and higher interest rates linked to everyday spending.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Year to date, Maya Bank dispersed a total of PHP 46.8 billion in loans and had 1.2 million borrowers, 133% growth year-on-year. Maya has scaled its lending business, with Maya Bank turning cash flow positive in the Q2 of the year. Maya offers the widest range of loan products among the digital banks, catering to both consumers and MSMEs. Year-on-year, consumer loans grew 2.7 times, while MSME loans rose by 6.7 times. Complementing these are lending solutions to key partners, such as device financing for PLDT and Smart. Maya Bank expects to further expand its loan book through strategic initiatives such as loan channeling with Tala. Finally, Maya continues to enter into partnerships that supports its financial inclusion objectives. Now, for the guidance. Our outlook for 2024 continues to be one of optimism.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

We affirm our previously announced guidance that includes mid-single digit top line growth, underpinned by robust increases in data and broadband revenues. With our continuing pursuit of operating efficiencies and cost rationalization, our EBITDA is anticipated to grow by mid-single digit as we aim to expand EBITDA margin beyond the current level. Telco Core for 2024 is expected to land north of PHP 35 billion. Consistent with our commitment to lower CapEx headline number, our CapEx guidance for 2024 remains at PHP 75 billion-PHP 78 billion, including fresh CapEx for the year and the deliveries of prior years' commitments. We remain committed to a 60% dividend payout, to working to bring leverage back to our target of 2.0x net debt to EBITDA level, and achieving positive free cash flow after dividends. Thank you.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

We're now ready to take your questions. For those 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 may also send your questions via email to pldt_ir_center@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 for those who are here with us at the venue. There's a question from Arthur Pineda. Arthur?

[Arthur Pineda, Analyst at Citigroup]

Hi. Hi, can you hear me?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Just a sec, Arthur. We'll work, work on the tech, on the volume. Could you try that again?

[Arthur Pineda, Analyst at Citigroup]

Hi, can you hear me now? Hello?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Arthur, let's try it again.

[Arthur Pineda, Analyst at Citigroup]

Can you hear me?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

If you can speak a little louder, we can hear you. A little faint, but yeah, we can.

[Arthur Pineda, Analyst at Citigroup]

Okay. Is this better?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Better. Thank you.

[Arthur Pineda, Analyst at Citigroup]

Okay, thank you. Yeah, several questions, please. Firstly, on Maya, can you please clarify the comment on Maya Bank turning cash flow positive? Do you mean that Maya Bank itself has turned profitable in Q2? I'm not familiar with the concept of a bank turning cash flow positive. So I'm just needing to clarify that. Second question I had is with regard to the data center. Previously, there were talks of monetization plans for that asset. Is that still a route that the company is pursuing? And third question I had is with regard to mobile revenues. When we look at this, this seems to have slowed down versus 1Q's momentum. What's dragging down the momentum on ARPUs?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

On the cash flow for Maya.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Maya Bank? Yeah, that's correct. Maya Bank is now cash flow positive, but not Maya as a whole, okay? We're talking only of Maya, of Maya Bank.

[Arthur Pineda, Analyst at Citigroup]

Sorry, because the concept of the bank on cash flow is a bit different when we think of banks, because it is in the business of cash. So, when we think of that, are you referring to Maya being, Maya Bank being profitable? Is that how we should interpret this?

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

Well, you know, banks always have cash, right? If you don't have cash, then you're in trouble. So from a cash standpoint, I think, the loan-to-deposit ratio of Maya Bank is about anywhere between 20%-22%. As of last count, deposits are about PHP 32.8 billion. Loans on books are anywhere between PHP 6-7 billion only. So they have cash. Now, from a profit standpoint, I believe they are profitable on their own, because what Maya Holdings or whatever the parent company is have allocated certain of their overhead expenses down to the bank. So it's not clear to us, to be honest, whether, to what extent they're profitable on their own without allocation of head office overhead.

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

Arguably, some of those expenses, like IT, which they understand, service part of the IT requirements of the bank, are operated out of head office. So there might be a basis for adjusting, expenses down to the back. But I think from a contribution to head office expenses, it is already positive, on an accounting basis, right? And, yeah, I think that's the short answer.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

And then on the data center question, sir?

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

But as Danny said, taken in the round, it is cash flow negative because, principally the digital wallet is still negative from a cash flow standpoint and accounting, accounting standpoint in terms of P&L, right? So, but, their losses, minus losses, consolidated, is down to PHP 1.9 billion for the H1 from was it PHP 6 billion last year? So that's a significant improvement. And, two things. One is Maya expects to break even on an accounting basis and cash flow positive in the month of December this year. And, the losses will drop from the H1, PHP 1.9 billion, down to about PHP 500 million for the H2 of this year.

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

So the total losses will be about PHP 2.4 billion, accounting-wise, and still cash flow negative, taken for the whole year. But at least EBITDA, well, they'll be EBITDA positive by December, and accounting equilibrium by December. Right?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Second question, sir, was on the data center monetization, whether that is still on?

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

Well, there are ongoing discussions, and I think we're down to the short strokes. We're down to two. The valuation has been agreed, and it's a combination of old shares or existing shares and new shares. So, PLDT will sell a portion of our outstanding shares in VITRO, which is the parent of the data centers, to this particular foreign investor. And there will be new shares issued to bring new money into VITRO for two things: The new investor wants debts to be reduced somewhat, and the other bit is that the substantial portion of the new funds injected into VITRO will fund the expansion of VITRO in respect of phase two of the Santa Rosa hyperscale data center and future data centers.

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

So in the medium term, VITRO does not need to borrow because there's quite a substantial injection of funds into VITRO to fund the expansion plans of VITRO.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

The last question had to do with what seems to be a slowdown in mobile. Cristine?

[Cristine Go, SVP and Head of Consumer Business – Wireless at PLDT Inc.]

So it's true, there is actually a slowdown in the mobile revenues in quarter two, but a lot of that has to do with the industry as well. So if you recall, in quarter one, we actually had a growth, an industry growth of somewhere in the 6%-7%. But in quarter two, growth was just at 3%-4%. It's linked to the early closure of classes as well, because there was a change in the school calendar. So with classes being cut short much earlier, there is actually limited mobility, plus of course, the heat and the temperature was actually not to our favor. But we are seeing a lot of momentum coming Q3, so we expect actually the growth to bounce back.

[Arthur Pineda, Analyst at Citigroup]

Very clear. Thank you very much.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Next set of questions from John Te.

[Analyst at AB Capital]

Hi, Melissa, can you hear me?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Yes, we can. Thanks, John.

[Analyst at AB Capital]

Thank you. My three questions from me. Maybe best if I go over them one by one. First is on home broadband. It's 1% growth, but I understand you published record net adds and stable fiber ARPU. So I suspect the gap would mostly come from the legacy business. Is my understanding correct? As in a decline in the legacy business.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Hi, John. Thanks for the question. You are correct, actually. If you look at our fiber business, our fiber business actually had 39,000 net adds, as well as 7% year-on-year growth. So we, we actually saw a total of about PHP 911 million in the Q2 alone, for our fiber business. The gap that you're, you're seeing is actually the decline in our legacy business. So a lot of that is in our copper, our VDSL, as well as our old copper lines and some voice calling. So it's all of those legacy businesses that are actually dragging down the overall performance for home.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Barring all of those legacy revenues, if you look at really only the future revenues, in particular, fiber, which is the area most contested in the market, we are seeing a 7% year-on-year growth.

[Analyst at AB Capital]

Thank you. And a quick follow-up to that.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Yes, yes.

[Analyst at AB Capital]

Sorry.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

PHP 1.9 billion. Yes. There was a PHP 1.9 billion total drop in our legacy revenues.

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

DSL and voice.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Yes.

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

We're down to PHP 1.6 billion.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Yes.

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

Success was in revenue terms for the legacy.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Correct.

[Manuel V. Pangilinan, Chairman and CEO at PLDT]

And, we think that the rate of decline, if any, would be modest, it's down at the bottom of the curve. So the growth in the home broadband should be more transparent to you, so talking through the consequences of our legacy assets.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Did that answer your question, John?

[Analyst at AB Capital]

Yes, very much. Thank you. A quick follow-up is the-

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

I think your gross and net installs are better for the months of July and so far in August. I think the gross installs are higher the first, one and a half months, H2, compared to the average of the first six months.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Yes, that's correct, Danny. We are actually seeing an increase, a significant increase on a month-to-month basis. We saw that increase coming through from June, as well as continuing to go through in July as well as August. That, coupled with an improvement with our overall churn performance. As Danny had mentioned, churn in the Q1 was 1.8%. Churn in the Q2 has actually gone down, now 1.5%. So those two things actually coming together will actually see momentum in the Home business actually picking up, and we'll see a much, much stronger H2 of this year.

[Menardo Jimenez Jr, COO at PLDT]

On the network side, we have to add ports, right?

[John Palanca, Head of Sales and Distribution at PLDT]

Yes, to complement the growth in the H2 of Home, we're seeing an acceleration of ports rollout as well. So if you combine their strength in installs and the lower churn, and now more ports for the H2, you will see the acceleration of the performance of Home for the H2 of the year.

[Menardo Jimenez Jr, COO at PLDT]

So consequences on the expansion of our transport network as well. With that expansion.

[John Palanca, Head of Sales and Distribution at PLDT]

Yes.

[Menardo Jimenez Jr, COO at PLDT]

Because we anticipate the growth in traffic from better installs in the H2.

[John Palanca, Head of Sales and Distribution at PLDT]

Yeah. I think one of the things that should be underscored is that the performance in 2024, if we end strong, is going to give us an even stronger performance in 2025. One of the reasons why 2024 was a little bit subdued in the H1 was because 2023, we pretty much slowed down both the installs and the rollouts, and that affected our H1 revenue. But if you see the acceleration in the H2, the impact of that in 2025 is actually gonna be quite big. So we're preparing for a stronger 2025, and we wanna make sure that we do not lose the momentum of what we have in the H2 of the year. So that 2025 should be a stronger performance for Home.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Any second questions?

[Analyst at AB Capital]

Thank you for the very comprehensive responses. Second is maybe on prepaid fiber unit economics, because I understand in the past you mentioned that this, you know, did not make sense to roll out or build. So maybe an update, whether there was an update about the change in strategy, and whether this business can be a potential profit driver for PLDT moving forward.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Sure. Look, the Prepaid Fiber economics are definitely challenging, right? I mean, one of the big things that is different about the fiber business as well as our mobile business is the amount of CapEx required to actually connect the customer in the first instance. So that's clearly a big difference between fiber economics as well as mobile. Where we started with Prepaid Fiber was actually within the existing base. So customers that were either having difficulties with regards to their financial situation, they wanted an alternative different payment methods. We actually went after those customers first, and we gave them the option to go to prepaid, right? So we've actually. That's where a lot of the economics actually are in your favor, because if you think of the setup costs and the setup fees, they're largely sunk costs.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

You've actually already done the roll. You've already done the truck roll. You've already got the CPE out there. So being able to extract more value out of that customer is only gonna be accretive to you in, from a top-end as well as a bottom-line perspective. From a new acquisition point of view, we have opened up prepaid fiber in select areas. So in areas where we have, ample capacity in our fiber network, we are making prepaid fiber available. It does, however, come with, slightly different, economics or slightly different commercial agreement. We are asking for an upfront payment fee from the customer to be able to show commitment, that they actually do wanna make sure that they. It's not just something that they wanna do once and, and once only.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

And we're also making sure that it is in areas where we have capacity. Unlike our competitors, PLDT actually has a utilization rate of our ports that are actually extremely high, so we're sitting at about 60%. So more often than not, because that 60%, ports and the 40% leftover are actually scattered throughout the Philippines, right? So it's not just all, you know, evenly done. So in areas where we do have capacity, we will make it available, and we'll actually push it down into different segments of the market, and we'll open that up. And we'll open it up, making sure fiber is more available to more people. But we are being very, very selective with it as well, to make sure that it is value accretive to us.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

I will add that we in May of this year, or actually it was June this year, we did launch our 899, right? The most aggressive postpaid and the cheapest postpaid plan that we have available in the market for fiber. And so we have seen an uptake on the 899. Now, that obviously still has very similar, because it is still a postpaid plan, that does have a little bit more predictable economics than, say, for example, a prepaid service, right? What we are seeing is customers are availing of the 899 rather than actually going to the prepaid option. When there's, when we're provided an option for both, we're actually seeing them self-select on the 899, and they're actually preferring to take that service moving forward.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

So, I guess I couldn't give you full details as to how the economics are gonna pan out, because I think the fullness of time is really what's gonna reveal how often someone is gonna recharge. However, we are very much committed to making sure that we extract the maximum value from our CapEx that we've got. So we will make it available, and we'll actually push to open up our fiber to as many customers as we possibly can.

[Analyst at AB Capital]

Thank you very much. Final question for Danny, on maintenance question on costs. Personnel expenses in 2Q alone, I think there was a big jump versus 2Q last year. But I understand that the H1 versus H1 number is kind of normalized. So is it just correct to understand this is a difference in timing in terms of booking some of your personnel expenses?

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

The increase in repairs and maintenance was actually due to the increase in technical service fees to different suppliers like Cisco, Huawei, principally from the site expansion program.

[Analyst at AB Capital]

Yeah, just to clarify, I think there was also a spike in personnel, as in, manpower expenses, wages. Could you comment on that?

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

You mean the compensation, which increased by 1%?

[Analyst at AB Capital]

Yes, yes, compensation. Correct.

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

It just increased by 1%.

[Analyst at AB Capital]

Yeah. So the Q2 versus Q2 number, I think, was high single digit, but the H1 year, correct, that it was muted. So is it just, Is my understanding correct, that this could be a timing difference from your end?

[Danny Yu, EVP, CFO, and Chief Risk Management Officer at PLDT]

Well, it does include merit increases for this year.

[Analyst at AB Capital]

I see. Thank you very much. That'd be all for me. Thank you.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Thanks, John. There's a question in the Q&A box from Jiawei of Macquarie. Your H1 EBITDA margin came in at 52%. Can you articulate your plan to push above 52% in the H2 of 2024 to meet your target?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Say that again, sorry.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Our EBITDA margin came in at 52%. Can we articulate our plans to push that margin above 52% in the H2?

[Christopher Pineda, Head of Finance of Wireless Consumer Division at PLDT]

Well, we will try by reducing the operating expenses. But most likely, it will land between 52 and 53.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

And then there's a follow-up question: Can you discuss how much incremental earnings from Santa Rosa's initial 20-MW capacity can be expected?

[Victor Genuino, President and CEO at ePLDT]

So, with the data center business, it usually takes some time before the revenue, ramps up, but we are expecting within the next 18 months, come the opening of Santa Rosa in October, that we should be able to extract anywhere between PHP 600 million-PHP 1.5 billion in additional revenues for our DC business.

[Christopher Pineda, Head of Finance of Wireless Consumer Division at PLDT]

Well, that's what they committed, that they're gonna break even by December. When I say they, I mean Maya committed that.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Next set of questions from Claire Alvarez of Guild Securities. Why is voice revenue big? Is it pure voice or combined with other products?

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Sorry, the question was, why is voice revenue big, and is it combined with?

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Voice.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

So when we refer to- I think the question is referring to legacy, right? So legacy revenue actually has a few things inside there. Voice is one of them, right? So an example of legacy revenue would be, say, for example, our copper, right? Telephony only, some of the voice international calling that we may have. It also includes things like calling cards. I know it might sound a little bit silly, but actually we have had long, some products there that have been out there for quite some time, that some of our customers still avail of, right? So some of the calling cards that they may actually get, prepaid calling cards in some of the malls, et cetera.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

So our legacy revenue actually has a lot of these older things that we've accumulated over many, many, many years that may not be actively marketed, today. However, we still do have customers that are purchasing them and continue to avail. Now, as voice over IP, data, and broadband become more and more prevalent, you're seeing that decline come through, right? So it is declining. It's just that there are still some of those customers that do continue to use those services, and obviously, while, especially since a lot of these are actually sunk costs from a network point of view, we extract the value as long as we possibly can. However, we have seen that decline, but we should see that decline actually start to dissipate as it starts to become now the long tail.

[John Palanca, Head of Sales and Distribution at PLDT]

Yes, absolutely. For the wireless, not only are we going to expand our 4G coverage as well as our 4G capacity, we have to move into the 5G space. So we are entering to roll out aggressively on 5G as well. On wireline, we are also going to be rolling out as well. The market for wireline, especially as you bring down the price point, actually expands. And so we have to keep on rolling out the ports to meet those demands.

[Victor Genuino, President and CEO at ePLDT]

Yes, certainly. We are actually looking into digitalizing our retailers. We've invested in an infrastructure that will accommodate the same as we work with our fintech partners. Our expansion in the channels extends beyond the stores, not just the company-owned stores and our partners, but also the online e-commerce and digital stores. Thank you.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Do you have a follow-up question? Arthur?

[Arthur Pineda, Analyst at Citigroup]

My side. Sorry, no question on my side. Thank you.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Maybe I'll just check within with the people who are here. Any questions?

[Analyst at AB Capital]

Good afternoon, Jared from AB Capital. Just have a quick follow-up question on broadband as well. Two questions from me. The first, what percentage of net adds moving forward do you see from your cheaper PHP 899 postpaid plan as well as your prepaid fiber plans? And the second question is, can you talk a bit about the decision to enter the prepaid market at a slightly higher price point than your competitors at PHP 999 per month, compared to the usual PHP 700? Thank you.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Okay, thanks. I'll start with your first question, I think, which was, what percentage of our plans moving forward are gonna be 899 versus prepaid? At this point in time, I can share with you what we're experiencing. We've actually launched both 899 as well as prepaid, and what we've seen is more of our customers are actually gravitating towards the 899 plan versus the prepaid, at this point in time. We have seen 899 actually hit a high when it was first introduced, of about 20% of our total new connect mix. But we've actually seen that number dissipate now, right? It's actually changed, and we're seeing actually more and more of our Unli All plans being sold as customers look for the overall value within the household, right?

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

So I think some of the communication that we've had and the information about Unli All, I'm sure you're aware, it's unlimited calling, unlimited calling from your landline, unlimited broadband at higher speeds with signal as well as now mobile. The value actually included in those plans are really starting to cut through, and we're seeing customers avail of those plans and seeing it as a total household spend, rather than just only on the, say, for example, on the broadband side of things. So we've seen it as high as 20%. That's actually come down now, and we're seeing that sort of hover between the 5% and 10%. Now, in terms of prepaid, to be honest with you, we're still actually ramping up our installed capacity.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

As our chairman actually mentioned, we have seen a huge increase in terms of demand over the June, July, August period. And so what we'll need to do is actually bring in additional installed capacity, as well as additional sales capacity, to be able to look at the prepaid side of things. Because I think the market demand that we're seeing right now is really, it's really not representative of what the market really wants. I think it's really coming down to leveraging the existing channels that we do have and where they're most comfortable in, and where they've been attacking, has really been in the 899 and up space. We think that there is still a bigger market opportunity there for the prepaid.

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

And so as we build our installation capacity to serve them, we'll also be building out specific sales channels to target the prepaid market.

[Analyst at AB Capital]

Eric from CLSA. So, several questions. First, on the data center side. On Santa Rosa, I recall it, it was first introduced at 100 megawatts. Can you remind us what changed from 100 megawatts to 50 megawatts? And, and if you're able to share also the EBITDA margins for existing data centers, if that's okay.

[Victor Genuino, President and CEO at ePLDT]

So, we had originally planned Santa Rosa. The facility can, by design, accommodate up to 100 megawatts of total. But based on prevailing, what we see as near-term demand, plus a diversification on the locations that we'd like to build, because we're not stopping with the 11th, data center. We found it prudent to stay at, 50 megawatts total or translated to roughly 36 megawatts, IT load. From an, EBITDA perspective, our data center business is very healthy and very comparable to other large, progressive, DC players from an EBITDA perspective.

[Analyst at AB Capital]

Okay, understood. So, on the margin side, would you say it's near to the whole consolidated margins of PLDT?

[Victor Genuino, President and CEO at ePLDT]

Slightly less than the 52, but there are certain deals that are above that. But as an average, it's slightly less than the telco EBITDA levels.

[Analyst at AB Capital]

Okay, thank you. Another question on the Maya, on Maya. So, life-to-date loans, are all those on-balance sheet loans? And would you able to, remind us to, about the dynamic with Tala?

[Leonardo Posadas, Head of Tech Operations at Maya]

Loans is about PHP 7 billion, which the latest loan balance on books. The amount of loans disbursed substantially renew existing loans are a factor of about two, three times. So my understanding is that they charge an upfront fee, something on average about 6%. They deduct from the... An upfront payment, but we do not pay it in the loan. It's really very short term. Look at the velocity disbursed, but also the carrying income. The amount of carrying income is really substantial for them. But they have to put more loans. Is that the velocity of loans disbursed, carry more loan? The carry trade is really what-

[Analyst at AB Capital]

Okay. Sorry, more on that point, on the loan side. There are no BSP securities or government securities in this mix or still there, any government securities there?

[Leonardo Posadas, Head of Tech Operations at Maya]

They do it. So the level of deposits is about, so partly to the, they're not commercial bank, they're way below standard, [garbled]. There's spread. The effective interest rate is probably in the 70s... Big spread business. It's a bit more volume, really push it to really cover the losses of PLDT.

[Analyst at AB Capital]

Okay. Thank you.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Questions on the floor before I go back to the... There's a question from Albizia Capital, from Pasin Ratanalert. On fiber broadband, can you please share the market share trend compared to the previous quarter?

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

Well, just trying to think. From a revenue share point of view, I guess, you know, it's very difficult to be able to share it for the H1 because we've only seen Globe results come out as of day, as of today, right? So I think, Converge will be releasing theirs, in, I think it's tomorrow, actually. So I won't be able to comment on the latest figures, but I can say that when we looked at market shares on a three-way basis, right, on a three-way basis, so Globe and Converge, side by side at the end of quarter one, we saw a, a slight increase in terms of revenue share, for PLDT. And, there was also a slight increase as well of, subscriber share, right?

[Jeremiah de la Cruz, SVP and Head of Consumer Business – Home at PLDT]

So subscriber share was just a small, but actually, the one that we measure and we monitor the most is gonna be on the revenue share side of things. So we saw a slight revenue share gain in the Q4 of 2024. Well, it's, Sorry, Butch.

[Menardo Jimenez Jr, COO at PLDT]

Well, we're for 2025, I think we're still in the budget process, so the home team is still trying to figure out exactly how many fiber ports we want to roll out for next year. But I would think, or I would dimension that it would be more than what we did this year, because of the accelerated demand that we saw due to the price reduction. Secondly, the concentration of the rollout for this year was in greenfield areas. Now, there is a combination of rolling out in both greenfield and brownfield areas, simply because the market for 888 has just expanded in the brownfield area. So I would think, they would dimension a much bigger rollout in 2025 than in 2024.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

There are no further questions. We'll now turn the floor back to Mr. Pangilinan for his closing remarks.

[Menardo Jimenez Jr, COO at PLDT]

Thank you for your attendance today. We look forward to seeing you again, and expect November twelve, you see, Q3 results. Thank you.

[Melissa Vergel De Dios, Head of Investor Relations at PLDT]

Thank you. Join us for some refreshments.

Participants

Executives

• Christopher Pineda, Head of Finance of Wireless Consumer Division
• Cristine Go, SVP and Head of Consumer Business – Wireless
• Danny Yu, EVP, CFO, and Chief Risk Management Officer
• Jeremiah de la Cruz, SVP and Head of Consumer Business – Home
• John Palanca, Head of Sales and Distribution
• Manuel V. Pangilinan, Chairman and CEO
• Melissa Vergel De Dios, Head of Investor Relations
• Menardo Jimenez Jr, COO
• Victor Genuino, President and CEO

Analysts

• Arthur Pineda, Analyst at Citigroup
• Leonardo Posadas, Head of Tech Operations at Maya
• Analyst at AB Capital