PLDT Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 13, 2026

Key Takeaways

  • Neutral Sentiment: PLDT’s first-quarter 2026 results were mixed, with gross service revenues up 3% to PHP 54.9 billion and EBITDA up 2% to PHP 28.3 billion, but telco core income slipped 2% due to higher depreciation.
  • Positive Sentiment: Enterprise was the clear growth driver, with revenues up 4% to PHP 12.4 billion, led by corporate data, ICT, cloud, cybersecurity, data centers, and AI-related services. Management said the “One Enterprise” model is starting to produce cross-sell uplift across connectivity, SD-WAN, cloud, and managed services.
  • Negative Sentiment: Home and wireless consumer were pressured by temporary operational issues and weaker consumer spending. Home installs were slowed by the OSS migration, while wireless monetization softened as inflation and higher fuel prices reduced top-up frequency and wallet spend.
  • Positive Sentiment: Management said the Home systems migration is now largely behind them, with order flow and fulfillment improving and installations normalizing in the second quarter. They also highlighted better customer experience metrics, including a 12-point NPS improvement and lower slowdown tickets.
  • Positive Sentiment: Maya continued to scale strongly, with deposits up 73% year over year to PHP 76 billion and the loan portfolio reaching PHP 33 billion. PLDT said Maya remained profitable, with improving asset quality and no material pressure from the broader consumer backdrop so far.
AI Generated. May Contain Errors.
Earnings Conference Call
PLDT Q1 2026
00:00 / 00:00

There are 11 speakers on the call.

Speaker 10

Good afternoon, everyone, and welcome to PLDT's first quarter 2026 financial and operating results. My name is Tringa Nogreles. I am the Head of Investor Relations here at PLDT, and it's my pleasure to welcome you this afternoon. Joining us today to share insights into PLDT's performance and strategic direction are PLDT's Chief Financial Officer, Mr. Danny Yu, PLDT's Chief Operating Officer, Mr. Butch Jimenez, Jr., PLDT Chief Legal Counsel, Attorney Joan De Venecia-Fabul, SVP and Head of Consumer Business Home, Mr. John Palanca, SVP and Head of Enterprise Business Group, Mr. Blums Pineda, Smart Communications Officers-in-Charge, Mr. Lloyd Manaloto. I think later, oh, Marge is just joining us as well. I think perhaps later we'll be joined by some other key PLDT officers as well.

Speaker 10

Before we begin, I'd like to remind everyone that we have a Q&A session later in the presentation, you may definitely submit your questions via the MS Teams Q&A panel. You can also send those to me on my phone if you'd prefer to do it that way. To start, I'd like to invite our Chief Financial Officer, Mr. Danny Yu, and he will walk us through PLDT's financial performance.

Speaker 3

Good afternoon, everyone, and thank you for joining us today. Please allow me to present PLDT's financial and operating highlights for the first quarter of 2026. Our gross service revenues were PHP 54.9 billion, up 3%, or PHP 1.5 billion year-on-year. Our net service revenue was stable at PHP 48.9 billion. The top line was helped by temporary factors. For Home, a system migration from a legacy platform affected activations and installs. For wireless, revenues were weighed down by lower mobility and pressured consumer wallets brought about by spring fuel prices. Despite this, EBITDA improved 2% to PHP 28.3 billion. EBITDA margin was 32%, supported by our focus on cost control as cash subsidies applications came down by PHP 0.5 billion, or 2%. Telco core income was PHP 8.6 billion, down 2%, mainly due to higher depreciation. Net financing costs were kept steady as we successfully negotiated better rates with our creditors.

Speaker 3

Core income improved 2% to PHP 9.1 billion, supported by Maya's continued profitability and asset sales. Overall, first quarter was softer, mainly due to the temporary impact on Home operational support migration and Middle East related pressure on consumer wallets. Some wallet pressure may carry into the second quarters as prices remain elevated. Home orders, on the other hand, and installed are now normalizing. We remain focused on stabilizing installs, continued monetization in our wireless segment, and sustained growth in our enterprise while keeping tight control on cost. While net service revenues were flat first quarter, revenues excluding legacy services grew 2% to PHP 44.6 billion. These growing segments now account for 91% of our total service revenues. While data and fixed wireless remained positive, up 1%, however, this was offset by the continued decline in legacy services such as voice and SMS.

Speaker 3

As a result, wireless consumer revenues came in at PHP 21 billion, down 1% year-on-year. Home revenues were PHP 15 billion, down 1% year-on-year. Fiber revenues were broadly flat at PHP 14.7 billion, as installs were temporarily constrained during the quarter. More on this later. More importantly, customer demand remained healthy with orders at pre-migration levels. Enterprise was the bright spot for the first quarter as revenues grew by 4% to PHP 12.4 billion, driven by corporate data, ICT, and A2P. Overall, the growth areas of the business remain intact. Let's take a closer look at each of the business segments. Enterprise were our main growth driver this quarter. Enterprise revenues reached PHP 12.4 billion, up 4% year-on-year. Corporate data and ICT, which includes A2P or application to person, grew 5% to PHP 9.3 billion and now accounts for 75% of the enterprise revenues.

Speaker 3

Growth was led by areas where we have been investing and building scale. ICT revenues, which include data centers, were up 17%. If you look at the tech services on its own, revenue grew even faster at 25%. This is an important part to the story because it shows strong demand for high-value solutions such as managed IT, cloud, cybersecurity, data, and AI. We also saw growth in SD-WAN lines, fiber lines, and third-party routes. A key driver for this success is our One Enterprise model. PLDT has the largest enterprise footprint in the country with many of our client relationships starting from connectivity. We are now modernizing the base through high-value solutions like SD-WAN. Simply put, SD-WAN helps clients manage their network across many branches and site through one platform with better control, security, and reliability.

Speaker 3

From there, we also bring in more services across cloud, data center, A2P, business loads, and global services. This help us deepen client relationship and move the business beyond basic connectivity. We also had good wins during the quarter, including government contracts, cloud productivity deals, and international connectivity accounts. These help offset the continued decline in legacy services. Overall, enterprise continued to show good momentum, where demand is moving increasingly towards solutions that help clients digitize, automate, improve security, and manage cost. To give more color and enterprise, we would like to show where the growth is coming from across the group. First is PLDT Global, our international connectivity business. PLDT Global supports hyperscalers, carriers, enterprises that need secure and reliable links between the Philippines and the overseas market. Revenues grew 26%, driven by demand for high-capacity IPLC, strategic connectivity, and carrier-grade colocation.

Speaker 3

Our wireless arm, Smart Enterprise, is also showing promise. Smart supports corporate and public sector clients through mobile connectivity, A2P messaging, IoT, and load disbursement platforms. Revenues grew 13%, driven by higher A2P SMS traffic, mobile load disbursement, and the Bayanihan SIM program, which supports digital inclusion for more Filipinos. These are recurring enterprise use cases, from customer alerts and authentication to workforce mobility and bulk load distribution. One of our fastest growing subs is PLDT, rather, ePLDT, our ICT solutions business. ePLDT supports enterprises and government clients across managed IT, cloud, cybersecurity, data, and AI. ePLDT tech service revenues grew 34%, supported by steady demand from both private and public sector clients. These solutions help organization improve efficiency, strengthen security, and modernize their operations. Finally, VITRO, our data center business. It is the pioneer and the leading data center provider in the Philippines.

Speaker 3

Revenues grew 10%, driven by enterprise and the hyperscale workloads. In the first quarter alone, VITRO contracted 254 new racks and 680 kilowatts of incremental. Overall, this shows that the enterprise growth is coming from several areas, including international connectivity, wireless enterprise solutions, ICT, and data centers. This gives us a broader base for growth beyond traditional connectivity. Let me now move to Home. Home revenues were PHP 15 billion, down 1% year-on-year. Fiber revenues were broadly stable at PHP 14.7 billion and now account for 98% of Home revenues. While the headline number was soft, the underlying demand remained strong. More specifically, order pipeline remained healthy. The constraint was not in customer interest, but in converting those orders into completed installs. This was due to the migration from our 21-year legacy OSS system.

Speaker 3

This system was outdated and fragmented. We needed to move to a more modern platform that can support a better digital customer journey, better order flow, and future AI-enabled capabilities. However, during the migration period, account installations and activations slowed, impacting fiber net adds. While churn remained low, we ended the quarter with 44,000 fiber net adds, lower than the previous quarters due to bottleneck. ARPU was also affected by two short-term factors. First, we extended temporary payment relief to subscribers affected by typhoons. This was part of our support for customers who needed time to get back on their feet. Most of these customers were covered, which helped preserve the base, but it weighed on ARPU in the short term. Second, the migration slowed some of the higher value fiber installs.

Speaker 3

At the same time, prepaid fiber continued to grow because it was easier to activate during the period. This created a temporary customer mix impact on ARPU. The important point is that the business fundamentals remain sound. The demand remains healthy. We are also seeing stabilization in the second quarter as install conversion improves. The focus is now to bring installation throughput back to normal levels and rebuild home fiber momentum from the second quarter onward. For Home, we continue to focus on improving the customer experience. We are pleased to note that our NPS score improved by 12 points in 2025. NPS measures how likely customers are to recommend PLDT. It also looks at the key factors behind that rating, including how important each factor is to customers and how well we perform on each one.

Speaker 3

The good news is that PLDT scores improved in the areas that matter most to Home subscribers Network reliability, broadband quality, and value. On network reliability, customers are seeing more stable connectivity, more consistent speeds, and fewer slowdown issues. This was supported by around PHP 3 billion in broadband capacity investments last year across peering, backbone, and caching. Network slowdown tickets were also down 38% in 2025. We also saw better feedback on the day-to-day broadband experience, including streaming, low ping, and peak time performance. On product offers, we continue to strengthen value through bundles, which customers recognize as a key advantage of PLDT Home. PLDT has been the first to market on several relevant bundles, including Netflix, HBO, IoT, and PC gaming. This help us improve value perception without relying on price cuts.

Speaker 3

Taken together, these improvements strengthen the home value proposition as it helps improve customer stickiness, reduce churn rate risk, and create more room to upsell over time. Let's now move to wireless consumer. While total wireless consumer revenues were down 1% to PHP 21 billion, the core data business remained resilient. Data revenues, including fixed wireless, grew 1% to PHP 19.4 billion and now account for 92% of wireless consumer revenues. Active data user reached 44.1 billion. Wireless data traffic, including fixed wireless, rose 10%. 5G individual data devices grew 34% to 12.2 million and now making up 20% of the device base. The softness was mainly in revenue. With higher fuel prices, lower mobility, and tighter consumer wallets, subscribers became more careful with their daily spending. Many also stayed home more and shifted part of their usage to Wi-Fi.

Speaker 3

While subscriber remained connected, some top up less than often by stretching their current offers. Fixed wireless remained a bright spot, with revenues up 18%, supported by stay-at-home data demand. To address the pressure, we're managing the base in a more targeted way. We're using hyper-personalized offers to match the right offer to the right subscriber. For some users, this means keeping them active with more affordable offers. For others, it means moving them to high-value offers where they have the capacity to pay. We're also using dynamic pricing to improve monetization. Lastly, 5G adoption continues to move up. As more customers move to 5G, they tend to use more data and take up bigger offers. This also helps improve experience across both 5G and LTE. Overall, wireless was affected by wallet pressure in the third quarter, rather in the first quarter, but the subscriber base remains intact.

Speaker 3

Data usage continued to grow, we're taking a more targeted approach to monetization. Let me now move to operating expenses. Total cash expenses, subsidies, and provisions came down to PHP 20.6 billion, lower by PHP 0.5 billion or 2% year-on-year. Compensation and benefits were down 4%, supported by workforce productivity efforts. Selling and promo were also lower, down 9%. Taxes and licenses were also down 23%. Repairs and maintenance were broadly stable, down 1%. These savings more than offset the increase in contract-specific service costs. That increase was tied mainly to growth areas, including ICT projects, cloud, data center, and content costs. We're keeping a tight grip on OpEx while still supporting the areas that drive growth and service quality. For the first quarter of 2026, EBITDA, excluding MRP, reached PHP 28.3 billion in the first quarter, up 2% year-on-year. EBITDA margin remained steady at 52%.

Speaker 3

This was achieved despite flat service revenues, mainly because of lower cash expenses. Telco core income was at PHP 8.6 billion, down 2% year-on-year. The decline was mainly due to higher depreciation as we continue to invest in the network and infra. This was partly offset by Maya's continued contribution. Maya contributed PHP 285 million to PLDT's core income in the first quarter. We also booked PHP 0.3 billion from property sales. This is part of our broader asset monetization program as we continue to unlock values from our non-core assets. As a result, core income improved to PHP 9.1 billion, up 2% year-on-year. Reported income was PHP 8.9 billion, down 2%. This reflects unrealized Forex losses and MRP cost. Overall, while the telco core was slightly lower, group core income improved, supported by Maya and asset monetization. Let me now move to CapEx and free cash flow.

Speaker 3

CapEx for the first quarter was PHP 10 billion, lower than PHP 10.8 billion last year. CapEx intensity continued to come down from 20% in the first quarter last year to 18% this quarter. This reflects our continued focus on discipline and better pricing and terms. At the same time, we continue to invest in the areas that matter for growth and service quality. These include new cell sites, home fiber ports, AI, submarine cables, data centers, and network and IT upgrades. EBITDA less CapEx improved to PHP 18.3 billion from PHP 17 billion last year. We remain focused on sustaining positive free cash flow while bringing CapEx intensity down over time. For 2026, our guidance remains in the mid PHP 50 billion range. Let me now move to our debt profile. I'll start with a key point. PLDT sustained positive free cash flow as at the end of March.

Speaker 3

Net debt was PHP 282.3 billion, while net debt to EBITDA was at 2.53 times, slightly better than 2.56 times in December 2025. Gross debt was PHP 297.3 billion, and our maturity profile remains long-dated, with 50% of our maturities are post-2031. This keeps near-term refinancing needs manageable. Interest cover remains healthy at 3.3 times. Average interest costs improved to 5.08% from 5.43% as of end of 2025. This reflects the work that we have done with our banks to negotiate more favorable funding terms, which resulted in keeping net financing costs flat year-over-year. Our debt mix remains balanced, with 32% fixed rate loans and 68% floating rate loans. We will also continue to maintain our investment grade ratings from both S&P Global and Moody's.

Speaker 3

Looking ahead, our focus is to maintain positive free cash flow in 2026 and work towards around 2.0 times net debt to EBITDA, supported by our asset monetization plans. In the first quarter of 2026, Maya, the Philippines' leading digital financial services platform, sustained its growth and profitability. Its integrated payments and digital banking platform helps consumers manage their finances. It also gives business tools to improve cash flow and access financing. This supports Maya's position as the country's leading digital bank and merchant acquirer. During the quarter, Maya continues to enhance its banking, credit, and payment suite using its proprietary data-led underwriting platform. By end of March 2026, Maya's deposit increased 73% year-over-year to PHP 76 billion. Its loan portfolio reached PHP 33 billion, driven by growth across multiple credit products.

Speaker 3

Demand and adoption stayed across consumer and enterprise segments, including merchant scaling through Maya Business for integrated payment acceptance, business deposits, and credit solutions. Results were driven by Maya's proprietary technology platform and AI capabilities. On the funding side, Maya Savings, Maya Personal Goals, Maya Time Deposit Plus continue to attract customers with competitive rates. In the first quarter of 2026, Maya accelerated credit growth across Maya Easy Credit, personal loans, Maya Black Credit Card and Landers Cashback Everywhere Credit Card, and SME loans. Asset quality remained stable with an NPL ratio of 4.9%. Maya delivered a net interest margin of 17.1%, underscoring strong lending margins. Maya's momentum continues to earn industry recognition, including Neo Bank of the Year, Best Digital Fraud Protection Experience at The Asset Triple A Awards, as well as inclusion in Forbes World's Best Bank of 2026. Beyond financial results, Maya broadened partnerships to advance financial inclusion.

Speaker 3

Through its collaboration with the IT and Business Process Association of the Philippines, Maya is extending digital banking credit access to 1.9 million digital workers, helping build formal credit histories and enhancing payroll and disbursement processes for participating companies. After PLDT's inclusion in the S&P Global Sustainability Yearbook for 2025 and 2026, PLDT was also apprised of its inclusion in the universe of eligible companies for potential inclusion in the Dow Jones Best-in-Class Index. While the company was not included in the final list of constituents, PLDT remains focused on embedding sustainability in the business and advancing its environmental, social, and governance commitments. PLDT remained active in the broader sustainability community in the pursuit of shared goals. The group's program on digital farmers and innovation in agriculture were also featured in international events.

Speaker 3

Other examples of embedding sustainability in the business are the solarization of lease cell sites, which meet our triple goals of cost savings, service reliability, and decarbonization. Combating cyber crimes and online harms remain a priority and are part of our keeping our customers safe online. Finally, we are able to use our e-waste program in marketing, particularly for younger markets. That concludes our prepared remarks for PLDT's first quarter results. We are now open for questions.

Speaker 10

Thank you, Danny, for the insights on our growth initiatives and key developments across our business units. Before we open the floor to your questions, allow me to reintroduce the business leaders in the room who can also help you with your queries. Again, we have PLDT CFO, Mr. Danny Yu, PLDT's Chief Operating Officer, Mr. Butch Jimenez, Jr., Chief Legal Counsel, Attorney Joan De Venecia-Fabul, SVP and Head of Consumer Business Home, Mr. John Palanca, SVP and Head of Enterprise Business, Mr. Blums Pineda, and our Smart Communications Officers in charge, Ms. Marjorie Garrovillo, and Mr. Lloyd Manaloto. Before we begin, I'd like to remind everyone that we do have a Q&A box for you to be able to send your questions through. Please feel free to go ahead and do that. You may also raise your hand, and I'd be happy to unmute you as well.

Speaker 10

For those who sent over your questions via SMS, thank you for doing that, and I'll read your questions as well. Let me see. It looks like we have a question from Arthur Pineda of Citi. Arthur, please go ahead. Arthur? I'm sorry.

Operator

Hi. Can you hear me? Hello.

Speaker 10

We just raised the volume.

Operator

Oh, hi. Okay. Yes. Thanks for the opportunity. Two questions, please. Firstly, are you able to elaborate on the monthly consumption trends? How this has changed going to March, April, and May? I'm just wondering if there's any change in consumer spending given the impact of inflation. Second question I had is with regard to your Maya business. You've seen a recovery in this quarter. I'm just wondering what your expectations are in the trends. Any added stresses on the lending side given all the consumer pressures? Thank you.

Speaker 10

Yeah. Sorry, we missed the beginning part of your first question. Allow me to take your question first on Maya, and then we can go back to your first question earlier. You mentioned that you've seen Maya continue to grow, and you were wondering if there were any pressures that we're seeing. Maya has continued to grow really strongly, and it did improve its profitability in the first quarter, and that was driven by growth in both the payments and digital banking side. As you saw, Maya's loan book grew by 52% in the first quarter, and that's year-on-year. If you look at quarter-on-quarter, that grew at 10%, right? That really represents consumers continuing to adopt the service.

Speaker 10

Our NPL ratio also came down from 6.1 to 4.9, that really reflects the strong portfolio growth, as well as the effectivity of Maya's proprietary underwriting platform. Right? Provisioning remains aligned with Maya's risk appetite. When looking at the effects of the Middle East crisis, really when we've spoken to Maya on this, they mentioned that they have not observed any material impact on overall business performance. Activity actually remains stable. They expect that to continue in growth. They definitely are monitoring key metrics across. As of now, they're not seeing pressure points yet.

Speaker 3

I'll take that question. Lloyd Manaloto here for Wireless Consumer. What we initially saw was that from January to February, we had an increase in top-ups. Starting March, we're starting to see the softening in terms of top-ups, due because the subscribers, in terms of their top-up frequency, are slowing down. This does not mean it's all subscribers, but segments of our subscribers where we see this behavior. Having said that, we've instituted certain programs and product and capabilities like our hyper-personalization, wherein we were now offering targeted offers to these subscribers to get them to adjust in terms of their top-up behavior. We're seeing some improvements in April. In general, we do see the slowing down of top-up behavior.

Operator

Understood. Thank you.

Speaker 10

Thank you. John of UBS, I see you have your hand raised. You may go ahead.

Speaker 6

Hi, good afternoon. Three questions for me. First is on mobile. I think you characterized the softness quarter on quarter on mobility restrictions. Could you comment on, I guess, how the competitive landscape was in the first quarter? Because I think your competitor alluded to some price hikes that were implemented, so I was wondering whether you see the same trends. Second, on broadband, how long can we expect this systems migration to continue? Or put another way, how much are we finished with this process? And how, I guess, it would affect future net adds in probably the second or third quarter. Third is, I think I observed a spike in both international voice revenues and the corresponding increase in interconnection costs. I was wondering what the interplay between these two accounts were and why the sudden spike in the first quarter. Thank you.

Speaker 2

I'll take the first question. I think to characterize the quarter changes in consumer behavior, competitive behavior, I would characterize part one to be more benign compared to previous quarters. The key now is for the industry to go after the subscribers in order for them to top up more, either with more frequency, or for those subscribers who can afford it, they would, if we could actually price up on certain SKUs. Not saying that we're doing it for all, but there are certain SKUs where we can actually do some tactical pricing increases. Having said that, we're really leveraging on our capabilities for hyper-targeting and hyper-personalization because we can't do blanket pricing place. What we need to do is target the right product and service to match the economic needs of that consumer and also their context at that point in time.

Speaker 8

If I may just add, just to provide context for our consumers, what is different today is that connectivity is actually one of their basic needs already. Even as a consumer wallet starts to shrink, staying connected still becomes part of their main need. Therefore, there is a certain level of resilience on how they will be connecting. In that way, the real role of wireless is to make sure that we are able to offer them the most price-effective offers that they can actually avail of at that point. In that way, we should be able to keep the subscribers engaged with the network.

Speaker 10

The question is in regards to the OSS migration.

Speaker 2

That's correct. Hi, John. Thank you for that question. Just for context, we've been operating and offering fiber services for a couple of decades now, and the current operation support system that we are using is actually one that is legacy driven. We've been using it for over 20 years, and it is no longer able to scale and innovate as much as we want to. We embarked on a modernization program, and we consciously accepted a very short-term softness resulting from a migration of such magnitude. We actually experienced some temporary operational friction. We began the OSS migration in December of 2025, and we actually are stable as of the first week of March. We are seeing that the flow-throughs have been enhanced and the processing of our orders from order to fulfillment have greatly accelerated.

Speaker 2

That is giving us the capacity to even accept more applications and serve more customers. More importantly, the operation support system serves as our foundation for future modernization, such as the BSS stack, the digital stack for unassisted channels, and our, of course, move to AI. I think we have the modernization for this particular stage of the OSS transformation behind us now. We have stabilized, and we are now postured for growth Q2 onwards. Thank you.

Speaker 10

I think the third question is in regards to our international voice revenues and the corresponding interconnection costs.

Speaker 3

We have a wholly owned subsidiary named PLDT Global. PLDT Global sells or trades international traffic volume to different operators. This one has a margin of only less than 2%. That's why you can see that you have a high revenue with a high cost of interconnection. That explain the increase in interconnection cost as well as the gross revenues or the gross trunk. Do you get it, Jan? Sorry if I'm not sure if you get it, Jan.

Speaker 6

Yeah. That was helpful. Is this business new? Because I think this was-

Speaker 3

We've been doing that for a while actually, Jan. We've been doing that for the last five years. It's giving us income. So far so good, no?

Speaker 10

Yeah.

Speaker 3

That's why I think you can better analyze our financials by taking that out. Actually, if you look at our management report, we usually don't include that. It's separately accounted for. If you look-

Speaker 6

Okay

Speaker 3

If you look at our operating expenses, you don't see interconnection costs there because we try to separate the hubbing business from the service revenues.

Speaker 10

Airlines to be-

Speaker 6

That was helpful. Thank you.

Speaker 10

Just read some of the questions that came in earlier this afternoon. This one is from Marky Carunungan. Okay, this is for our mobile business. Last briefing, management highlighted hyper-personalization and improving ARPUs as a key driver for mobile recovery. However, in first quarter, data traffic grew 10%, while wireless data revenues grew 1%. Could you give us some color on what is limiting monetization conversion despite the stronger metrics?

Speaker 2

The power of that service, the capabilities, we're actually analyzing behaviors of our subscribers. We're seeing segments of our subscribers who are actually fully using up their load wallets

Speaker 7

Before, they would actually top up with some available data and then continue to load up. What we're seeing now, I think as a response to the inflation pressures, is that these segments of subscribers are actually eating up all the wallets. There's no breakage on those data revenues. Having said that, what we're also now doing as part of our hyper-personalization is, aside from upselling, we're also offering next best offer services to these subscribers because we know they're now under pressure because of the inflation. We try to give them the next best offer at maybe a slightly lower price, but we keep them in the system. As you can see from our subscriber base, it's fairly stable right now, and churn rates are stable at about 2.5% for prepaid. It's not going up, and our subbase is slightly increasing. It's because of post-paid services.

Speaker 7

Essentially, what we're doing now, we're not just using the capabilities of hyper-personalization, upselling. We're also using it to protect the base, keep churn low, and also get them to the next best offer. Does that clarify?

Speaker 10

Thank you, Lloyd. Looks like this question is for Home. John, this is in regards to the ARPUs. You mentioned that ARPU softness is characterized by partly mix-driven rather than structural pricing pressure. With fiber ARPU declining this quarter, has your view changed regarding the long-term pricing environment in broadband?

Speaker 5

The question was from?

Speaker 10

This is from Marky Carunungan, sir.

Speaker 5

Hi, Marky. Good afternoon. Thank you for that. Yes, I recall during the last investor meeting that we were going to really put a lot of focus on the product mix and ensure that we sustain our ARPUs. We are still continuing that effort. However, during the OSS modernization exercise. Well, first let me answer what is OSS. OSS is our operation support system. It flows in our orders, from order taking to validation to provisioning, activation, and fulfillment. During that period of modernization and migration in the first quarter, the prepaid orders were flowing much easier because they had to go through less gates, and the mix kind of got skewed a little bit more towards prepaid. We never over-indexed. There was just a slight increase. Thus, you will see the slight dip.

Speaker 5

Moreover, we did have some subscribers that were affected by the disasters that occurred in the third and fourth quarter of last year, in 2025. We wanted to keep them on the network, give them a chance to stay on as extended repairs resulting from reoccurrences of the earthquakes, and the typhoons in the same areas. Because of that, we zeroed out their revenue so that we do not see any inflated revenue figures in Q1. However, as you can imagine, since they are active in the system, that has a dilution effect on our ARPUs. Again, that too is temporary, and that too was something that we accepted would be part of the recovery efforts for the typhoon. That has since been normalized as we already cleaned up our base, and you will see a regularization of the ARPUs Q2 forward.

Speaker 10

From what I recall, John, a lot of these customers who extended assistance to have come back.

Speaker 5

Yes. I won't disclose how many, but we lost only about 17 to 17.5% of those that were affected by the typhoons. They really appreciated the gesture of extending and not billing them during the typhoons. Thank you. The earthquakes. Thank you.

Speaker 10

Thank you. All right, this question is for our enterprise business, this is from Matteo Lorenzo. Good afternoon. On the One Enterprise model, are you already seeing measurable cross-sell uplift from existing connectivity clients into cloud data centers, SD-WAN, A2P, and managed IT? Is the current enterprise growth still mostly driven by standalone product demand?

Speaker 1

Yes. Thank you for the question, Matteo. We are really beginning to see that growth already, I think. We focused on the larger corporate and larger enterprises with that push out, where basically a single relationship manager carries the full bag, if you will, of enterprise solutions, whether that be fixed, wireless, or ICT. We're seeing healthy attach rates, especially in companies that are scaling up on the digital infra side. I think they're seeing the value of being able to come to one company for this. For example, with tech native companies or even all the way up to big hyperscalers, being able to come to one place for your big circuit connectivity, your data center requirements, et cetera, is a big plus.

Speaker 7

Yes, we're beginning to see it, we're continuing to roll that out to the rest of the large accounts, and hope to get more lift from them. Thank you.

Speaker 10

Thank you, John. I think this message is from Marky as well, which he said earlier, this is in regards to KPA. Attorney Joan, have there been any meaningful developments since the last on KPA? How do you assess the potential impact on the industry pricing and infra competition?

Speaker 4

Thank you for that question. Since our last board meeting, there's been some movement on the KPA, particularly on the drafting of the initial access list. As you know, there's a technical working group comprised of the DICT, the PCC, and the NTC, and they are in charge of formulating the initial access list. They have sought, and we have given our views on the initial access list, and I think other telco players, as well as access seekers, were also asked for their views. The access list should have been released per the timeline of the IRR last March. However, it's already May, and this is because there are many views that they had to consider.

Speaker 4

In fact, the PLDT group met with the TWG just two days ago to share some more information about our technical and operational capabilities to meet the demands of the initial access list. Given the situation, we believe that maybe the initial access list may come out in the next month or so. This means that per the timeline set in the IRR, we have two months to issue the reference access offer. We told the TWG candidly two days ago that it is virtually impossible to meet the two-month deadline for the reference access offer because the pricing itself, which you mentioned in your question, would take at least a year. In other jurisdictions, like in Saudi Arabia, it took them more than a year to formulate a reference access offer.

Speaker 4

We informed them of this, and we urged them to also do a survey of their own, and they considered our views in the latest meeting. Definitely a lot of movement, there are some delays that are understandable given the number of players that want to participate and get their views and voices out there. For spectrum management, there was an initial invitation for us to participate, not much movement there because we understand that the TWG is taking it one item at a time. We imagine that spectrum management might be pushed back to end of this year or even next year. That's it for now on the KPA. Definitely everything on pricing is still up in the air. We are starting to work on that from our end, no definitive movement there yet. Thank you.

Speaker 10

Thank you, Attorney Joanne. There are a couple questions here in the Q&A box from Fernandez Michael. The first is in regards to a potential REIT listing. Would this still push through this year? Is there an envisioned listing date? How much does PLDT expect to raise? Will proceeds be used to pay down debt? While there's no certainty on this, go ahead anyway.

Speaker 3

Yeah. The REIT is a key priority project as part of our asset monetization program. Unfortunately, we cannot really divulge about the timing, again, this is a very important project, it's quite urgent for us. We can't also divulge the amount to be raised, sorry.

Speaker 10

In regards to any asset monetization proceeds, whether it be sales.

Speaker 3

Yes, all of these will go to debt reduction.

Speaker 10

Sure

Speaker 3

pay down debts.

Speaker 10

Also from Michael, and this is for you, Danny, as well. Do you expect any margin compression as a result of the US-Iran war? I guess on costs, how we're managing those, and how that would be managed.

Speaker 3

We're managing the costs, I think efficiently, except that we really don't know. If it's prolonged, then it's likely to impact our operating costs.

Speaker 10

It's really very fluid at this point in time.

Speaker 3

It's not easy.

Speaker 10

We've definitely taken measures to mitigate those costs as well. This question is from Paolo Manansala of COL. It looks like this is in regards to Maya. Just wanted to ask for more color on Maya's contributions, given the sharp improvement in profits. Should we expect this level of profitability for the rest of the year, or are there one-off gains booked in this period? I guess to answer your question, Paolo, it is both, right? There were, of course, very good improvements in regards to the core business, both on the payment side as well as the banking side. We did show the metrics earlier regarding loan growth, which has grown substantially. NIMs remain very healthy, and the NPLs are actually trending down. That's very good on our part, right?

Speaker 10

In terms of the payment business, that is also expanding, and they have a very strong hold on the merchant acquiring business as well. Definitely that business continues to grow. It's a well-diversified business, and they expect to continue to contribute in that way. With that said, there are also some one-offs that were booked by Maya, as well as some catch-up provisions that we recognized this quarter as well. There are one-offs, and these are non-recurring in nature. Yeah. Non-core.

Speaker 3

Is it referring to the PHP 285?

Speaker 10

Well, the 285.

Speaker 3

PHP 285 million is core, but it does include catch-up adjustments.

Speaker 10

Mm-hmm.

Speaker 3

We normally finish our financials before February 28th, but in the case of Maya, they finish it only after April 15, or say, on April 15th. There are catch-up adjustments. That's part of the core income that we book in the first quarter.

Speaker 10

On slide 12, you'll see Maya's contribution to PLDT's core income. In our financials, you'll see the impact as well on reported net income, which in that line would include some of the one-offs. Okay. There are some hands raised. Let me just go ahead with that. Raymond Franco, you have your hand raised. Let me go ahead and allow you to unmute. Please go ahead.

Speaker 9

Thank you. Just checking first if you can hear me. Okay. To continue on the Maya thread, just three questions on Maya. First, has there been a significant increase in the average term of the loan book? Second question, does Maya also, like the banks, employ an expected credit loss model? If yes, does this ECL model impute the higher level of inflation as well as the weaker GDP growth? Third question, any update on potential or planned listing of Maya? Those are all of my questions. Thank you.

Speaker 10

Yeah. Thank you, Raymond. First on the IPO, we're unable to comment on any speculation regarding whether it would happen or any timing on that. In regards to the increase in the loan book of Maya, what I can say is that really, their bread and butter would be the Maya Easy Credit, right? Which is a very popular short term, 30-day, maximum PHP 30,000 type of product. I would say that this primarily makes up a good chunk of their loan book. I don't know if there's any significant changes to that, although I do know that, of course, they do have a very diversified business. They have a consumer business, they have an enterprise business as well. As that mix changes, we would definitely see some changes in the absolute loan tenor as well.

Speaker 10

Regarding a credit loss model, I'm unable to comment on that in detail, but they are very well covered in terms of their loan provisioning. If you would look at the BSP statistics, they're about 100% covered there. I hope that answers your questions, Raymond.

Speaker 9

Yes. Thank you. That's all from me. Thank you.

Speaker 10

Thank you. Arthur, you have your hand raised as well. Please go ahead.

Operator

Hi. Sorry, just to follow up on Maya as well. Just to clarify, when I look at slide 34, you have PHP 1.08 billion in equity contributions versus the PHP 200 billion-PHP 300 billion that you've mentioned. Just wanted to check what accounts for that big difference?

Speaker 10

Yes. Basically, those are some value adjustments.

Speaker 3

Fair value adjustments on the convertible and exchangeable bonds.

Speaker 10

Yeah.

Speaker 3

That's the fair value adjustments on convertible and exchangeable bonds.

Operator

Okay, it's a one-time adjustment. We should really be looking at the PHP 0.2 billion-PHP 0.3 billion.

Speaker 3

That's the one time, the one below the core income.

Speaker 10

If you look at the earlier slide 12, that would include the contributions of Maya to PLDT's core income. That would, I guess, more accurately show contributions from the business.

Operator

The PHP 285, okay.

Speaker 10

Including some value adjustments as well.

Operator

Okay. Thank you.

Speaker 10

Thank you. Just check the Q&A box. Okay, some other questions from Fernandez Michael, "What is your CapEx guidance for 2027?" We don't have our budget yet for that. I guess the general direction is to continue to be very prudent on CapEx, bring our CapEx intensity down, since we do intend to make sure that we hit positive free cash flows and hopefully two times net debt to EBITDA.

Speaker 4

Continue to sustain.

Speaker 10

Continue to sustain, yes, of course. Hit two times net debt to EBITDA in the medium term. Okay. There's a question from Neil. I think we read that already on the enterprise book model. Let me just check my phone. Okay, this is a follow-up question from John Te of UBS. "Is there any guidance for 2026?

Speaker 3

Given the current condition, it's hard to give guidance, I think.

Speaker 10

Yes, very fluid environment. The guidance we can give now is in regards to our CapEx, as well as our continued efforts to be free cash flow positive. Another question from Fernandez Michael, "How much does PLDT expect to raise from tower sales in 2026?

Speaker 3

Around PHP 2 billion-PHP 4 billion.

Speaker 10

Okay. We have a few minutes left here. I don't see any other questions from the Q&A box. No raised hands as well, I think that's it for today. Thank you so much for joining us this afternoon. We hope we were able to answer all of your questions. If you missed any, please feel free to reach out to me via PLDT Investor Relations box or via my phone. We look forward to seeing you in our next earnings briefing come August. Thank you again, and have a great afternoon.

Speaker 3

Thank you very much.

Speaker 10

Thank you.

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