PLDT Inc. (NYSE:PHI) Q3 2023 Earnings Call Transcript

PLDT Inc. (NYSE:PHI) Q3 2023 Earnings Call Transcript November 7, 2023

Melissa de Dios: Good afternoon, and thank you for joining us today, to discuss the Company’s Financial and Operating Results for Nine Months of 2023. 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.pldt.com, under the Investor Relations section. Kindly note that this briefing is being recorded. A podcast of this event will be available on our website after the call. QR code for the presentation is on the screen, and the MD&A, FS and podcast will be made available after the call. For today’s presentation, we have with us Mr. Al Panlilio, President and CEO of PLDT and Smart; Mr. Danny Yu, Chief Financial Officer and Chief Risk Officer; Marilyn Victorio-Aquino, our Corporate Secretary and Chief Legal Counsel; Mr. Shailesh Baidwan, President of Maya Philippines and Co-Founder of Maya Bank, as well as other members of the PLDT management team.

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

Al Panlilio: Thank you, Melissa. And good afternoon to all, and thank you for joining us this afternoon. And I’d like to start off the presentation with a few highlights of the business, and then I’ll pass it on to Danny, for more detailed financial highlights report, and then to SB for Maya. Happy to report the first nine months performance for PLDT-Smart. Growth was made possible in nine months, 2023 performance. To start with, we have ₱142.3 billion or 1% growth in revenues, which are nine month high revenues for PLDT. We also had an all-time nine-month high for our EBITDA, of ₱78.4 billion, which counts for the same period of last year, able to maintain margin at 52%, EBITDA margin. Telco core have shown growth also, plus 2%, ₱26.1 billion for the period.

And also want to share the CapEx being managed down ₱55.3 billion versus ₱67.3 billion, of same period last year. So because of that, the Cap intensity gone down to 37% from a high of 46%. That’s clear. And Page 2 next page. So, we are continuing to expand the network, countrywide. We improved – we increased our fiber footprint — our domestic fiber footprint by 4%, and that’s now up to almost 894,000 kilometers. And if you add the fiber optic of backbone of – in terms of our subsea it’s about 1.1 million kilometer of fiber. Homes passed is ₱17.31 million, up from ₱16.78 million, last year. I’m also happy to report that there are no more device latched on to our network, passive return 74% growth. Now we have 3.64 million who are latched on to 5G devices environment network.

Jupiter Cable Systems, which we launched last year, and was also got certification for IS0 22301 BCMS. And just an update on the tower sales that we started about a year and a half ago, two years ago. We closed 1,319 closed towers as of November 3, generating proceeds of about ₱17.4 billion. And in total, from the first sale that we have, we’ve already completed, turnover 5,984 towers, equivalent to approximately ₱78 billion. Next page, please. Happy to report also – next page. The recognition that we’ve gotten as a group, both locally to back market – locally and globally. Ookla [ph] has rated Smart as the best in test, both upload speeds, download speeds, and latency experience, and has been a consistent winner since 2019. Time Magazine actually also put PLDT as the only Philippine telco named, and is ranked highest in sustainability among six cited Philippine companies, recently.

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Q&A Session

And we continue to also get awards in terms of the governance initiatives, and scorecard and recognition, which recognize PLDT, upholding high standards of corporate governance. Next page. Our three business units continue to push for growth through innovation. Smart, we continue to empower digital lifestyles through exciting, personalized offers. And we have [Alex Caeg] here today who can answer your questions on what’s in store for our wireless customers. And by the way, we have now the highest in terms of sub base 55 — sorry, 55.2 million subscribers now on Smart, and PLDT being the number one prepaid brand in country. PLDT Home, Jeremiah De La Cruz is here, he can also share with you some of the plans, and keeping families safe, connected, productive and entertained, of both offers on the fiber and fixed wireless products that we have launched in the market.

And PLDT Enterprise, both Mitch Locsin and Gina, ensuring that we’re able to provide innovative solutions for the digital transformation of the industries that we cover, both large companies and also institutes. Next page, please. Next page. So staying true to our company core, on sustainability. We did put — we had a digital convention held last October, called Vision, and talked about — discussions in the Digi Hub, was about sustainability — in-depth discussions on sustainability and the program that we have embarked as PLDT, that we have School-in-a-Bag turnover, with guest of honor, DICT Sec. Ivan, during that time. And we also implemented E-Waste Collection Stations for delegates, same with the second pillar here where we put it in our businesses where we’re collecting all phones, chargers, devices, modems to properly dispose of this equipment.

And in fact, also in FEBA we did an initiative for sustainability where we collect PET bottles, plastic bottles that we want to also expose sustainably. Next page. Our push for vision building through a public and private collaboration remains to be strong. PLDT Group joined the call for the creation of a Connectivity Index Rating through PISAC, to elevate internet quality in the country, which could bring great things for customers and for people to be able to raise building its — connectivity. We also partnered with Maya, backed by the GDP, DTI, Cashless Expo 2023, which should — just happening this month. And during also the DIGICON, we launched the first ever sovereign cloud, with DICT, to help fast-track digital transformation of the country’s public sector.

But it should also be used, obviously by private sector, as soon as the IRR permit guidelines have been submitted by government. Next page, please. Our PLDT Smart Foundation remains to be very busy, in serving our communities. Just to highlight, our Lab for All public health initiative by the First Lady, is supported not only by PLDT, but also MVP group of companies, others that we continue to grow. Next page. So at this point, we will continue to innovate for tomorrow, but we’re excited for innovations today, and we will continue to push this last quarter to make sure that we end the year — not behind. So at this point, I’d like to move the presentation to Danny, for more details regarding our financials.

Danny Yu: Thank you. Good afternoon, everyone. I’ll be presenting the financial and operating highlights for the first nine months of 2023. Service revenues of ₱142.3 billion for the first nine months of 2023, were higher by 1% compared to the same period last year. On gross basis, service revenues of ₱149.8 billion were up 3% from ₱145.7 billion in 2022. Operating expenses decreased by 3% or ₱1.7 billion to ₱63.9 billion. Consolidated EBITDA rose by 4% to ₱78.4 billion, an all-time 9-month high with EBITDA margin at 52%. Telco core income, excluding the impact of asset sales and Maya, grew to ₱26.1 billion, up 2% year-on-year. Next page. On a segment basis, revenue growth was broad-based. Individual revenues representing about 43% of consolidated revenues rose 1% to ₱60.6 billion.

Record highs were adjusted in the Home and Enterprise segments. Home revenues rose 2% to ₱45.3 billion, with Fiber Only revenues having risen 10% to ₱39.3 billion. Home revenues — our Enterprise business grew by 1% to ₱34.8 billion. Let me now go through the segments in greater detail. Next, please. Home Broadband revenues grew by 2%, Fiber Only revenues, which now account for 87 total Home revenues, were higher by 10% or ₱3.6 billion compared to the same period last year. As a result, across our installation plus migration and low churn, Fiber net adds re-accelerated in the third quarter with 88,000, compared to 42,000 in the second quarter, bringing the total net adds for the year to 210,000. The gross of our Fiber Only revenues and the sequential albeit modest improvement of revenues from our fixed wireless broadband business, underscore our view that the home broadband market remains underpenetrated, we can serve demand more at the lower market segments that’s more sensitive to price.

Unique to PLDT is the ability to complement our fiber offer with others, at different price points, using varied fixed and wireless technologies to address market affordability. PLDT continues to enjoy strong brand equity and superior network quality, making it a formidable competitor in the market. Next, please. Data and ICT remain the key drivers of our enterprise business, which registered a revenue increase of 1% to ₱34.8 billion from the same period last year, with third quarter revenues up by 2%. Corporate data grew by 6% due to higher fiber and managed IT data revenues. ePLDT recorded a 10% increase in revenues mainly from data center and cloud services. With the Santa Rosa Data Center capacity expected to come on stream ahead of competition in the first half in ’24, ePLDT is well positioned — actually the robust demand from hyperscalers.

In addition, our growth pipeline is fueled by our enterprise team’s focus on enabling digital transformation of corporate SMEs and government, through the creation of smart cities and the first sovereign cloud. Next, please. Positive trends are also manifesting in the individual segment which has faced various challenges over the years. Revenue for our individual business rose by 1% in the first nine months of the year. In the third quarter, which is historically low, revenues were higher by ₱100 million versus first quarter, and ₱400 million higher than the same quarter in 2022. 2% and 6% growth in prepaid and postpaid revenues in the third quarter supported year-to-date revenue implements compared to last year. Mobile data revenues jumped ₱52.4 billion, with active data users of almost 38 million and following a 15% price in data traffic.