Good afternoon, and thank you for joining us today to discuss the company's financial and operating results for the first quarter of 2020. A copy of today's presentation is posted on our website. For those who have not been able to do so, you may download a copy of the presentation from www.pldt.com, under the Investor Relations section. For today's presentation, we have with us, Mr. Manny Pangilinan, Chairman and CEO; Mr. Al Panlilio, Chief Revenue Officer; Ms. Anabelle Lim Chua, Chief Finance Officer; Ray Espinosa, Special Assistant to the CEO; as well as members of the PLDT management team. Before we start the presentation, we'd just like to remind everyone that later in the Q&A session, you will have to type in your questions, which we will read out loud. At this point, let me turn the presentation over to Ms. Anabelle Chua to start -- the floor over to Anabelle Chua to start the presentation.

Good afternoon everyone. Welcome today to PLDT's first quarter 2020 results briefing via Microsoft teams. I hope everybody can see the slides that are being flashed on the screen. Let me start by saying that we saw the continued growth momentum from 2019 in the first quarter of 2020, with limited impact from the enhanced community quarantine or ECQ which took effect only towards the tail end of the first quarter. Our service revenues rose by 9% to PHP 41.5 billion in the first quarter, a new high in quarterly revenues. This increase was primarily driven by data and broadband services. The consumer Individual business group once more set the pace for growth, posting $20.2 billion in revenues, 20% up from the first quarter of 2019. PLDT Enterprise generated $10.1 billion in revenues, 3% higher than the previous year, while PLDT Home increased its revenues by 5% to $9.6 billion. The consumer and enterprise business groups combined grew by 11% to generate $39.9 billion of service revenues, 96% of the total. To make up the balance the international and carrier business group posted PHP 1.6 billion of service revenues, which are 25% lower than prior year. Next slide. With the 9% increase in our service revenues, our EBITDA increased 8% to PHP 21.6 billion in Q1 2020, as the increase in our revenues more than compensate for the increases in our operating expenses. EBITDA margin remained at a healthy 52%. Our first quarter telco core income is PHP 6.9 billion, lower by 5% year-on-year as the rise in EBITDA was offset by higher depreciation and financing costs, resulting from higher capital expenditures, the offshoot of the PLDT group's sustained network rollout program. Next slide. Viewed from the vantage point of the last three years, we've seen our service revenues climb…

Hi, good afternoon. Thank you for being here today and I hope everybody is keeping safe. Again, just to – just highlight what Anabelle said I think we had a very strong performance for the first quarter albeit there was a weakness in the second – or the last two weeks of March. But I think we ended the first quarter even higher than our highest quarter last year fourth quarter. So that's pretty good news for us. Again, we're delivering this to – again it showed that the company is very resilient a lot of collaboration done internally to be able to continue to serve our customers and that has been our focus. So, if I may go to the next page please. So during the first quarter, we continued with our programs the 18 million full connections and I'll go deep into this in the next few charts but really making sure that we push on our wireless business being again Anabelle said 77% of our business there on data. Home, we continue to also provide connectivity obviously through fiber and fixed wireless. And really the focus – and Butch is here in the room with us focused on enhancing the customer experience by making sure that we're able to install quicker and repair quickly also. Enterprise has been a focus area also for us pushing fixed line broadband and data and also wireless broadband, which has been a requirement tail end of the first quarter and into April, when the lockdown was in place. And again, enterprise operating solutions that are already becoming the next normal the BCP, business continuity programs, and I think this will be part of every business' way of working now. Work from home component together with office environment and we deliver this…

I think I'm the last speaker here. So, good afternoon to all of you and thank you for joining us in this briefing. I only have three points to make in terms of conclusion. First is, on the full year prospects, we think it is a little early for us to give you a clear view on how the full year core income would pan out. We have indeed run scenarios internally, but we're finding out there are many variables to deal with in this context and environment some of which are unknown at this point, such as for example the quarantine period whether it will be extended and to what extent; if it's going to get lifted; the government stimulus package; credit availability from financial institutions; and overall economic conditions. I believe the government has reported out that the first quarter the economy has -- GDP has contracted by 0.2%. [indiscernible]

No. This is the chart that I saw. Yes.

So that's where we are in terms of guidance on our telco core. But the second point relates to the revenues. The momentum that we saw in 2019 continues to be carried forward in 2020. First quarter revenues the aggregate of Home Wireless and Enterprise grew by 11%, 9%, if you include the international business. The second quarter outlook on revenue we expect the growth rate to soften by low to single-digit growth principally because of the ECQ impact, but higher compared to last year. So if you combine the 1Q growth and the 2Q revenue projections the first half revenues will be ahead of last year. The CapEx we are -- we're expecting the CapEx spend to be down by 20% to 25% of the PHP83 billion, we disclosed late last year or early this year. So, it will be down to about PHP60 plus billion range. That is not a matter of choice for us. It just reflects the current conditions where there are supply chain difficulties from abroad in terms of the shipment of the relevant equipment that we're importing and supply chain conditions or difficulties locally as well and of course the ability of our of the labor force -- of our labor force to install repairs in the relevant barangays. On dividend payout we're maintaining a policy of 60% of telco core. That's of course subject to no significant changes -- average changes in the economy or in the financial position of the company moving forward, which we don't see actually. So, just about it.

We're now ready to take your questions. [Operator Instructions] So, the first question. Would you we'd like to clarify how much is the decrease from the planned PHP83 billion CapEx in 2020 and which business segment is affected by the decrease in CapEx and why.

Can you answer the question?

On CapEx decline, bringing down the CapEx was in -- what areas will the decline be in CapEx?

I think Joachim--

Maybe he can get this one.

Go ahead.

Yes. Okay. So good afternoon. As MVP said, the CapEx decline is about 20% and that is mainly driven by our inability to spend. It's not a choice. The normal business with like rollout connecting our customers will not be as much impacted by the CapEx spend as much as it is impacted currently by the inability to access certain locations which are restricted at the moment because of ECQ and general quarantine. So, the delay will not be felt so much this year as it probably will be felt next year, but it gives us also a substantial time to catch up in the second half of this year. So, it will be -- it is too early to say what exactly which business will be impacted. From a client perspective, I personally believe that the business as usual will be able to continue with only a slight impact. Maybe some of the new projects 5G, for example, will see a few months of delay because of the delay of being able to spend.

The second question is can we get some insights on current subscriber behavior? What kind of plans are consumers subscribing?

The view on subscriber base. What kind of plans are subscribers picking up?

Okay.

Well, insights on behavior.

Yes. For -- well for mobile it's really your GIGA offers that are picking up and I think 50% to 55% of our top-ups are now coming from the GIGA traffic. Jane is also on the line so if you can also add for home. It's fiber and fixed wireless that are growing. Both are growing and obviously connectivity at home. Butch is here also.

Yes, if I can share for Home the biggest product that exploded post-lockdown was really fixed wireless and it was good that we were able to start launching our fixed wireless product towards the end of the year. So, we were able to somehow capitalize on that demand and that explosion. On the fiber, definitely our programs and our plans at the 1299, 1500 level is also gaining a lot of traction. But what we are foreseeing is that in post-COVID, now that we have been able to do a speed boost where our subscribers at 1299 are able to feel the impact of a 25 Mbps minimum speed, we feel that with the new normal, they are going to require this kind of speed as well and not be content with the original speed of about 10 Mbps. So, for Home these are the plans and products that are actually gaining a lot of traction. We hope to launch postpaid fixed wireless very soon. So, we feel that will be another product that is going to hit the market and have strong demand.

So, if I may for individual, we actually did experience some initial challenges in terms of usage during the early parts of the ECQ right given the mobility issues and maybe cash liquidity issues. But we've actually managed to address some of those challenges. And therefore from a lower top-up -- or top-up for the month of April actually went down 70%. But this May, we're actually seeing that it's going to be up to levels that we had observed in the first quarter of 2020. In fact the top-up performance most likely will be higher than YAGO. So, this is really driven by customers using more data products. And our data products are actually priced higher than our legacy products. And there's -- we've observed that they're actually buying higher denominations of 200 and above. So, these are higher denominations with longer validity. So, the focus in May is to ensure that we create more data products that address the needs of customers. So, even if we had observed lower activity because some customers had no access to load on an average basis for those next-gen actually paid more and buying more.

But if I may just add to that on wireless especially on top-ups. I think we had a very strong first quarter in top-ups and as we went into the second half of March that slowed down significantly, obviously, because of what Jane is saying. And -- but post-Easter -- so Easter Monday up to this day, the volume has picked up again and it's the level at the level of the first two and a half months of this year.

Pre-COVID.

Pre-COVID. So, it's been a good take-up again lately and I think there are more big failures now that have zero balances and are able to sell. It's really more of a supply issue rather than demand. The demand is there.

Okay. The next question. Do you have any idea how much PLDT spent on the virus, the nation's supports for the community? And how much was expensed in the first quarter and how much more do you expect in the second quarter?

Well we do have -- if I could speak to that. We do have an idea of how much PLDT has so far spent and not only of course PLDT, but the other group companies Meralco, the Tollways, Maynilad and so forth. But we don't -- as a matter policy, we don't publicize that. We're just there. I think there's one particular Governor who called and say "We're in need of food. Can you supply us rice et cetera et cetera?" I said, yes, of course we'll do that. So it's across the board. Our hospitals we are participating actively for example in testing because the government wants to ramp with up to 30,000 tests a day for our hospitals. And the groups are participating in acquiring test kits and in upgrading the laboratories of our hospitals located in the hotspots and we intend to mobilize mobile laboratories in order to supplement the capacities of our laboratories to -- for testing. So I don't know what else do we -- quarantine facilities, we've equipped them with water power, telcos and whatever else the government -- because of the Tollways. So I'd rather not give you a number. We're there. I think we -- in every tragedy that has struck this country, I think we're proud to say that we're there. You will see the Meralco linemen repair people and trucks and equipment being sent to areas, typhoon areas for example typhoon-affected areas even if they're outside our franchise like the….

Actually Batanes and Leyte.

Batanes and Leyte, right? So we just -- we don't -- we have an idea of the cost, but I think it's sufficient to say that we're there.

Yes.

Okay. Here's the next question. With regards to fixed installations, how much of the installation team is out versus pre-COVID levels?

Jorn, do you want to take that?

Yes. Yes. I can take that. So we are probably at 60% to 70% on a daily basis and that's because of the COVID rules we have implemented to protect our customers and also our teams down. But what we did was we moved to a seven-day shift. So we have every day people going out for five days a week and then the teams change. So we have one-third typically doing back-office work and two-third are out. Together with our suppliers, which help us on the ground in serving our customers, they are also at the moment at about 60% to 70% of the capacity before ECQ and it's going up every week. We're almost back in terms of total install capacity to where we have been before ECQ. The main constraint we have today is that there are a pretty high number of locations who do not allow us access despite of the IATF IDs we have and special letters from DICT who want to encourage the barangays to give us access. But we cannot go everywhere, so we are not able to repair everywhere and to serve every customer need. Otherwise, I think our capacity is coming back. And I think by end of this month, we will be back to normal rollout capacities.

The next question, can we get clarification on the guidance of low mid single-digit quarter-on-quarter contraction? How is this split between fixed and mobile? And what assumptions are being brought in? I'm wondering what's driving the material difference in guidance between yourself and your competitors?

Who wants to take that difficult question?

Well, I think all three segments as MVP mentioned will show growth vis-à-vis 2019. And I think it's been really a collaborative effort across the company to make that happen in terms of -- even during the lockdown. I mean, it wasn't only in the CRO team. The network was there. The legal was there to get our IATF cards, so we were able to get out there as soon as possible. Of course, finance helped out legal regulatory. I mean, everybody just chipped in. And really the focus for us is really just to serve the customer. We really just focus on what we can do and best we can and that's serving our customer. So hopefully with that and the past decisions on a very good network, the investments that has been made in the past two years is benefiting us today. Even though there's a surge of about 20% to 25% in traffic across the board both Home and obviously Wireless, our customer experience remains to be very good. And we just have to continue that and continue to serve our customers. Enterprise for sure our customers are challenged and we will continue to hold hands with them and help them pick up where they left off. And we will just continue to serve whatever solutions, connectivity, requirements that they need. For example BPO, during the start of the lockdown, they were forced to work from home and there were massive requirements on work-from-home devices. And that's why about 40,000 to 50,000 of the fixed wireless solutions from home have to be transferred to the requirements of enterprise because there was a demand. So again, there's a major push on fiber. We still have a lot of ports we can sell. That is still our competitive advantage right now. Fiber, I think is still a more solid service, a dedicated service to you and guaranteed speeds that we can offer you vis-à-vis fixed wireless. But we are offering both. And a third offering we have is the pocket WiFis. So it's just really focusing on what we can do best for our customers and that's just -- our main objective is to serve the customers.

Yes. And maybe just a comment on competition. So of course, we do compare our performance with their performance on a periodic basis because that's a reference point. And whilst it is an important consideration for us, I reminded our management team that the standards we should set for ourselves are related to the potential of the our business, right? So if we have a superior network now and we think there's latent demand still for the wireless side, the home side and the enterprise side, we should push the business to the standards we're setting for ourselves. So that for me is the main criteria by which we should plan, especially at this inflection point where whether by choice or not behavior and practices are pivoting towards the digital type of things. And that should give us opportunities, opportunities to emerge, for the group to really take advantage of the potential that lies ahead for us.

There's a similar question here. It seems like more resilient with regard to the ECQ than the competitor, especially on the mobile side. In fact, there were higher mobile data subscribers quarter-on-quarter and good growth in overall data stack. Some loss in ARPU, but not significant. Do you think there is some element of market share gains in the second quarter numbers? Other factors behind the relative stability in mobile spend in particular?

Jane, do you want to pick that up?

Yes. We've actually seen significant growth in our data users. On a year-on-year basis, we gained around close to five million fresh data users and there's a lot more in our base that are still on legacy or basic call and text. So we're actually quite confident that our usage for data and therefore our revenues for data will grow in the coming months. And, certainly, we've gained some shares on revenues from competition. I think for the period, the growth in the industry for mobile, in particular, was largely due to our performance in Smart.

The next question is for our outlook. For Enterprise, are we seeing customers scaling down operations?

Is that the question?

Yes. It's the message.

The message. They're not online?

No. There's a chat. There's a chat. And this live event doesn't allow --

The media was --

But it was not live event.

Okay. Anyway. So to the question.

Sorry, Melissa, can you say it again, please?

What's the question again? We soft of just distracted.

What's the outlook on the Enterprise? Are you seeing customers scaling down operations?

Well, yes, I'll ask Jovy also to chime in. But just to answer that quickly, I think, of course, there customers are very impacted by it and thinking also how they progress post lockdown. But there are also opportunities, as I said, for example, BPOs, there are opportunities where work-from-home solutions are provided for. And there's a major requirement. And this becomes really part of the new way of working. It's not anymore just a BCP, a business continuity program, but it really becomes a way of working moving forward, the combination of office environment with work from home. So there are opportunities in that space. But we're here to obviously help out our challenged customers, enterprise customers where they've been impacted by this pandemic. Jovy, you might want to add a little bit more.

Yes. Thank you, Al. So, yes, the complexion of the enterprise segment today is kind of mixed. So there are a lot of -- especially, the small and medium enterprises who have really been impacted. And predominantly, businesses have just shut down. Now that being said, we are seeing pockets of excellence in some industries. I mean, like BPO, as Al alluded to in the first two weeks of the lockdown were all scrambling, but we have seen a resurgence. In fact, the latent demand that we have on connectivity is quite high and a lot of discussions are now happening on a per industry basis, for us to be able to prepare for a post-COVID scenario. So rather than taking a look at this situation from a pessimistic angle, the Enterprise group of PLDT remains positive and then -- and we're very focused now in terms of how we can help, particularly industries, on how they are going to do business moving forward. Now the capabilities of the group spans across not only connectivity, but also now on the ePLDT side, when you take a look at IT systems that are very important in a post-COVID scenario, I think, businesses were just not that prepared for a pandemic. Now, a lot of the companies now are preparing for post-COVID scenarios, wherein they will be more prepared. So we're looking at a surge in our data center revenue. Cybersecurity is a hot topic now. Even our hospitals now are being attacked by hackers, even in this time of pandemic. So there's a lot of activities that are ongoing and we think that there is going to be a different kind of virus, yes. So if we have frontliners, the doctors and the hospitals out there in our data centers, we also have our own frontliners, but they're inside the data center making sure that all of the systems are up and running 24x7. So, again, to recap a lot of people can take a pessimistic view of the enterprise side. But we feel that with all of the activities and all of the discussions that we're having with industries, we look very positive in terms of the outlook for the second quarter and also for the second half of the year.

The next question is on refarming. Just curious on which bands are currently being refarmed and which bands right now are actually being used for LTE. Also, digital capacity in percentage can that provide, assuming refarming targets are --

Jorn?

Yes. I'm here. Okay. So what we have been doing -- this is already completed two weeks ago. We have been taken 5 megahertz of 1800 megahertz spectrum, which we are currently using both for 2G and for 4G. We have taken 5 megahertz from 2G and moved it to 4G. That we did on almost 4,000 sites in the Philippines. And depending on how much spectrum was being used before by LTE, on those sites, the capacity increase can be between 5% and 15%, 20%. Currently we are using 700 megahertz 850, 1800, 2100, 2300 and 2600 for LTE. So there's a broad variety. The whole process took only 10 days. It could be done completely remotely because of the modern base stations. Everything was software-defined and people can do it remotely, even the optimization afterwards. No quality impact for GSM. So our GSM customers have the same level of service as before. And what we did in addition was also to -- on some 100 sites, like 150, 180 sites we use actually spectrum dedicated for 5G that's 2600 and moved it to LTE. There the capacity increase is massive, because this is massive MIMO technology and we could gain 30% to 50% on those sites. And we have done this in particular on those sites which have experienced a lot of traffic. Do you think that answered the question?

Okay. The next question is about zero balance retailers. How prohibitive are the logistical constraints to address the supply side bottlenecks? Is there a way of digitizing the process of replenishing credits of dealers?

Yeah. I guess Alex, might be on the line also. He can be -- I mean, if you talk about frontliners being, doctors, and also the installers, and network guys, of PLDT and Smart, the sales guys also are frontliners. They've had to really put their lives at risk also just to reach out to retailers. As you know, they're about 1.2 million of them. And at some point, there were a lot of zero balance retailers. That was the initial -- no, no. The last one is very difficult for us to move around. But yes, in times, like this there are also opportunities. In this case really online has come into play. And we're really looking at that. I mean, Alex can expound a bit more, but we are also helping our RDs come up with their online platforms. And I think our online websites have been very active. The volume has started to pick up both from Wireless and Home. So definitely technology will only improve this moving forward and from an analog point of view a way of working to more in digital.

Here's the next question. Can you resume your network rollout during GCQ?

Yeah, network rollout in GCQ, general quarantine.

So, yes, we are -- actually we never really stopped. There was just the first week where it almost came to a still stand mainly because of lack of protective equipment for our people. But since that supply is guaranteed we had -- in March, the rollout went down by 65%. So we had only one-third of the original capacity. In April, we were back at about 60%. And I think, it will continue to improve in May. So that our rollout and this is mainly related to mobile network, we will be back on track, probably in one or two months from now completely. But we are still able to expand the substantial amount of sites. Those who are most challenged, if we can access them we do expand. And on fixed, I mentioned that before, we are almost back on track in terms of rollout of, fiber to the home. So -- and so far the answer is clearly yes, we can. As far as we get the permission to install. And that's a major constraint, now going forward.

The next question is on Voyager. Can you share guidance on how big the profits and losses -- profits or losses, we can expect from, Voyager?

Is Doy on the line?

Yes. Both Doy and S.B. are on the line.

Okay.

This is S.B. So for us in Voyager when we look at the three lines of business, the wallet, the merchant enterprise and the remittance network the Smart Padala, all three businesses are showing strong growth, even in the current COVID period. We are seeing pockets of some stress, especially with our travel merchants. But across the wallet we are seeing more than doubling versus last year. Across merchant acceptance we are seeing strong growth even in e-commerce, and of course in areas like pharmacies and supermarkets. And then on the Smart Padala network, the domestic remittance has been very strong, because that's been the lifeline for a lot of people to send money and receive money, from cities to provinces and the likes of that. So we have an investment plan to grow aggressively in 2020. But we are realizing efficiencies on our growth side. So at this stage, our plan is to hold our losses to the same level as 2019, while delivering significant growth and realizing efficiencies, from the growth at this stage across all the businesses.

The next question is on bad debt provision levels, trending into the second quarter. Given PLDT's larger exposure to contract revenues, given the sizable fixed line component. Do you see a material rise in defaults? In some other markets we see this balloon to up to two times, even before the impact of the quarantine.

Anabelle?

Yeah. Let me answer that. During this period, of course we have suspended what we call treatment and disconnections at this point in time. And we have given payment relief and extended payment terms effectively for our customers. So as Al mentioned earlier, what we have decided to do as a pragmatic matter is to allow the unpaid balances to be amortized over a six-month period. So clearly the assessment will be done in terms of the appropriate levels of provisioning depending on what we see in terms of collection rates, in the next few months. It will hinge largely on, how I guess the economic performance will be how people are able to come back and pay. So that's something that we will have to assess in the second quarter and in the third quarter going forward depending on our experience when things come back.

There's a question on, how the ECQ affected daily operating expenses. And if yes, how much has daily expense burn increased?

I think there are pluses and minuses. So for example as mentioned earlier, we have had to put certain facilities in what we call a lockdown mode. So we have asked people to stay in. We have asked -- we have provided for, food and other provisions for those who are in lockdown facilities. So in that sense, there’s extra spending for those. But there are other areas where we are able to see reduced, let's say, overtime reduce utilities, used in some of our offices, reduced on-ground selling activities. So, all told, I guess there are things that are up and things that are down. So I think part of the internal management is really to, really keep a tight watch on our OpEx during this period. I think one of the things just really to highlight in the first quarter numbers, we did advance the 13th month pay for our people. So typically that 13th month is paid, in the last quarter of the year. So you typically would accrue the expenses over the year, but because of the advancing of that 13th month pay then from a timing standpoint that all got booked, in the first quarter.

The next question, I'll weave two questions together. One is asking about, color and how the consumer behavior and competition was in the ECQ, any meaningful change in consumer behavior? And then, is there any shift in behavior on the mobile side. And the outlook on how consumers will adjust going into the second and third quarters of the year?

Jane, you might want to answer the mobile.

Yeah. So as I actually said earlier, we're seeing higher top-up bucket sizes among our consumers. They're essentially buying higher denomination data packages. Our basket prices actually increased on a Q-on-Q basis at least April comparing it to the first quarter of 2020 by around 10%, right? So people are buying higher top-ups, people are buying longer-validity loads. And the decrease actually was observed among those from the low-value segment, and I think this is really largely because of cash issues on top of the retailer zero load challenges that we had experienced in the early parts of the ECQ. Once the ECQ is lifted, because now they're more exposed to the more sophisticated data packages that we have, we do expect that that behavior will continue and they will be using more of our Giga packages, Giga videos, Giga stories, Giga games. And we just recently introduced Giga Work actually. So those are higher priced versus our legacy call and text offers.

Okay. The last question we have is with respect to the current dividend policy. I think this was mentioned by MVP earlier. Will the 60% payout be sustained?

What's the question Melissa? Where does…

Will our dividend policy be sustained?

Well, that's – well, the policy stays. We're sustaining the policy as we speak. There's been no thinking about changing it. Now, of course, I don't know whether things will get -- could get worse in the course of this thing, this pandemic. But so far the company is doing well, so I don't see a basis for changing the -- that policy.

Yes. There are no more questions on the queue. So if there are no further questions, we just want to inform everyone that the podcast of this briefing will be available on our website after the call. We turn the floor back to Mr. Pangilinan for his closing remarks.

Well, thank you to everybody for joining us in this briefing. I think the next public event of PLDT is the Annual Shareholders' Meeting on June 9th. And we like -- I hope we could -- right now it's -- we've gotten Board approval to do it online. I hope we could do it not online. So anyway, so we hope to see you on the 9th of June. And in the meantime stay safe, stay healthy. Thank you. Thank you to everybody.

That concludes today's briefing. As always should you have any further questions please reach out to PLDT Investor Relations. Thank you for your participation.