For today’s presentation, we have with us Mr. Manny Pangilinan, Chairman and CEO; Mr. Al Panlilio, PLDT Chief Revenue Officer and President of Smart Communications; Ms. Anabelle Lim Chua, Chief Finance Officer 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.

Thank you, Melissa. Do we have the presentation? Thank you, everybody, and thanks for being here this afternoon. Let me just flash the presentation. Julie? Melissa, do you have it? Sorry.

Let me – yes, we’ll just check.

Okay. Thank you. Again, we are reporting our first quarter 2021 financial operating results. Before I pass on to Anabelle, I just would like to go to a few slides. Next page, please. It’s been a – still a very difficult first quarter. As you know, the lockdown remains to be in place, and really, vaccination, it won’t come in until the second half of the year, and there’s just a lot of restrictions in our business as we speak, no? But our growth means getting it right for our customers. We owe it to them to do our very best despite this challenging environment that we are actually currently in. Next page, please. Having said that, happy to report – next page, please. Happy to report that our first quarter revenues for 2021 hit PHP 44.8 billion. This is PHP 3.3 billion in revenue terms above same period last year, or 8%. If you recall, our fourth quarter 2002 – and fourth quarter, normally the highest for the year was at PHP 44.9 billion. So we were not far off from the second – from the fourth quarter of last year. So we’re very happy with this performance despite the challenges that we face, no? And 76% of the revenues are attributed to data, which is really an incremental PHP 4.5 billion versus same period of last year. Next page. And if you subdivide this into the four segments. Individual, although challenged during this time because of the issue on cash mobility and wallets being – because of the economic issues, the wallets of our customers are also challenged. Despite that, it still grew at 7%, or PHP 1.4 billion, in revenue terms to end the first quarter at PHP 22.1 billion. Enterprise, also challenged, with a lot of…

Thanks, Al. Next slide, please. As Al has previously communicated, we hit PHP 44.8 billion in the first quarter of this year, exhibiting an 8%, or PHP 3.3 billion, growth year-on-year. As you can see from this slide, our highest growth was registered by our Home business at 19% accounting for PHP 1.7 billion or more than half of the growth that we showed last year. Individual continues to be on the growth path with PHP 1.4 billion, or 7% increase; and Enterprise, showing a steady 4% increase. Next slide. On the back of this 8% increase in our revenues, we were able to see our EBITDA hit PHP 23.3 billion, or a 51% margin, thereby showing a 7% growth year-on-year compared to the PHP 21.6 billion level last year. While our expenses are higher, that’s also partly exacerbated by the higher provisions that we booked this year at PHP 1.6 billion versus PHP 1.1 billion in the first quarter last year. Although I must note that the provisions of PHP 1.6 billion is lower than the average that we recorded last year. With the higher depreciation and financing costs coming in at about PHP 1.3 billion higher, we were able to still report PHP 7.5 billion telco core income, higher by 9% year-on-year compared to the PHP 6.9 billion last year. Next slide. Just to also go back a bit in time, in the first quarter of 2019, our total service revenues were at PHP 38 billion. A year after that, that was PHP 41.5 billion. And this year, first quarter, we hit PHP 44.8 billion with the 8% increase year-on-year. Next chart, please. Data clearly propelled the growth in our revenues with data broadband revenues up 15% year-on-year and now accounts for 76% of overall revenues. Next chart.…

Thank you, Anabelle, and good afternoon to all of you. Hello?

Yes, boss. We can hear you.

Thank you. In terms of revenue for the full year 2021, we anticipate that revenue will grow in the high single-digit revenues overall, and that assumes a fair part of the – the major part of the year 2021 will be more or less under lockdown conditions, no? We’re seeing good growth in April and in May, the first week of May. And in fact, trending towards low double-digit growth for the second quarter. So it depends on how the government will relax restrictions in the second half of this year in terms of its effect on our revenue growth for the full year. The most encouraging growth is coming from the Home Broadband, as Anabelle indicated, that grew by about 19% for the first quarter. And it’s likely to continue in the high double-digit number around that 19% to 20% for the full year. There’s a bit of a headwind on the Wireless side, although momentum will be sustained on the Wireless side at high single digit for the full year. The Enterprise is challenged, but we’re seeing growth in our data centers and in the hyperscalers side of the business. CapEx guiding towards around PHP 90 billion, PHP 88 billion to PHP 92 billion. No change there. Telco core, PHP 29 to PHP 30 billion, albeit, I think, the trend is moving towards or the bias is moving more towards the higher end of that range for telco core for the full year. And dividend payout as we guided, I think, sometime in March, we’re guiding at 60% plus 5% special dividend for the full year out of the telco core income for 2021. So that’s it for the outlook. We’re ready for your questions.

[Operator Instructions] The first set of questions comes from Bern of ATRAM. Congratulations on the earnings. I have a few questions. So I’ll read the questions one by one so that we can get to them before we tackle the next question. The press release stated that PLDT Home total upgrades and installations in March 2021 hit 129,000. We’d just like to ask, what’s the split between upgrades and installations?

About 110,000 of that is new connect and in the balance [indiscernible]

So it’s mainly new connects, mainly new connects.

And then she says, this is for Fixed broadband and does not include Wireless?

Yes.

Yes. It’s just – it’s a fixed broadband. No…

And a related question, how is the trend of applications and installations for Fixed broadband so far in April?

I think in terms of demand, demand remains to be very, very strong. Our connects next in April, I think, we will – we have – we will surpass 230,000 installations for the month of April. So we’ve actually – as I said earlier, we’ve increased our capacity to install a little over three times from the same period last year, and we will continue to improve that.

Do we have a target for homes passed for 2021?

We do. But not sure we want to see that publicly here.

We have stated our target more in terms of the number of ports that we will build out.

And then she asks, what have you heard on the ground about Dito?

In terms of? I guess we know that they want to launch also in Luzon after the launch in Cebu and Davao. But maybe those questions are best for Dito to answer. But what we’re hearing from the ground is, of course, they’re also establishing their presence in these areas. But at the same time, we think – initially, they had an offer of unlimited until the end month of April as an initial offer to its customers. But they’ve actually retracted that starting mid-April. And they have stopped the unlimited offers now. So that tells a lot in terms of what’s happening to them. I think the initiative started with very high speeds in their service, but dropped rapidly as they had their customers in their systems. That’s why, I think – our hunch is that’s why they had to start their unlimited offers.

There’s another broadband-related question. When does PLDT expect churn on Fixed broadband to ease?

I think it’s starting to do that. Al? Last year churn.

Yes. Yes. Our churn in the fourth quarter last year was slightly above 2%. I think what we’ve seen, at least for March and April is at the 1.5% level. Our budget is actually 2%, but that has come down also with a lot of effort – efforts coming from Home in terms of making sure that we’re able to address our repair capability so that we have customers whose service might have some problems being repaired within one or two days. And that’s a significant dropped in terms of repair time. We’ve also offered a lot of upgrades on their packages so that they can experience better connectivity. And we continue to push the higher plans, no? I don’t know, Jeremiah, if you want to add a few more things on that one.

I think I’d probably – just add to that, what Al is really talking about the continuation of our copper or fiber migration, right? So copper or fiber migration we announced in August last year, which was moving our ADSL customers to fiber as quickly as we possibly can. So we saw actually that, that program has kicked off in a big way this year, and we’ve been able to do 20,000 of those migrations through for the first quarter. And our intention is to ramp that up and actually move over as many of those customers as we possibly can, as quickly as we can. So I think all of those things together combined to help bring down the churn level. I think as you pointed out, Al, our quarter one churn level is below quarter four of last year. We’re seeing the trajectory continue through the second quarter as well.

I think if – just as a final point on ADSL, I think, most of it, if not all, no, and maybe it might scale over some time in January, but we’re hoping that all of 700,000- plus ADSL subscribers are already on fiber by the end of the year.

Okay.

There’s a question for Ms. ALC. When will adjustments from the retroactive application of the CREATE bill for the second half of 2020 be factored into earnings? And how much would this be?

We already included that in the first quarter report. So that was one of the items that was an adjustment between our telco core and reported income. So the net effect of last year’s retroactive application is a net of 110,000. That’s really actually a positive impact in terms of the reduction of actual tax paid by about PHP 500 million and then a deferred tax adjustment of PHP 5.6 billion, so net of 100 – PHP 0.1 billion, or PHP 100 million.

Next questions comes from Miguel Sevidal of BPI Securities. Congratulations for another strong set of results. Two questions for me. Number one, may we ask for the split of the 2.5 million Fixed Line broadband subscribers between fiber and DSL? And would it be fair to attribute the bulk of the quarter-on- quarter ARPU improvement to the DSL to fiber upgrades? Or are you also seeing some upgrading to higher-value plans within your fiber subscriber base? That’s the first question.

No, no. I think it’s both. There are also some upgrades from our existing subscribers. In fact, there’s a program that Jeremiah and the Home team have established to exactly do that, just to upgrade. I think there’s about 120,000 that upgraded in this first quarter alone into a higher plan. And as we mentioned earlier, I think, the bulk of the new installs are actually – of the new installs are new customers, so that’s an uplift. For copper, what was the question, Melissa, on ADS

Whether the increase in our ARPUs are due to the migration from copper to ADSL? Or whether we’re seeing higher top ups, or I guess higher ARPU, from the existing fiber subscriber base?

Yes. It’s both, but I’m not sure about the ratio Jeremiah. Do you know which one is…

Sure. I’ll take care of it. I’ll just jump in. I think what we’re seeing in the market is, obviously, with everyone spending more and more time at home, right, needing to both study – not just to study but also work as well as play from home, the demand for bandwidth has actually increased quite a lot. And that demand is actually showing itself on two fronts, new customer acquisition. So as customers actually come onboard, they’re starting to want higher and higher plans. So we are seeing an uplift in our acquisition ARPU. Customers are wanting the faster speeds because it’s a shared service. It’s a service not just being used by one or two people. In fact, it’s actually being used by multiple children in the household as well as parents working from home. The second side, and as Al has alluded is, we’ve actually had some very aggressive and also some very strong take-up within our base. We’ve had over 120,000 customers over the course of the first quarter that have actually availed our faster upgrade plans, right? So we are also seeing that need, that desire for faster connectivity coming through from our base, and we expect that demand to actually continue as we get more and more inquiries with the different types of packages we are making available to our base.

The second question. In the previous earnings call, management mentioned that the goal was to secure common tower agreements for 95% of the planned cell tower builds. May we ask for an update on the new cell tower build so far? And if the new common tower agreements have been signed?

Yes. We’ve actually signed up with 50 common tower partners, and we’ve actually had an initial – almost 1,000 towers that we’re already piloting with them. And that’s as an ongoing project for our network build. So yes, we have engaged.

The next set of questions come from Arthur Pineda of Citi. Can we clarify why mobile data has jumped with Fixed wireless broadband, which is classified under a different segment previously? And secondly, it seems that Mobile revenue is just slightly lower quarter-on-quarter. Is this just a seasonal factor? Or are there other factors such as competition or weaker public consumption at play?

Yes, sir. There is definitely some seasonal impact there. But in general, what we see are subscribers, particularly from the low to mid-segments, economizing. We have a significant growth in our value brand, TNT, and that is actually really showing signs of more than double-digit growth on a year-on-year basis. Subscribers are also latching on to a lot of our promotions. We just ended the Giga Mania, and in that particular promo, we did offer a lot of really good deals and freebies for customers. In addition, we have observed a shift in traffic from Mobile to Wi-Fi home solutions. So this is an off-loading that’s happening. And we see less network traffic over multiple cell sites, indicating that there’s really less mobility, and therefore, the consumption for the mobile service is actually a little bit challenged. But it is still a growth – a good growth on a year-on-year basis. It’s growth 8%. And we are seeing some improvements in the second quarter, particularly in the latter parts of April and in the early parts of May. So we are hoping that our second quarter will be significantly better than our first quarter.

So the next question is from John Te, and it’s similar to the question that Jane just responded to, but I’ll read it anyway. Congrats on the strong fixed numbers. A few questions on Mobile. I understand the lockdown is part of this. But both net adds, particularly on Smart and ARPU were softer. Any more color, particularly on the competitive front?

Sir, may I answer that?

Yes. Yes, Jane.

In terms of subscriber numbers, we do see a softening on the top line subscriber figures. But the more important metric that we actually monitor is VLR and SWE and SWR. So that’s subs with events and subs with reload, because those are the subscribers that actually give us our revenues. And it is worth noting that’s actually pretty stable, a double-digit growth on a year-on-year basis. But on a month-on-month basis, there’s a slight softening on SWR. In terms of competition, we – it’s too early to say whether Dito is impacting the business. In fact, in the two areas that Dito launched their service in March, which is South Cebu and Davao, we’re actually seeing some growths, right? So we really don’t think that this is really due to the economic environment, both micro and macro factors, right? And then people are really just tightening their belts at this time.

A follow-up question from John. There were more promotional activities like more data for the same price. Do you think this encouraged spin-downs?

Well, actually, we did launch the double Giga sometime April. This was really because we wanted to strengthen the brand, in anticipation of the launch of Dito, right, and their expansion in Luzon and NCR this year. But what we are very proud of is we’re actually not competing on price. If you notice, competition has brought down their price points, even pushing PHP 10 per day price points, that is the same for Dito pushing unlimited at some PHP 200 level. We’re not doing that. What we are doing is we’re trying to upsell and in doing so, actually giving more benefits in terms of better data inclusions. And I think it’s been successful so far because we’ve managed to actually protect our basket size. So in the middle of this economic health challenge and competitive challenges, on a basket size area, we’ve actually managed to increase it.

I guess if I summarize that, really, a stronger network and stronger marketing programs.

Yes. We are fighting it out in the marketing space and not on the price – pricing space.

The next question is from Ranjan Sharma of JPMorgan. How is PLDT monetizing 5G investments? Are there any 5G plans? And how do ARPUs of 5G compared to 4G?

Okay.

Okay. Well, we were able to g et permission from senior management to rollout 5G only, I think, in the first quarter of last year. So 5G is actually still in its very early stages. But in the areas where we have it, in Metro Manila, in urban areas like Cebu and Davao, we are seeing a significant lift in ARPU. It’s actually more than 120%. So as we roll out more 5G networks and as handsets become more affordable – because right now, they’re really anywhere between $200 to $1,000, and we won’t be able to scale with that one. But when we create a balance between 5G coverage and affordable handsets, then we should be able to see 5G contributing more to our revenues.

Next question is on Voyager. What are the capital requirements of Voyager?

Okay.

Sure. So in terms of capital requirements from existing investors, we had a round of investment last year in May, I believe, in May 2020. There was a follow-on, on that right now effectively on this quarter, which is shoring up our finances. That looks to be keeping us busy for the next few months. And so, the capital requirements for Voyager at this point are on hold, and that should keep us busy for – again, for the next few months, probably into next year. In terms of the way that the team has been performing, we can answer that separately.

There was an e-mailed question. Considering the breakthrough levels of installs that have been achieved, how much more do you expect to install in the coming months?

Is this for Fixed broadband?

Yes sir. There was an e-mailed question. Considering the breakthrough levels of installs that have – we’ve been able to achieve in the first quarter. The demand remains very, very strong in the marketplace. So one of the things we want to do is continue to actually increase that capacity as fast as we can. Where that ends up, really, it’s going to come down to how many resources are available in the marketplace, some of the efficiencies we’re looking to build into with our processes and being able to install customers faster. But it’s our intention to try and actually lift that up as high as we possibly can for the remainder of the year. We talked at the beginning of the year about having quite an aggressive rollout program of 1.5 million ports, right? And a key part of making sure that we can secure – further secure further CapEx is making sure that we utilize as many of those ports as fast as we can. So it’s our intention in Home to continue the momentum that we’ve had in the first quarter, to ramp up that installation capacity more and more.

Yes. I think – and the way we measure it or get an indication of how strongly the demand is, is that our – the service orders – or the orders – the applications, Jeremiah, are significantly ahead of our actual installs, growth, right, for Fixed broadband. So that’s above, way above what we have so far been installing on a growth basis.

And to – further to your point, Manny, I mean, we are in a situation where we have customers that have been waiting. Some customers that wait for quite a while before they can get a PLDT service. It’s absolutely our commitment to shorten that wait, right? And we want to serve as many of those customers as we possibly can. So we need to really lift up and ramp up that installation capacity.

Yes.

What is the current overall network backbone capacity of PLDT?

Sorry, Melissa, we lost you for a bit. Say it again.

What is the current overall network backbone capacity of PLDT? Yes. The question is about backbone capacity. I hear it right?

Yes. Right now, we have 470,000 kilometers of fiber. That’s the backbone capacity that we have.

An e-mailed question. What is the target GTV of Voyager for 2021?

Doy? Doy said that it’s – Paolo, you want to answer that? Because we’re just about to call Doy. He said it’s at least 3 trillion, right? 3 trillion GTV for 2021s?

That’s correct. That’s correct. There hasn’t been a firm figure that we’ve come out publicly with, but it will be at least 6trillion.

And then there was a question, I guess, following Jeremiah’s response earlier. Have we seen an improvement in waiting time for service to be delivered from the time of call?

Yes. Jeremiah Dela Cruz So we have seen an improvement in terms of waiting time on two fronts. Really, there are one reasons why mainly customers call us. One is follow-up to applications. And the second one is follow- up to repairs, so whenever they’ve got service interruption. I can share with you, obviously, as we ramp up our installation capacity. And Anabelle mentioned it that it hit total installations in March of just shy of 130,000. As we ramp that up, it means there are less and less customers that are actually waiting for that installation to happen. right? So we are seeing that those installation wait times are actually shortening. However, having said that, though, despite the ramp-up, we still do have a significant number of customers – customer applications. Our SO levels are still much higher than our ability to install. So there is still a segment of the market that we have not been able to get to, and that’s why we absolutely want to be able to continue to ramp up our installation capacity so that customers don’t have to continue to wait. On the second front – sorry, Al.

Yes.

Just going to mention on the second front, really around service interruptions and repairs. There’s actually been a very, very strong focus into ensuring that customer repairs are being dealt with as quickly as we possibly can. We’ve seen that actually start to bear fruit. And it’s started to bear fruit because we’ve been able to get to – we’ve increased our capacity to repair, and that’s reduced the number of customers actually waiting for repairs on any given day, right? That number has come down to a point now that most customer inquiries or customer issues are actually being dealt with within 48 hours, right? Now that’s a significant improvement to what we’ve had in the past. It’s our intention to continue and improve on that, right? That’s really not where we want to be. We want to be even faster than that. But it is actually a huge improvement to what we’ve had in the past. Now that’s not to say that everybody is being dealt with immediately. It will really depend on what the customer issues are, and there are times where that may take a little bit longer. What I’m sharing with you is the vast majority of customers that do have an issue, we are actually able to tend to those issues within 48 hours.

Yes. Our aspirations on – there’s still so much we can do. That’s why we have a lot of projects to automate also our process, moving to self-care as far as customer is concerned, which is a journey that we’re embarking on. But to the point of Jeremiah, I think, at the end of the day, I feel customers still want the PLDT service. It’s really just our ability to fulfill those orders, and that’s why our aspiration for installation is actually within the day and repairs within four hours. That’s our aspiration today. We’re not there yet, obviously, but that’s something that we’re striving for.

And then there’s an e-mailed question on Enterprise. You speak about hyperscaler opportunity. Could you give some color regarding this?

Okay.

Thank you, Al. Yes. So the hyperscaler market is senior market that we’re looking at. When you talk about hyperscalers, these are the very large cloud companies globally. So I’m sure all of you would know the usual names. Some of them are existing customers already. But when we compare the way they put they put their facilities in a specific country, and when we compare ourselves to Southeast Asia, they have been more active in putting their availability zones, as we call it, putting their servers in our neighboring countries. And because of some of the geopolitical issues that abound, and some factors, like Singapore has already reached its limit in terms of carbon footprints, so they cannot any more build data centers, the Philippines is becoming very quickly a very viable option for these global hyperscalers. And that’s something that we really want to pursue. That’s why our Chairman alluded to the fact that this might become the next BPO industry also. It’s going to be – it’s not going to be easy. We have to work with government. But I think we have the right formula with the BPO companies. So we did it way back – a decade ago. And we think that there’s going to be a very big upside in the hyperscaler market, not only for revenues, but for the country as well.

Next a question on our new endorsers. What is the impact of the business of the new Korean endorsers and now the Thai endorsers?

Boss, I’ll answer that. Yes. Well, let me talk about the more recent international endorsers that we introduced and that’s BTS, right? We introduced them to the market last April 22. And without going into specifics, I will say that in that – in the fourth week of April versus the third week of April, we did see some growth already and this growth continues on in the first five days of May. And BTS, in particular, is actually endorsing the brand Smart Prepaid. And for the first time in many months, it’s actually outpacing TNT in terms of activations. So I think I can conclude that it’s a good investment, and we will continue to maximize the investment for the business.

I think – let me add to that, no, and Jane knows this. I think it’s really building affinity to the brand. And it’s something that we know our youth wants today. And maybe we can ask our CFO, Anabelle. She has watched thousands of Korean drama, I’m told.

Sir, actually, the reality is right now, no? The center in the heart of pop culture, not just here in the Philippines, but globally, it’s the K wave. That is the reality, right? That’s why in the Philippines, there’s a lot of following for K-Pop, K-drama, K-food, all kinds of K, even Filipinos are learning the K language. So this is essentially us putting our brand at the heart of this pop culture, and I think that’s a wise thing to do.

And I think it speaks a lot about not only the brand, but the company, particularly Smart, where you have global companies like BTS, global brands themselves and Chris Evans to be associated with PLDT Smart. I think that says a lot about parallel aspirations for not only the companies that we run, but also with our endorsers.

All right. That was the last question that we got, and there’s no question in the Q&A 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 now turn the floor over back to Mr. Pangilinan for his closing remarks.

I would simply like to say thank you to all of you for joining us this afternoon. We’re already midway in the second quarter, and I think we release our first half results sometime early August, no? So we look forward to even better numbers for the first half and – right, Al?

Yes sir.

And we look forward to meeting you again some time in August. Thank you. Thank you so much. And Happy Mother’s Day to everybody.

And that concludes today’s briefing. As always, should you have any further questions or clarifications, please reach out to PLDT Investor Relations. Thank you for joining us this afternoon. Stay safe.

Thank you.