Good afternoon, and thank you for joining us today to discuss the company's financial and operating results for the first half of 2021. A 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. Also, a podcast of this briefing will be available on our website after the call. For today's presentation, we have with us our Chairman, Mr. Manuel Pangilinan; Al Panlilio, our President and CEO of PLDT and Smart; Ms. Anabelle Chua, Chief Financial Officer and Chief Risk Officer; as well as other members of PLDT management. At this point, let me turn the floor over to Mr. Panlilio to begin the presentation.

Thank you, Melissa, and good afternoon, Chairman MVP and colleagues in PLDT and analysts in the room, thank you for joining us this afternoon. I'm here to report the first half 2021 financial report. I have a few slides, and I will move to pass it on to Anabelle. Again, as you know, we continue to face big challenges, but we remain steadfast in our commitment to deliver the needs of our customers. And happy to report that first half 2021 we ended the half at PHP 15.2 billion telco core income, which is 10% higher than the same period last year or PHP 1.3 billion in cash terms. Our net service revenues for the first half is also all-time high at PHP 89.9 billion, increase of PHP 7 billion or 8.5% versus last year, PHP 45 billion was in the second quarter, which again was an all-time high for PLDT Smart. Our expenses also grew by 9% at PHP 3.6 billion, PHP 42.3 billion, and our EBITDA is at a very healthy PHP 46.6 billion increased by 8%, which is a 51% margin. Next page, please. Just some key highlights, key performance drivers for the first half. I mean despite the fact that the pandemic is still around and we're about to get into another lockdown starting tomorrow and the behavior of customers is shifting towards the home and sharing 1 broadband connectivity at home and the hyper competition in the wireless space, we are still happy to report that our wireless top-up growth is at 13% year-to-date versus last year. And in revenue terms, we're still up 7% as of first half of 2021. For our fiber net adds, which is our home, our home will be the star of the year, growing at the clip of about…

Hi. Good afternoon, everyone. Thank you for joining us this afternoon. So let me run you through the details of our financial results for the first half of the year. On the back of having increased revenues by 8% in the first quarter, we saw our second quarter revenues also rise by 9% to PHP 45 billion and all told PHP 89.9 million for the first 6 months of the year, equivalent to 8.5% increase for PHP 7 billion. Individual business continues to be our largest customer segment, growing 7% year-on-year to reach PHP 43.8 billion in the first half of the year. Home showed the best performance by way of its revenue increase. Home registered a 27% increase in the second quarter. And combined with the first quarter, a 23% increase equivalent to PHP 4.2 billion to hit PHP 22.7 billion. Enterprise, withstanding all the challenges out there continues to show a healthy 2% increase year-on-year. International, of course, which makes up the balance of our revenues, is down 8% because of the lack of travel and COVID. Moving forward to the next slide, with the 8.5% increase in revenues, we saw our EBITDA grow by 8% to PHP 46.6 billion, equivalent with EBITDA margin of 51%. On a telco core income basis, our telco core income for the first half of the year was at PHP 15.2 billion, a good 10% higher than the same period last year. Next chart please. So looking at the revenue trajectory over the last 10 quarters, we started 2019 with about PHP 38 billion of revenues in the first quarter of 2019. Today, we have hit PHP 45 billion for the second quarter of the year, which is a record high for PLDT in terms of quarterly revenue performance. Combined with the…

Well, thank you, Anabelle, and good afternoon to all of you. Thank you for joining us this afternoon for this analyst meeting. But on the revenue side, we anticipate continued improvement on the overall service revenues for the second half, as Anabelle noted, for the second quarter we achieved an historic high. And for the full year, it'd be another historic high for PLDT. We land at certainly north of PHP 180 billion service revenues for the full year. And EBITDA will follow. First half EBITDA was about almost PHP 47 million. So if you calculate that for the full year, it definitely will be ahead of PHP 90 billion for the full year on EBITDA terms. CapEx will be about PHP 90 billion for the full year, ahead of last year's 2020 of PHP 72 billion, that's about 25%. We will continue the build-out of our 5G network. We are ahead of schedule actually in terms of build-out. And by September, we'll continue build-out of our FTTH fiber and ports such that, in fact, we will complete the schedule build-out by the end of September. So we are considering accelerating part of the build-out in 2022 into the fourth quarter for the FTTH given the significant increase in installs by Home because I think also for 2021, Home will drive about 50%, 55% of the growth in revenue for the full year as it did for the first half. Telco core, we're guiding at PHP 30 billion for the full year. Dividend payout, considering free cash flows, CapEx and net debt-to-EBITDA ratios, we are open to going back to our old policy of a basic dividend payout of 60% and a special payout of 5% for the full year 2021 on Telco core income. That's it.

[Operator Instructions] Let me now read some of the questions that we received via email. The first set of questions are from Arthur Pineda. Mobile revenues are slightly softer Q-on-Q. Do you see this as driven by macro factors? Or do you see competitors such as Globe and DITO as taking a greater share in the market? I wonder if the new entrant is disrupting momentum or if consumer spending is just weak?

Yes. I think -- let me just answer. I think there may be factors that we have considered there. I mean first of all, I think I mentioned earlier that change in behavior of our customers -- I mean we're starting a lockdown again tomorrow. So mobility is the one that's affected by the lockdowns. So -- but to this point, the growth is being now delivered by the Home broadband. So that's the benefit of us being an integrated telco where we offer both services. And yes, there is hyper-competition that's happening in the market. In fact, there are very aggressive price offerings in the market that we're a bit concerned about. But if it's such a saturated market that anybody who -- of course, DITO has claimed that they have 2 million subscribers that they have. I guess the question there is how much of it is active. But definitely, again, if you say it's 90%, 95% active then that has to come between Globe and Smart, right? So there will be some customers who will try their service. But I think at the end of the day, after we've shown you our major investments in the network and the customer experience that we want to really offer our customers, at the end of the day, we feel that the best customer experience should prevail in the long term. So that's what's happening.

Arthur's follow-up question is, how do you see the early trends into July and August in terms of consumer spending? Are people reducing spending levels?

Well, there is an impact, obviously, of people losing their jobs. And I think it's an affordability question today in terms of the offers. That's why it is very attractive for our consumers, they see very low offers in the market. But that's really because of the situation that our customer is in. Plus, again, the fact that mobile customers today share 1 connectivity broadband service at home, I mean 3, 4 people sharing 1 service. And that's how it is as of the moment. But hopefully, once the vaccination is more widespread in the Philippines -- and we see this as temporary, hopefully, when the economy comes back to really more people going out, mobility is already present, them we see that wireless and top-ups will also continue to rise.

Next set of questions comes from Gio Dela-Rosa of Regis related to the news about the spinning off and selling our tower assets. Would you care to comment on the veracity of this? PLDT used to view them as strategic and thus not open to selling them. Has that view changed and would PLDT consider the possibility of REIT-ing them?

Well, let me take the question. Before we have cherished the position that none of our network elements -- we're not prepared to open up any of our network elements. But given changing circumstances, we're now open to considering that, and we've started discussion with certain banks who have actually been a learning experience for us if we were to consider sale and leaseback of certain of our towers that are not strategic to the overall network position of PLDT. So yes, those discussions have started on a preliminary basis. And the banks have started to sound off a number of these tower operators that operate globally and in the region, private equity investors, financial investors. So the whole universe of possible investors in our towers have slowly been explored. So that -- so that our position has changed. So we're open to a sale leaseback of a portion of our towers. So nothing has been agreed. We've briefed the Board today about that possibility and a fuller exposition to the Board will be made towards the end of the month in the next Board meeting. And then we'd have to take it somewhere.

The next question comes from German de la Paz of Abacus Securities. Would you have any comments on MNP and its effectivity by September 3?

Well, we're actually looking forward to MNP, we're getting ready for that. At the end of the day, it's good for the customer. They've got a choice, which is a better network for them, better choice on the network, while keeping the numbers. I hear a lot of my friends that they want to move, but they want to keep their numbers. So again, at the end of the day, it's offering the better plans, offering the better deal.

The next question is from Miguel Ong of Papa Securities. What are the potential constraints or challenges for satellite broadband? Will this require higher price points in plans or global offerings? And are there any patent to state that only offerings in the [indiscernible] mobile suites?

I think on that is still very early stages on -- we just signed an MOU to explore it. So we still have to see when the technology is available in the country. If that's [indiscernible] offers that we can bring to the market. But the reason why we went into it is we -- it's really aligning our purpose of making sure every Filipino is connected. And we have 7,100 islands, as you know, and some of them are reachable by fiber. Hopefully, some form of satellite hosting that's affordable and who will use the mobile handset as device and that's special handsets. That's what we're looking at as of now.

The second question, are there any plans to introduce data-only offerings in the prepaid mobile space?

Yes. Yes. I think we just launched Smart Bro on a fully data plan, Rocket Internet.

[indiscernible] On the CapEx of PHP 90 billion, would it be adjusted according to operating cash flow, such that the company would still be able to comp positive operating cash flows?

Well, as noted, the EBITDA for the year could cross PHP 90 billion. But there -- the bet, obviously, is that over time, that operating cash flow will continue to improve on the back of the returns that we generate on the CapEx. Having said that, I think CapEx this year is quite high because we are investing on several fronts, right? 4G, 5G, fiber ports, transport, et cetera, right? So our sense is that next year, we should be able to bring the CapEx down to probably closer to what it was before 2021. So that's something that we will continue to manage. Obviously, the quality of the network is something very important for us to win from a customer standpoint and to be able to generate more revenues, but it's also something that we should continue to optimize from a cash flow and spend basis.

Also from [indiscernible]. On Slide 13, the fixed broadband subs, this would be fiber-only. And so the fiber-only net adds of 478,000 in the first half of 2021, is that part of the 511,000 gross adds in the first half?

The 478,000 is a net basis. So if you look at it, 478,000 fiber only, the total was 265,000, which implies the difference is a net reduction in the copper DSL numbers.

A related question on the fiber net adds from German de la Paz. Regarding the 478,000 fiber net adds, how many of these were conversions from copper and how many are new customers?

About 120,000, if I remembered, was the upgrades from the copper. So averaging about 21,000 migrations per month in the second month. That's a rough number. Jeremiah can probably give the exact number.

107,000, Anabelle. So you're very, very close.

107,000, yes. Right. But that's one perspective. I think what we want to achieve by showing the total subs and total additions to fiber is the new connects, you're right, and the migration from DSL to fiber. Because look, those are subscribers already on the network. In the -- maybe in the short term, there is no significant impact on revenues from the migration, but it does open the opportunity for PLDT Home to sell upgrade plans and to push more content and the fiber experience is very different from the DSL experience. From another perspective, what is incremental to revenue needs is both the net adds and the -- how do you call it, the upgrades, the upgrades to the plans. So depends what you want to do. The net adds total on fiber makes it directly comparable to a Converge. If you want the revenue impact, you have to consider the net adds on fiber plus the upgrades. So we can give you both numbers, if you wish, right?

Still on the subscriber base for fixed broadband. With your current subscriber base, what is the share or split between copper and fiber?

Of the roughly 2.5 million, about 1.77 million are fiber and then about 770,000 are combination of copper DSL and DvDSL.

Next set of questions comes from [indiscernible] of BPI Securities. Hi PLDT team. Congratulations again for another set of strong results. The first question, could we get color on what you're seeing in terms of data yields? In the previous earnings call, management noted the outperformance of the value brands for mobile. Are you seeing the recessionary effects of the pandemic prey on mobile consumption and perhaps builds?

I think…

Speak louder. I can't hear you.

I'll read the question again. Could we get color on what you're seeing in terms of data and yields. In the previous earnings call, management noted the outperformance of the value brands for mobile. Are you seeing the recessionary effects of the pandemic weigh on mobile consumption and perhaps yields?

It's not so much the economic effect, but it's really the fact that the rate at which data usage is growing outpaces that of the revenue growth, right? So -- which implies there's a bit of compression on the yield. Having said that, it's only a small difference. I think it's PHP 21 yield per GB for the first half of this year versus PHP 22 average yield per GB last year. This is on the back of around 39.4 million active mobile data users in our base consuming a little over 7 GB per month. So just another data point, the data revenues for mobile grew 12% and then the traffic grew 17%. So that's why there's a bit of change in terms of the yield from PHP 22 to PHP 21.

Second question, in the light of the 182% growth in migrated subscribers and ramp-up in gross connects in the second quarter, what kind of pace do you expect for the migration of the remaining ADSL customers? Are we still looking at the end of the year? Or should we expect a faster pace of migration?

I think the plan for ADSL, as we indicated last year, was to zero out ADSL as soon as possible. So by year-end, I think we're close to about 80,000 left in ADSL and should fully migrate that by the start of next year.

So PLDT will be on equal footing as Converge. Converge is claiming that they are all fiber on the home broadband.

A follow-up question from [Fullerton], is the 2021 CapEx the peak level?

Most likely, yes.

Total year, yes, most likely.

The last question is from Myles Aniceto of SB Equities. Do you see the growth in wireless and fixed line segments somehow offsetting the depreciation of the peso on PLDT's net foreign currency denominated [networks]?

As we look at our unhedged debt is only down to 5%. So FX is not as big as a driver as it was in the past. And then in terms of revenues, it's principally now a peso-based revenue, right, unlike before, where ILD settlements was such a big part of PLDT. So it's really more and more a peso-driven business.

Also from Myles, do you see a sustained growth in your EBITDA margin to help maintain your competitive advantage in the long run?

Certainly, there are scale benefits as you get bigger, there -- which we would hope to extract and as a result of that bring up our EBITDA margins. There are -- as Al noted earlier, there are a lot of initiatives he's championing from an operating efficiency side. So we certainly believe that there are still a lot of juice to be extracted in terms of increasing productivity, more automation and digitalization. There are still a lot of cost optimization opportunities for the business.

The next one is a question about Voyager. Post-money valuation of Voyager implied by the most recent funding round, how much is PLDT's stake now?

We are not prepared to disclose that number. But recently, we invested another $25 million. So we own 38.5% roughly of Voyager. I think the general plan is that maybe 2 years down the road or somewhere like that, Voyager could potentially be an IPO candidate.

So we're still the biggest shareholder. 13.

Next question, congrats on a strong set of wireline numbers. Any color as to why PLDT adjusted broadband plans recently, the speed boost in the 1,699 plan and the price cut on the 5000 Mbps?

Butch or Jeremiah, you might want -- I mean we have some geo strategies that they're executing. Jeremiah can answer that.

Al, if I may. I just wanted to say that we continue to evaluate all of the plans that we have in market to make sure that they best satisfy what our customers are looking for, right? It's our intention that we make sure that what we do provide to our customers remains competitive, but also very, very relevant to the different use cases that they have. We see a huge increase in customers looking to use their broadband connection at home for working as well as providing schooling services, entertainment and also remaining connected with a lot of their family and their loved ones, right? As a consequence, we see the demand for higher and higher speeds become more and more important. And that's why we continue to evaluate what those price points are and what the data and speed inclusions we provide in each of them.

Next question is also related to fiber. Where geographically are the new FTTH connections strongest?

Jeremiah, do you want to pick that up?

Sure. We see demand actually very, very strong across the country, right? So we see demand actually, whether it's Luzon, whether it's VisMin, whether it's GM, we see demand very, very strong as connectivity is a requirement regardless of what part of the country you're in. I think this pandemic has really impacted all parts of the Philippines. It's affected our ability to work. It's affected our ability to logistics. It's also affected our ability to move around in general. So we see demand very, very strong in all of those areas. And we look to actually expand out our footprint as well as our installed capability across the country.

And I guess just to give a specific number, I think for Visayas-Mindanao, close to 500,000 ports each in those areas are being [indiscernible].

We're coming to our last question so just please type in, in the Q&A section if you have any questions. So this question is from [Rachelleen] of Maybank. When do you expect Voyager to show positive income growth?

2 years, I think, probably -- or maybe Vea take that question.

Sure. Thank you. Yes, we are working towards the 2023 profitability. We are expanding the number of services that we are offering. We're getting into lending and other higher-margin products. So we started rolling those out. So we are aiming for 2023 profitability.

A question on hyperscalers. Any update on the hyperscaler interest?

Jovy, do you want to pick that up?

Yes. Thank you. From the hyperscaler market that we're seeing, there's much demand that we're seeing. Not to disclose the names, that we've closed already 2 of the major hyperscalers who are now going to be colocated in our data center in VITRO Makati. There are a couple of more global cloud companies that we're talking to, and we're now working very closely also with the government so that we can make this into a major industry for the country, and we believe that by doing that, we can position the Philippines to be a hyperscaler hub in Asia. Now that behooves us to a point where we probably have to build a new data center. We are now studying that because the kind of scale that we're seeing will be in the 30-megawatt range most probably. So we're at the study phase today, but that will be pursued very aggressively.

There are no further questions.

Do you want to add to it?

Well, I think we should add a bit more color. I mean as a general -- as a general point to this hyperscaler, I think as Jovy indicated it is possibly a new -- well, it is a new area of growth. So it just depends on how substantial it can be for Enterprise. The advantage that PLDT has got is the extent of the scale international facilities and of course, the scale of its current data centers, and the geopolitics is playing, in a way, to the hands of the Philippines. Because I think the -- what we're picking up is noise concerning reluctance of some of these -- a number of these hyperscalers, the major ones, that are reluctant to locate in Hong Kong because obviously, because it's a Chinese territory. And in Singapore, they have put a limit to growth in data centers that rely on thermal power. As you know, Singapore is an all-gas economy. On the other hand, I think the government has committed to take it carbon-neutral. So I think they're looking at data centers that do offer, as much as possible, renewables. So that's where the -- so the links will have to avoid as much as possible international cable. Next avoid as much as possible the South China Sea. So that puts the East Coast of the Philippines as a potential place to locate data centers, including in the Eastern Seaboard of Mindanao. And at the same time, I think the relationship of PLDT to Meralco and Meralco's own pivot towards renewables is a very key factor, both as a source of power and of course a cost of power, which is a major expense for data centers. So I think that that's -- I think you were asked earlier about where the growth would come from. This could be a major source of growth for the Philippines in general and certainly for PLDT. So we should really try to exploit that advantage, partly driven by the geopolitics.

We don't seem to have any more questions in the queue. If there are no further questions, we'll now turn the floor back to Mr. Pangilinan for closing remarks.

Well, I think there was a question asked about the satellite. It's really a niche market. It is not -- I think we turn to it because Cignal obviously is a big user of satellite capacity. And so they have -- they can easily, together with Smart, be capable of rendering or delivering broadband in the hardest reaches of the country. But it's very expensive. I mean the service is expensive. The cost to transform those is expensive. So I don't think it will be at least in the foreseeable future mainstream purveyor of broadband. But it is -- if in education, for example, you need broadband capacity, we can deliver that. Nobody else can. Anyway, thank you for joining us this afternoon, and we look forward to seeing you again with respect to the third quarter results. As I indicated, the way forward for Enterprise looks promising for the second half. The number of transactions that we've closed in the second quarter, we see the benefit flow in the second half. And certainly, PLDT Home appears to have acquired a significant momentum in the second quarter, and that seems to be flowing through to July-August numbers that we're seeing in terms of in stock. So we anticipate that actually, in terms of the revenue growth, PLDT Home will have as much as 60% of the improvement in revenue -- of the aggregate revenue improvement for 2021. Wireless is a bit of a concern. I know you've seen some softness in the numbers. I think partly driven by the recessionary conditions containing at the moment. To what extent that has softened it, we actually don't know. But it's also partly driven by significant competition that is emerging in the market. And what worries us is that this -- it appears to be price driven, and we're worried about that. We have not responded to it yet. We will have to maintain a watch in brief to see how that develops because we cannot afford to lose market share. So I think pricing is the oldest form of competition, it really is. It doesn't take a genius to match what the other guy did. So we hope to see you again in November when we announce our third quarter results. Thank you.

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 your participation. Stay safe.