Good afternoon, and thank you for joining us today to discuss the company’s financial and operating results for the first quarter of 2022. A copy of today’s presentation is posted on our website. For those who’ve 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 broadcast of the event will be available on our website after the call. For today’s presentation, we have with us our Chairman, Manny Pangilinan; our President and CEO, Mr. Al Panlilio; and Anabelle Chua, Chief Finance Officer and Chief Risk Officer; Mr. Shailesh Baidwan, President of Voyager Innovations and PayMaya Philippines, 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. Good afternoon, and thank you for joining us today. Let me start by saying that I’m very proud to show you the performance for the first quarter 2022. We are showing Telco Core net income of PHP 8.2 billion, which is I think, if I’m not mistaken, all-time -- a quarterly high since 2015. So we are -- this is 9% higher than the same period last year or PHP 700 million higher than the PHP 7.5 billion of last year. In terms of net service revenues, all-time high for net service revenues of PHP 46.4 billion, which is a 3% growth versus same period last year or PHP 1.5 billion increase, and this was driven by the following segments. For sure, the one driving the major growth -- the major driver for revenue growth is Home at PHP 13.6 billion, which is also quarterly high for Home, 25% increase in revenues or PHP 2.7 billion. Wireless is down versus last year at 20.4, amidst the challenges of the lockdowns and the Odette issues that flowed through the first quarter of this year. But we are seeing a turnaround in the second quarter, and the second quarter should be an improvement from the first quarter moving forward. That’s where we’re seeing new programs coming in and our top-ups are increasing month-on-month. Not there yet, but at least reversing the trend in the past few quarters. For Enterprise, also an all-time high for them, PHP 11.6 billion. This matches the fourth quarter number last year. 7% growth versus the same period last year or PHP 800 million growth. And for carrier, which is a long tail in this business, as you know, PHP 0.8 billion for the quarter. So for our expenses, we are actually down 3% versus…

Thank you, Al. So let me just recap again what Al had showed earlier in terms of our first quarter overall top line results. So service revenues came in at PHP 46.4 billion. That’s a record high and a 3% increase year-on-year over the first quarter of last year. Home and Enterprise led the growth with Home at PHP 13.6 billion or 25% higher year-on-year. In fact, when you look at the fiber-only revenues within Home, that’s about 80% of the total Home business, it’s 74% year-on-year growth for our fiber revenues. Enterprise also did an impressive 7% increase year-on-year to hit PHP 11.6 billion, also a full-time high. Individual remains to be our largest revenue contributor at PHP 20.4 billion. Rounding that up is International, about PHP 0.8 billion, which is also down year-on-year. Next chart, please. Just to show the way our revenue has been building up over the last 9 quarters, you see that from PHP 41.5 billion starting point in the first quarter of 2020, we now have registered PHP 46.4 billion of revenues. And the increase also from fourth quarter to first quarter was PHP 0.2 billion versus what usually happened, like last year, for the first quarter dip versus the fourth. We didn’t have that this year. So all told, the 3% increase resulted in an all-time high of PHP 46.4 billion for the quarter. Next chart, please. So for our Home business, just to also show the growth trajectory over the same time frame. So you’ll see that from a PHP 9.2 billion quarter base in the first quarter of 2020, we’re now at PHP 13.6 billion, having added subscribers last year of over 1.1 million and now another 213,000 of fiber net adds in the first quarter of the year. We continue…

Thank you, Anabelle. So for the last quarter, even as we were getting ready, and I’ll talk about the Maya Bank launch and the whole rebrand of our PayMaya, we were building our core businesses on the consumer side of the house, which is where we serve people through our e-wallet or app and also an on-ground network. We expanded the number of registered consumers to 47 million. On the payment side of the business for the enterprise solution, which is our acquiring business, where we process Visa, MasterCard, domestic debit, QR, all kinds of payments. We expanded that network, continue to be the #1 in terms of key industries and retail industries in the Philippines, and the points of acceptance where we enable payments to be done by MSMEs, by SMEs, large enterprises, in payment gateways and also omnichannel provision of payment services. And then we have an on-ground network, which we operate through mom-and-pop stores where people who don’t have their own digital wallets or not quite ready, we service them through this digitized on-ground network of 63,000 agents and expanded that too. So why they grow our core vectors on the consumer and enterprise side? It was a busy quarter for us to pull together new services, which would enable us to create an all-in-one money platform, both for consumers and an all-in one money platform for the enterprises. And that was done on the back of revamping all our payments, introducing new investment categories like crypto, adding insurance and, of course, launching Maya Bank, which enables us to offer deposit taking and also credit services. So I’ll give them a little more color on the next slide, please. So in terms of -- thank you. So in terms of completely revamping and from a consumer perspective,…

Okay. Just dealing with the outlook and guidance numbers for the year, for the full year. Service revenue growth is expected to be in the mid-single-digit growth range with home broadband leading the way in terms of revenue momentum. We expect revenue growth for the home broadband to be in double digits for the year and in absolute quantum value, higher than the growth in 2021. Enterprise is expected to registered a stronger performance underpinned by ICT and Data Center for the course of the year. I believe that would be high single-digit growth for the enterprise business. And the wireless continue to face challenges, but I believe it will be flattish for the full year 2022 to 2021. Telco core income is expected to be at PHP 33 billion for the full year, flowing from better cost management, principally the MRP that Anabelle referred to earlier, and increased revenue, better EBITDA in the course of the year. CapEx. First of all, we’re raising estimates from the PHP 76 billion to PHP 80 billion range. We gave out in the early part of this year to PHP 85 billion, owing to requirements of the business and the exigencies of competition. And of course, the CapEx, additional CapEx spent for towers, which are the subject of the sale and leaseback recently announced. But nonetheless, after key CapEx in 2021, CapEx is being managed to guide below 40% of service revenues starting this year and over the medium term. The cash picture is expected to get much better starting 2022 with focus on delivering positive free cash flows in the course of the year. EBITDA is expected to be up PHP 108 billion this year and CapEx being PHP 85 billion. So the ratio of EBITDA to CapEx is 1.3x. And I think expect to maintain that level of surplus of EBITDA to CapEx in the coming years. So it’s important for us to deliver free cash flows over the medium term. The cash position of the company will be helped in the first instance with the preferred shares return that Anabelle mentioned, which has already been received to the tune of PHP 7.8 billion. And of course, the PHP 77 billion proceeds of tower sale, which should be received in the course of the year, starting end of May and in the third and fourth quarters. So the ultimate goal is to get deleverage sub 2x net debt to EBITDA. And, of course, to pay a special dividend in the -- when we announce our interim results sometime in August, late August, early September this year. That ends our guidance. Back to Melissa.

We’re now ready to take your questions. [Operator Instructions] First question is from Arthur Pineda. Arthur, you may unmute your mic. Arthur? We can go to the second question Hussaini. You have your hand raised. You can unmute your mic now.

Yes, sure. I just have multiple questions. First is on mobile competition. So is it possible to guide us that the decline in mobile revenues, what portion of it is going to audit? And as we are seeing some recovery in the space, so I just want to understand the level of recovery. Are we already pre-COVID level? Or will it take time for us to reach there? And then what are the factors which is kind of holding it back? Is it competition? Or is it just the general purchasing power, inflation or things like that? That’s question number one. The second question is on the CapEx side. Now the increase in CapEx, which to an extent is linked to tower sale and leaseback. So if PLDT has to reinforce the towers before transferring to the vendors towers -- vendors or tower folks. So just want to understand where the incremental CapEx is going on the tower side? And finally, on the PayMaya, I think that there are most of them in fees. So I just want to understand that is the cash bond linked to the launch of Maya Bank? Or is it linked to the date of the app and things like that? So what is driving that incremental cash burn on the PayMaya side?

I guess I’ll have the first question first, but I think Jane is also on the line. Just to answer your question, I think there are several factors at the mobility opening up, how lockdowns have stopped. So hopefully, there’s no more -- any virus or any pandemic that will force the economy to lockdown again. Yes, there is an affordability issue that we are seeing. That’s, of course, competition. We are not yet at pre-COVID levels. But I think we’re seeing the next quarter to be -- is closer to the second quarter of last year. So that’s something that I think we’re a bit positive about, that there is a change in trend in terms of the mobile space. But Jane, you might want to add a few things, and I think the programs that you implemented this first quarter.

Yes. Yes, sir. On the -- that’s right. Our revenues in the mobile wireless space hasn’t quite reached pre-COVID levels. As you know, we were challenged in the second half of 2021 as well as the lockdowns were extended. In fact, there was a hard lockdown in August and then there was this anticipated impact of Odette. But we’re very encouraged with the signs of growth that we are seeing beginning middle of January. And on a month-on-month basis, our top-ups are growing, our subscriber activity is actually growing, our average basket size is growing. And that’s really a combination of the reopening of the economy, which was implemented in the third to fourth quarter of February, as well as the programs that we had implemented early on in the year, in fact, beginning the second week of January. So this includes programs like GIGA Power. And currently, we’re running free TikTok for all. And the objective of these programs is not only to differentiate our service, I mean, it’s a heavier competition from both -- different player, but also to really stretch our home from -- our most valued customers.

And just as a follow-up question on this set. So how would you characterize competition? Has the competition remained stable, vis-à-vis, the previous quarters? Or has it kind of elevated or escalated from the other operators?

Sorry, if I may answer that. It’s actually been rationale, I think, in terms of pricing. Clearly, the Dito in particular, product proposition is really hampered on price. But we’ve been able to hold off responding to that because of, as I said, the many values that we give our subscribers. So it’s not been as bad as -- it could be worse than what it is now. The bigger challenge we are seeing actually with the entry of a third player is the increasing levels of dual similar base. So we’ve seen that doubling from around 13% to closer to 25%. So when people have more than one SIM, then they kind of spread their usage, of course, across 2 SIMs, right? So the goal is to make sure that Smart becomes the primary thing.

Should I answer on the tower?

Yes, go ahead, [indiscernible].

Yes, there is no incremental spend for the towers. It’s an acceleration because most of our towers were in the permanent upgrade because of 5G and so on. And we -- in those towers which we sell, we have to complete that work a bit earlier than we thought. For example, tower replacements. So that moves a bit of CapEx from next year to this year. But there is no additional spend unplanned because of the sale.

Again, the third one is the PayMaya question. SB?

Sure. So the investment has been in 3 areas, Hussaini. So first of all, on the core payments business, on the consumer and enterprise side, we’ve made sure that we set the unit economics from solidly positive. So the investment is for acquisition, which has a payback period, of course. So we’re investing in acquisition and growing on the payment side. Then there are new services that they’re introducing, so for our investment, we spoke about crypto and we spoke on insurances. These give us margins from the get (technical difficulty) to continue to access capitals.

Arthur is not able to unmute his mic, so he sent these questions in. The first of his questions is regarding CapEx. What is driving the PHP 5 billion to PHP 9 billion increase in CapEx? How do you split this between network CapEx, data center and dollar-related CapEx? And based on this, PHP 77 billion proceeds from the tower sales is actually lower if we net this down. Is that how we should look at it?

The answer is yes. The effect of retrofitting those towers to make it salable, which should be [indiscernible].

So when we show the premium to book value, and we show that the book value was PHP 23 billion, that is inclusive already of the additional CapEx that we are booking this year. So it’s still PHP 77 million versus the book value of PHP 23 million, inclusive of the excluded ongoing CapEx?

And the second question is why aren’t you guiding up more materially on the profit expectations? Given the PHP 3 billion implied annual net savings from the deal, shouldn’t we see a recurring profit?

I guess it’s a timing question of when we will. The PHP 3 billion is the full year impact, assuming 100% done, right? So given that we’ll have some of it, I guess, flow through the year. But it’s a little unpredictable in terms of when the final closing will be and how many months in fact on that.

And then the third question. On mobile momentum, are we seeing any improvements in the second quarter with the market reopening post-pandemic? Are we see any connection related spending uplift in the second quarter? Or is this phenomenon no longer applicable given the shift into data?

Well, I think we are indeed seeing growth in second quarter. We expect second quarter growth for us to be higher than the first quarter. We are not seeing much of the election spend this year. I mean a lot of it is just on social media. It’s all just on this data, so not a major spike. I asked the question to the team as early as early this year, and we don’t expect any major spikes during the election.

And then Arthur’s last question. What is the outlook on mobile data, noting that the first quarter revenues are flat year-on-year? When are you expecting this to be?

We continue to push the adoption of data among our subscribers. We’re actually at the 80% level now on the prepaid base. So the objective is really to take the remaining 20% to using data, we are promoting a lot of usage offers. We call them SKUs to promote data use. Right now, our biggest campaign, which is free TikTok for all, actually attempts to stretch the data spend of customers from the entry price point of PHP 50 all the way up to PHP 99. So yes, penetration for data has actually increased in the past several quarters. So the objective now is to actually speed value from customers by making them spend more through the values that we put in our products.

Next is a question on data center. Can you discuss the expectations of a new data center? When should we start seeing material contributions from this?

I think [George] is there. But in terms of a timetable, the completion of the last -- of the 11 data center will not -- the target is some time for 2023. So we expect hopefully revenue to stream in 2024. But George , you might want to add more details.

So just to quickly add from the VITRO Santa Rosa perspective, the revenues from that will come in May 2023. But we’re also expanding on the current set of 10 data centers. So we expect our growth rate from the data center revenue perspective, 29% in Q1, to continue to be at similar, if not higher levels in the next few quarters.

This question is from Rachelleen of Maybank. In full year ‘21, Voyager registered PHP 2.3 billion in equity losses. With PHP 700 million in equity losses in the first quarter, do you expect the same level of losses this year? And when do you expect to reach profitability?

So as I mentioned earlier, in 2022, given that we have a major undertaking of the launch of the bank, we were able to do it very fast under 6 months, pretty much on the 6-month -- just over 6 months after getting the BSP license in September ‘20 on the back of leveraging on all of the expertise that we have on the payment side. And using that synergy across both the businesses. However, we would need to invest through 2022 at levels similar or maybe slightly elevated versus 2021. As we roll out the new products and services through the course of 2023 is when we should start seeing, we start moving towards the end of 2023 towards a positive potential breakeven.

And lastly from Rachel. Can you share the percentage of fiber subs over total fixed line subs? When do you expect migration completion?

Jeremiah? [Ph]

Sure. So I’ll answer the second question first. We have a plan to actually migrate all of our ADSL customers to fiber. That’s something that we’ve been working on since last year. And we anticipate actually all the database fiber customers who might have -- database ADSL customers to be migrated over by the end of Q2. We do have some customers that are actually using voice-only services, which will actually then be the next focus for us happen in Q3. That’s not the end of our copper customers. We still do actually have quite a large VVDSL base. That’s where we will turn our next focus on to, which is actually migrating our VVDSL customer base over to our fiber network, which will go into 2023. But as a percentage, we have approximately 400,000 customers on our copper network of a total of 3.1 million total base.

Hussaini, you have your hand raised again.

Yes. I have a couple of questions. Wondering on the margins, and there has been quite a decent reduction in the provisions. So I just want to understand, is that level sustainable? Or there was one-off kind of a reversal in the first quarter? And the second question is on the data revenue. Yes, we are kind of increasing the revenues on the existing data centers. Just want to understand from where those revenues are coming? Is it coming from the enterprises or mostly coming from licenses?

On the provisions, I guess we do follow the expected credit loss approach, which does take into account actual experience in terms of collections, but also forward-looking items with respect to macroeconomic factors. So I understand we have the chance to reduce it a bit because of provisions we have hiked -- ramp-up in the last 2 years during the pandemic period. So we didn’t need to raise our provisions as much when we assessed it during quarter 1. But now of course, it’s a continuing assessment. What we do need to look out for in the subsequent quarters through the impact of the higher inflation and other macroeconomic development, vis-à-vis, the ability of our customers to continue their payments.

Question on data center. Go ahead, George. [Ph]

So we see -- if I understood the question correctly, so we see growth in both segments of our customers from a data center perspective. So we’re seeing growth from enterprises and we’re seeing growth from the hyperscalers. Although from a momentum perspective, we’re seeing most of the growth -- a larger part of the growth is actually coming from the hyperscalers.

The next question is from [indiscernible]. You may unmute your mic.

I have 2 questions. First one is on Dito. Can we make any type of guess on how much market share is Dito having at the moment? And then how is it compared with, let’s say, 1 year ago? The second question is on the mobile data revenue, right? It used to grow at about 20-plus percent a year before 2021 and slowed down to 6% last year and then become flat this quarter. So I wonder how much is that is driven by competition? And is it -- and how much is driven by basically the consumer power? So if we think like in the normalized situation, let’s say, by next year, what kind of assumption that we should make for mobile data revenue growth?

Yes, I don’t think Dito has released official figures. But to us, we do monitor the consumer proxies, for example, FB Insights, right? And with FB Insights, we are seeing Dito shares to be around 5% right now. I think they ended last year with around 2.5% to 3%. So we are still the dominant player as far as the FB Insights, FB user base is concerned, but that’s the kind of growth that we are seeing from Dito. And in terms of data usage, if you remember, sometime 3 quarter of last year, we actually had to compete in the market by launching our unlimited data propositions initially priced at PHP 499. We had since repriced that to PHP 599 because we had to compete against Dito and GOMO’s similarly priced product, which is unlimited PHP 499. And that is actually largely been the reason for a significant growth in our mobile broadband space, and you can expect because it’s unlimited, then the data utilization will likewise increase. We have also been pushing long validity high-price offers in our usage portfolio in prepaid, and that means more data allocation within those products. So the objective at the end of the day is to be able to stretch our low to mid value customers, still a significant portion of our base around 60% to 70% have top-up store than PHP 100, right? And so the objective is for us over time to migrate them to the higher price, higher margin data offers.

Just 2 small follow-ups. So the 2.5% market share that Dito had end of last year, is that for fourth quarter or for the whole year last year?

That would be -- sorry.

Yes. And then one the -- and then the second one is on the new data set for the mobile data revenue, right? And what kind of growth assumptions we should make, let’s say, for next year? Is it going to resume to double-digit growth or the mid-single digit going to be the new norm?

For the first question, the first figure is as of end 2021, right? And for the second question, I’m very bullish about growing the -- in the data space. As I said earlier, there’s a huge potential to still grow our low-to-mid value segment, largely buying anywhere between PHP 10 to PHP 30. And as they become more sophisticated, as technologies become more affordable and as we roll out our programs, we do expect this space to be consuming more and more data, right, and that translates to higher revenues for us eventually.

I see. So from the data, basically, Dito probably gained about 2.5% market share in the matter of the last quarter.

Yes. That’s unofficial, right? It’s what we see from [indiscernible].

There are questions sent in by [indiscernible]. Aside from Odette, should we attribute the slowdown in home net adds in the first quarter to growing competition?

Okay. Actually, what we see is seasonally, quarter 1 is actually a slower period for us. A couple of things that actually happened during quarter 1. It takes us a little bit of time for people to come back from annual leave. Our field installation teams often take a lot of their vacation period over the Christmas break. So it’s a little bit of a slower start for us. Secondly, February is a shorter month. So we actually see there’s only 28 days, working days in February, whereas we see normally a lot more than that. Those 2 things actually impacted us directly from a calendar perspective. But as you also touched on, Odette actually had quite a significant impact from us. The demand remains strong, but our ability to install them was hampered because we had quite a lot of our efforts focused on restoration activities in the VisMin area. Customers were actually impacted by Odette quite extensively. We had about 300,000 customers that we’ve actually had to restore services to in the Southern region. But now that, that has actually been completed, we’re looking forward to actually ramping back activities in terms of net adds. What I will call out, though, is just to point out, if you look at year-on-year comparisons, we are still ahead of where we were last year. So there is some positive numbers then, and we look to continue that throughout the whole year.

Should we expect further funding rounds for Voyager this year?

Currently, the loan that we have done funds as well for the plans that we have in the foreseeable future, specifically making sure that we can focus on execution. So the investors came in and the round that we did of PHP 210 million will make sure that the team is fully focused on the execution of launching and scaling up the bank and developing the other services. So at this stage, we are comfortable through the course of 2022. But as you will see the progress, we will then see the need if there further rounds needed.

Hussaini, your hand is still raised. Did you want -- did you have a follow-up question?

No, sorry. I’m good. I’m good.

Okay. We have no further questions in the queue, and neither are there any questions sent in by e-mail. Last chance. Last call. There are no more questions. We’ll turn the floor over back to Mr. Pangilinan for his final remarks.

Thank you for joining us this afternoon in respect of the first quarter results briefing. And we look forward to speaking with you again when we announce our interim results some time end of August or early September. Thank you. And vote on Monday.

In today’s briefing, as always, should you have any further questions or clarifications, please reach to the Investor Relations. Thank you for your participation. Stay safe.

Thank you.

Thank you. Thank you, Melissa.