PLDT Inc. (PHI) Earnings

Management highlights

- Overall Financial Performance * Consolidated gross service revenues grew 2% to $108.7 billion, and net service revenues (excluding introduction costs) grew 1% to $97.8 billion. Growth was tempered by soft consumer spending and first-quarter home installation constraints, partially offset by enterprise growth. * EBITDA reached $56.1 billion with a stable 52% margin, and core income stabilized at $17.3 billion, supported by positive contributions from Maya and asset sale proceeds that offset higher depreciation and amortization. * First half 2026 CapEx was $20.7 billion, down from $27.4 billion in the first half of 2025, reducing CapEx intensity to 19% of service revenues from 26% a year prior. * Net debt stood at $287.3 billion at end-June, with a net debt-to-EBITDA ratio of 2.57x. PLDT maintains an investment-grade credit rating, with 3% of debt maturing in 2026 and over half maturing after 2031, and an average debt maturity of over six years. * The board declared a half-year cash dividend of 46 pesos per share, consistent with PLDT's 60% of core income payout policy, for a trailing 12-month dividend yield of ~8% as of end-June. - Strategic & Operational Updates * Wireless: Improved throughout H1 2026, with monthly year-on-year top-ups improving from -3% in March to +1% in June and +3% in July. Growth has been driven by selective price increases on prepaid plans paired with extra value, and hyper-personalized app-based offers that convert at 25x the rate of generic SMS promotions. Smart's network won multiple independent awards for speed, coverage, and user experience in the Philippines. * Consumer Home: Operating recovery is underway after Q1 OSS migration disruptions, with monthly installation volumes rising through Q2 to the highest 2026 level in June. PLDT is bundling fiber connectivity with streaming and data benefits to increase customer value, and uses the AI-powered Store Genie tool to resolve customer inquiries 10x faster and cut escalations by half. * Enterprise: Follows a "One Enterprise" strategy that integrates all PLDT group capabilities to deliver end-to-end digital solutions from connectivity to cloud, cybersecurity, and data center services. Vitro data center has a clear growth runway, with 10 additional megawatts of capacity targeted for activation by end-2026, and total expansion potential to 62.4 megawatts (80% growth from current activated capacity). Newly issued Executive Order 119 requiring in-country data storage for sensitive government data has strengthened demand for local data center capacity. * Maya Digital Bank: Remained profitable in H1 2026, with deposits growing 71% year-on-year to 86 billion pesos and loans growing 56% to 39 billion pesos. The loan-to-deposit ratio is 45%, gross NPL ratio is 4.8%, and net interest margin is 17.3%. PLDT's share of Maya's core income was 559 million pesos in H1 2026, with the year-on-year decline driven entirely by one-time non-recurring accounting adjustments, not underlying operating weakness.

Guidance

- Full-year 2026 CapEx guidance is maintained at the mid-50 billion pesos range, with higher spending expected in the second half after lower H1 investment. - PLDT's long-term goal is to continue reducing CapEx intensity over time, while sustaining positive free cash flow and targeting a net debt-to-EBITDA ratio of 2x. - The proposed Vitro REIT listing is still targeted for Q4 2026, subject to favorable market conditions. Proceeds from the listing will be used to pay down approximately 12-13 billion pesos of debt, which is expected to reduce PLDT's net debt-to-EBITDA ratio from 2.57x to ~2.4x. - For 2027, management intends to maintain capital discipline and target lower CapEx than the 2026 mid-50 billion level, though a final 2027 CapEx amount has not been set. - PLDT will maintain its existing dividend policy of a 60% payout ratio on core core income for the foreseeable future. - PLDT is targeting approximately 2 billion pesos in proceeds from tower asset sales in 2026, and is in active discussions to sell its legacy copper assets amid elevated global copper prices.

Segment performance

1. Wireless: Revenue was broadly stable year-on-year at $42.1 billion, accounting for 43% of total consolidated net service revenues. Data and fixed wireless access revenue grew 2% to $38.7 billion, representing 92% of wireless segment revenue. 5G devices reached 12.5 million units, making up 21% of the total device base, and total data traffic increased 12% year-on-year to 3,273 petabytes. 2. Consumer Home: Revenue was $30 billion, down 1% year-on-year, accounting for 31% of total consolidated net service revenues. The decline reflected a lagged revenue impact from first-quarter OSS migration-related installation constraints, but operating trends recovered through the second quarter. Fiber net additions hit 97,000 in Q2, more than double the Q1 level, postpaid churn improved to 1.4%, and ARPU remained an industry-leading 1,330 pesos. 3. Enterprise: Revenue grew 5% year-on-year to $24.8 billion, accounting for 25% of total consolidated net service revenues, making it PLDT's strongest growth segment. Corporate data and ICT revenue grew 5% to $18.4 billion, with ICT revenue up 22% overall and tech services up 35%. Vitro (data center) revenue grew 13% year-on-year, PLDT Global enterprise revenue grew 30%, and Smart enterprise revenue grew 15%. Vitro is currently the largest data center operator in the Philippines by activated co-location capacity, with 34 megawatts of activated IT capacity online.

Risks & headwinds

- Soft consumer spending in the Philippines pressured wireless revenue in the first half of 2026, and the pace of consumer recovery remains uncertain. - The Vitro REIT listing is dependent on favorable market conditions, and could be delayed if market sentiment does not support attractive pricing that reflects the business' growth upside. - Competitors have accelerated growth in the prepaid fiber segment, creating increased competitive pressure in the home broadband market. - Elevated depreciation from prior network investments has weighed on core core earnings in recent quarters. - Details of the government's Pax Tilita industrial development project remain unclear, though management expects any new data center demand from the project will be incremental business for PLDT rather than a competitive threat.

Analyst Q&A

• Q: Mobile top-up trends improved from -3% in March to +1% in June. What are July/early August trends, and how much of the improvement is structural consumer recovery versus company actions? /

  A: July top-ups grew ~3%, and August is tracking between +2% and +3%. Approximately half of the improvement is structural, driven by lower fuel prices that increased consumer mobility starting in May, and half comes from PLDT's pricing and personalized marketing interventions. This aligns with the observed step-up in growth after May.

• Q: After Q1 OSS disruption, installations and postpaid net adds turned positive in May. When will revenue growth turn positive, and what run rate is needed? /

  A: As long as net subscriber additions stay positive and grow at the current increasing rate, revenue will follow with the normal lag. New postpaid subscribers deliver high ARPU, so continued positive net adds through the second half will compound into positive year-over-year revenue growth, gradually making up for the Q1 shortfall.

• Q: Why is depreciation growing faster than revenue, and how long will elevated depreciation persist? /

  A: Higher depreciation reflects recent prioritized investments in network upgrades including fiber, 5G capacity, and digital infrastructure, plus step-ups from right-of-use depreciation under IFRS 16 for leased network assets. Management expects moderate depreciation growth in 2026, and will sustain CapEx intensity improvements through tighter investment prioritization going forward.

• Q: Why is now the right time to list Vitro as a REIT, and what are the benefits for PLDT? /

  A: Vitro is already the largest, most experienced data center platform in the Philippines, with strong existing demand from enterprises, hyperscalers, and the public sector boosted by Executive Order 119. The mature portfolio of 8 existing data centers offers investors an attractive dividend yield, and listing proceeds will allow PLDT to reduce net debt and strengthen its balance sheet while funding future Vitro expansion, aligning with PLDT's deleveraging goals. The listing will remain contingent on favorable market pricing.