PLDT, Inc. Q2 FY2024 earnings call

Key Points

• Consolidated service revenues for the first half were ₱96.9 billion, 3% higher than the previous year. Operating expenses grew by 1% to ₱43 billion. Consolidated EBITDA rose by 3% to ₱53.9 billion with an EBITDA margin of 52%. Telco core income, excluding the impact of asset sales in Maya, expanded by 3% to ₱18 billion.

Individual Business

• Service revenues grew by 4% in the first semester. Mobile data, accounting for 89% of total segment revenues, grew 8% year-on-year. Active mobile data users increased to 40.5 million from 39.4 million, and usage per sub grew to 11.6 GB, up 11% year-on-year.

Home Segment

• 92% of Home revenues are from the fiber business, which registered a 7% year-on-year growth. Fiber installs saw a 20% increase from May to June. Home fiber ARPU remained at around ₱1,500 level.

Enterprise Segment

• The Enterprise segment recorded a 4% revenue rise. Corporate data and ICT, which were 72% of the total enterprise revenues, were higher by 7%. The Sta. Rosa data center was energized with 20 megawatts of IT load capacity expected to be available by the end of 2024.

Maya Bank

• Maya Bank continued to be the country's number one digital bank with 4 million customers, deposit balances of ₱32.8 billion, and loans disbursed totaling ₱46.8 billion. Maya Bank turned cash flow positive in the second quarter.

Dividend and Balance Sheet

• The Board of Directors approved an interim dividend of ₱50 per share. PLDT's balance sheet remained healthy with a net debt-to-EBITDA of 2.38 times at the end of June. CapEx amounted to ₱35.1 billion, with guidance for 2024 at ₱75 billion to ₱78 billion.

Consolidated service revenues for the first half reached ₱96.9 billion, 3% higher than last year. On segment basis: The Individual business registered ₱41.9 billion in revenues, a 4% growth. Mobile data, accounting for 89% of total segment revenues, grew 8% year-on-year. The Enterprise segment recorded ₱24 billion in revenues, a 4% revenue upswing. Corporate data and ICT, which were 72% of the total enterprise revenues, were higher by 7%. The Home segment had revenues of ₱30 billion, marginally lower by 1% year-on-year. However, fiber-only revenues were higher by 7% or ₱1.8 billion, representing 92% of the Home segment.

Forward-Looking Statements

• Affirmed mid-single-digit top line growth underpinned by robust increases in data and broadband revenues.
• Anticipated mid-single-digit growth in EBITDA as operating efficiencies and cost rationalization continue.
• Telco core income for 2024 is expected to land north of ₱35 billion.
• CapEx guidance for 2024 remains at ₱75 billion to ₱78 billion.
• Committed to a 60% dividend payout while working to lower leverage to the 2.0 times net debt-to-EBITDA level.

Risks Identified

• Legacy business decline is dragging down the overall performance of the Home segment.
• Maya Bank is cash flow positive, but Maya as a whole is still facing cash flow challenges.
• Uncertainties remain regarding the progress of data center monetization discussions.
• Impact of factors like school holidays and heat index on Individual business service revenues.

Q: Can you clarify the comment on Maya Bank turning cash flow positive?

A: Maya Bank is cash flow positive, but Maya as a whole is not; we're specifically talking about Maya Bank.

Q: Is the company still pursuing data center monetization plans?

A: There are ongoing discussions with potential investors; PLDT is working on selling a portion of its VITRO shares and injecting new funds into VITRO.

Q: What's dragging down the momentum on ARPUs in mobile revenues?

A: The slowdown is linked to industry factors, school calendar changes, and heat index; momentum is expected to bounce back in the third quarter.

Q: Why is there a marginal decline in the overall Home segment despite fiber growth?

A: The decline is due to legacy business revenues (copper, VVDSL, old copper lines, voice calling) which dropped by ₱1.9 billion.

Q: What's the update on prepaid fiber unit economics?

A: Prepaid fiber has challenging economics, but it's being offered in select areas with existing capacity; customers are gravitating towards the 899 postpaid plan more currently.

Q: Why did personnel expenses spike?

A: The 1% increase includes merit increases for the year, and there's a timing effect on booking.

Q: Plan to push EBITDA margin above 52% in the second half?

A: Will try to reduce operating expenses, likely landing between 52% and 53%.

Q: Expected incremental earnings from Sta. Rosa's initial 20-megawatt capacity?

A: Expect between ₱600 million to ₱1.5 billion in additional revenues for the DC business within the next 18 months.