Melissa Vergel de Dios – Head of Investor Relations Napoleon Nazareno – President and Chief Executive Oficer Manuel Pangilinan – Chairman of the Boar Doy Vea – Chief Wireless Advisor, Smart.

Arthur Pineda – Citigroup Global Markets Singapore Pte Ltd. Chate Benchavitvilai – Credit Suisse Neeraja Natarajan – Nomura Financial Services Jaime Jose Del Puerto – First Metro Investment Corporation.

Good afternoon, and welcome to the PLDT Conference Call. This conference call is being recorded. Replay information will be provided at the end of the call. At this point, I would like to turn you over to the Melissa Vergel de Dios, Head of Investor Relations of PLDT, for the introductions. Please go ahead. Thank you..

Good afternoon, and thank you for joining us today to discuss the company's financial and operating results for the first nine months of 2014. As mentioned in the conference call invitation, 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. For today’s conference call, we have with us members of the PLDT Group management team; namely, Mr. Manny Pangilinan, Chairman of the Board; Mr.

Poly Nazareno, President and Chief Executive Officer of both PLDT and Smart; Mr. Doy Vea, our Chief Wireless Advisor, Smart; Mr. Chris Young, Chief Financial Advisor of PLDT; Ms. Anabelle Lim-Chua, SVP, Treasurer of PLDT and Chief Financial Officer of Smart; Mr. Charles Lim, Head of our Individual Business; Mr.

Ariel Fermin, Head of our Home Business; and attorney Ray Espinosa. At this point, let me turn the floor over to Mr. Poly Nazareno for the presentation..

Good afternoon. Allow me to share with you PLDT's financial and operating results for the first nine months of 2014.

Despite the continued growth of data and broadband during the first nine months of the year, the escalation of price-led competition in the prepaid cellular market and higher network along with marketing costs impacted our financial results during the period.

Service revenues for the first nine months of 2014 rose by 1% year-on-year to PHP122.9 billion. Our fixed line business recorded a 5% year-on-year increase, while our wireless business registered a 1% dip. EBITDA for the period declined by 5% compared with the same period last year.

Service revenue increases were overtaken by the rise in subsidies, particularly in our wireless business and higher cash operating expenses. As a result, EBITDA margin declined to 46% for the first nine months of 2014 from 49% in the same period last year and from the 47% for the full-year 2013.

Reported net income at the end of September 2014 was lower by 3% year-on-year at PHP28 billion, while core net income dipped by 1% to PHP28.6 billion.

On the next chart, Page 3 on the presentation, consolidated service revenues and EBITDA for the first nine months of the year reflects the impact of the following; ongoing structural change in our revenue mix, the intensification of competition as manifested in price cuts in cellular service in order to defend market share, and number three, the launch of free data promos at the end of the third quarter.

Consolidated service revenues grew by PHP1.3 billion, or 1% year-on-year to PHP122.9 billion at the end of September 2014. Our growing data and broadband businesses registered a 19% year-on-year increase to PHP30.8 billion in revenues, and now contribute 25% to total service revenues.

This cushioned the 7% year-on-year drop in revenues from our declining legacy international voice and national long-distance businesses, which now account for only 15% of total revenues, or PHP18.4 billion.

During the period, the combined revenues from fixed and wireless domestic voice and SMS, representing 18% of total service revenues were lower by PHP2.1 billion, or 3% at PHP73.7 billion. Fixed and wireless domestic voice revenues rose by PHP1.8 billion, while SMS revenues declined by PHP4 billion.

EBITDA margin for the period stood at 46%, similar to the margin for the first-half of the year, but is lower than 49% the same period last year and 47% for the full-year 2013.

Consolidated EBITDA decreased by 5% year-on-year to PHP56.8 billion, mainly from higher cash expenses arising from operating an expanded network, residual post-typhoon Yolanda restoration expenses, and increases in subsidies and other selling expenses stemming from a greater push to grow our post-paid business and our response to the competitive situation.

In the next slide, let me now discuss highlights of the various businesses, starting with broadband. The upward momentum in broadband continued with a 20%, or PHP3.9 billion year-on-year growth in revenues to PHP23.4 billion for the first nine months of 2014, representing 19% of total service revenues.

The PLDT Group's broadband subscriber base rose to over 3.7 million at the end of September 2014, consisting of about 1.1 million fixed broadband and 2.7 million wireless broadband subscribers. Fixed broadband revenue increased by 12% to PHP10.2 billion, following an 11% rise in subscribers.

Wireless broadband revenues improved by 7% to PHP7.5 billion as a result of a 13% rise in subscribers. Mobile Internet usage registered the strongest growth with revenues higher by 69% at PHP5.7 billion, as smartphone ownership among our subscriber base grew to over 25% and usage was up by 112%. We are optimistic about the growth in data usage.

In the third quarter alone, mobile Internet usage more than doubled the usage in the same quarter last year, and was 36% higher than the second quarter this year. To enable access across an even wider spectrum of users, we launched a free Internet promo on September 26, to further stimulate data usage.

Each user enjoys 30 MB per day on top of free Facebook. However, the promo excludes video streaming, VoIP, and chat applications. Results to-date are encouraging with more than 50% of users being non-data users and over 10% being new subscribers.

On the next slide, moving now to the fixed line, this segment registered a 6%, or PHP2.3 billion year-on-year rise in service revenues to PHP42.3 billion, net of interconnection costs.

Over 85% of the fixed line service revenues recorded year-on-year increases with data revenues, which accounted for 53% of total fixed line revenues, continuing to underpin the growth. Our corporate data revenues rose 8% to PHP10.6 billion. Complementing this was a 20% growth in data center revenues to PHP1.5 billion.

Fixed line broadband revenues were higher by 12% at PHP10.2 billion following at a 11% increase in subscribers. At the end of September 2014, fixed line EBITDA grew by PHP0.9 billion, or 5% year-on-year to PHP18.9 billion, as the rise in service revenues and dip in provisions fully offset increases in cash operating expenses.

EBITDA margin of 39% was stable versus first-half 2014 and same period last year, and was higher than the 36% for the full-year 2013. At the end of the first nine months of the year, PLDT had nearly 2.2 million fixed-line subscribers, of which about 1.1 million had fixed broadband subscription.

On the next slide, wireless service revenues for the first nine months of 2014 were lower by 1%, or PHP500 million at PHP85.8 billion, as increases in broadband and mobile data as well as domestic voice revenues were fully offset by declines in inbound international and SMS revenues, as competition intensified.

Broadband revenues grew by PHP2.8 billion, or 27% to PHP13.3 billion, consisting of PHP7.5 billion of wireless broadband and PHP5.7 billion of mobile Internet revenues, details of which we discussed in an earlier slide.

Cellular voice revenues improved by PHP500 million, or 1% to PHP38.3 billion, reflecting a PHP1.6 billion rise in domestic voice revenues, and a PHP1.1 billion decline in international voice revenues. SMS and VAS revenues decreased by PHP4 billion, following a 16% reduction in SMS volumes and competitive price cuts, particularly in prepaid.

Contributing to the reduction in SMS usage was some shifting to voice calls by postpaid subscribers and the use of alternative messaging services, the growth of smartphones and its usage. Prepaid revenues were lower by PHP3.1billion, or 5% at PHP59.6 billion with the escalation of price-focused competition.

Our postpaid subscriber base grew to nearly 2.7 million at the end of September 2014, bringing in revenues of PHP15.8 billion, or about 20% of total cellular revenues. The increase in postpaid revenues of PHP1.9 billion surpassed the PHP400 million rise in subsidies.

Wireless EBITDA at the end of September 2014 was lower by PHP3.5 billion, or 9% at PHP37.6 billion. This is on account of higher subsidies in operating expenses related to an expanded network, residual post-Typhoon Yolanda restoration costs, the push to grow revenues and our response to competition.

EBITDA margin of 44% was stable versus first half of 2014, but was lower compared with 48% in the same period last year. This partly reflects the impact of the structural change in the wireless revenue mix and the greater proportion of postpaid revenues to total revenues.

On the next slide, the individuals and home markets continue to present a rich source of untapped potential for us to harness.

In addition to our earlier initiatives that include low denomination data traffic and use of constant for greater customer engagements to help build habits and increase frequency of data usage, we recently made available a free Internet promo to further spur data usage.

Through this promo, we will – we would like to enable more of our subscribers to appreciate the always-on data experience on smartphones, which should lead to developing a regular habit. This push for data adoption is fully supported by the PLDT Group's integrated fixed and wireless network, which has unparalleled capacity, resiliency and reach.

On the next slide, in the Enterprise segment, our wide range of enterprise solutions and telco services powered by the unrivaled PLDT Group network, have made PLDT the preferred provider to corporates, SMEs, and the BPO industry.

Our data center capacity remains the largest in the Philippines and continues to be a new source of growth for the fixed line business. Given our current market position in the Enterprise segment, we are confident of the segment's sustained growth momentum underpinned by the overall improvement of the Philippine economy.

On the next slide, in August, PLDT and Rocket, entered into a global strategic partnership to guide the development of online and mobile payment solutions in emerging markets. PLDT invested €333 million and now holds a 6.6% stake in Rocket, following its IPO in early October.

At last night's closing price for Rocket, PLDT's stake is worth €419 million. I represent PLDT at the nine-person Rocket Board.

This investment reflects PLDT's long-term commitment to Rocket and strategic intent to combine our world-class mobile money expertise and resources with Rocket's global platform to drive future value-enhancing growth opportunities.

PLDT and Rocket are currently developing a commercial model that integrates Smart Money payments in selected Rocket e-commerce businesses into Philippines with target launch before year-end and mobilization in other international markets, where Rocket operates shortly thereafter.

On the next slide, moving onto the balance sheet, net debt at the end of September was US$2.4 billion with net-debt-to-EBITDA of 1.46 times, already reflecting PLDT's investments in Rocket Internet. 47% of gross debt is denominated in U.S. dollars. Taking into account our U.S.

dollar cash holdings and hedges, only about $1.1 billion, or 36% of our total debt is unhedged. A natural hedge is provided by our dollar-linked revenues, which amounted to $600 million, or about 20% of service revenues. Post-interest rate swaps, 74% of our debt are fixed-rate loans. PLDT's debt profile remains healthy with maturities well spread out.

Over 75% of our debt is due to mature in 2017 and beyond. PLDT's credit ratings with Fitch, Moody's, Standard and Poor's remain at investment grade. On the next slide, free cash flow for the first nine months of 2014 was lower by PHP8.8 billion, or 27%, at PHP24.1 billion mainly due to higher CapEx and income taxes paid.

In anticipation of the continued growth in the market's appetite for data services, following our free Internet promo as well as to meet increasing fixed wireless demand, PLDT is stepping up its data capacity build-out in 2014 and 2015. For 2014, we expect CapEx to increase to PHP34.5 billion from our initial estimate of PHP32 billion.

This reflects among others an accelerated build-out of our data networks, particularly FD and TD-LTE. CapEx is anticipated to remain elevated in 2015, as we undertake the build-out of incremental capacity and coverage for our existing data network.

Ongoing network initiatives include boosting by 13% for an additional 520 gigabits per second the current capacity of our fiber network of over 92,000 kilometers. The increase in FD and TD-LTE coverage is to around 2,600 base stations.

Reinforcement of existing network infrastructure to improve resiliency against severe weather conditions by buying – by burying fiber, deploying of super-sized base stations, and the construction of elevated equipment shelters among others, continued migration of legacy lines to NGN or next-generation network line.

The integration of the Sun and Smart networks was successfully completed for Mindanao and 78% of the Visayas, resulting in operational efficiencies. On the next slide, at the end of September, core net income declined by PHP200 million, or 1% year-on-year to PHP28.6 billion.

The decrease was a result of the combined effect of higher revenues, lower net financing costs, reduction in non-cash operating expenses, and the recognition of gains from the sale of Meralco shares by Beacon, which were more than fully offset by the rise in subsidies, operating expenses and income taxes.

Reported net income at the end of September 2014 was PHP1 billion, or 3% lower, year-on-year to PHP28 billion, mainly due to lower net ForEx and derivative losses during the period and the contribution from discontinued operations in 2013.

As mentioned earlier, we are seeing the impact on the business of the increased competitive intensity on pricing in the prepaid cellular market, the continued decline in inbound international revenues, the negative impact on SMS of the growing popularity of messaging apps, as well as higher operating expenses.

All these are anticipated to continue exerting downward pressure on profitability in the ensuing quarters. And now, let me turn over the floor to our Chairman, Mr. Manny Pangilinan, for the outlook for the rest of the year..

Thank you, Poly, and good afternoon to all of you. As indicated in our press announcement around noon time, we have revised our guidance numbers for the full-year 2014, within the context of two things.

First, competition which is expected to remain keen in the fourth quarter of the year and possibly beyond 2014 as well; and second, as Poly described it earlier, the accelerated transition of our legacy businesses to the data broadband space, which are affecting both our revenues and our margins.

Based on this market assessment and the information currently available to the company, PLDT is revising its profit guidance for the full-year to PHP37 billion from the PHP39.5 billion earlier disclosed.

On the CapEx front, we expect higher CapEx levels for both the full-year 2014 and 2015 in light of the market's continued appetite for data services and as well as competition.

We are accelerating our data capacity build-out on both our fixed and wireless networks, especially in wireless, as we continue to build-out our 3G and TD-LTE to meet increasing fixed wireless data demand, including – or especially the free Internet promo program that is ongoing.

We anticipate that CapEx for 2014 will be higher at PHP34.5 billion from PHP32 billion previously estimated.

Finally, insofar as our dividend policy is concerned, no change is anticipated, we are committed – we remain committed to a regular payout of 75% of core earnings and an assessment of the payout of the special dividend, taking into account among other considerations, the anticipated level of CapEx for the ensuing year 2015, headroom available in the balance sheet, competitive market conditions, as well as any planned acquisitions or new investment.

Thank you..

Now, we're ready to take your questions.

Operator, can you provide the instructions, please?.

Thank you. The floor is now open for your questions. (Operator Instructions) Our first question comes from Arthur Pineda. Your line is now open..

Hi. Good afternoon. Thanks for the opportunity. Three questions from me. Firstly, on the free Internet promotion, that's been going on for more than a month already.

Has that resulted in better overall total revenue momentum, especially actually gaining cost, or is the reduction in data revenue offsetting this? Second question I had is with regard to strategy, what do you think needs to happen in the industry before you see an end to these free programs and better monetize data revenues, what do you want to see happening before it actually changes? Last question I had is with regards to the guidance, is it possible to decompose what's driving a change in gross profit guidance and say what percentage is coming from softer revenues versus higher marketing costs and the operating costs? Thank you..

Maybe I'll just try answering the last question first, what is really driving the guidance? I think it's really we are anticipating somewhat lower revenues in the fourth quarter and had been the case earlier in the year. I think as you would expect, the pressure will be principally on the wireless side.

So while we expect it to be somewhat higher than the third quarter, we expect it to be below last year's levels. So it's principally that we are expecting lower revenues in the fourth quarter compared to earlier expectations..

With regards to the free Internet promo, as you know, it is still early to make any conclusions, because it has been out for four weeks only. But from what we have seen so far, more than half of the participants in the free Internet are new data users and roughly about slightly over 10% are new subscribers that we haven't seen before.

In terms of unique subscribers that has ever tried, we are now seeing the number in the millions. The 30MB per day limit also introduces to new Internet users the idea of volume gap..

Understood.

Is there any timetable or catalyst that we need to look for before you guys are monetizing on this?.

Before monetizing we – the promo is scheduled up to January 5 of next year. And by that time we should be able to evaluate and judge whether we would extend the promo or do something else. But until that time, it would be very difficult to predict what's going to happen. Thank you..

Thanks very much..

Thank you. Our next question comes from Chate Ben. Your line is now open..

Hi. Good afternoon, everyone. Thank you for the opportunity to ask the questions. Regarding the escalations in competition, I understand that you mentioned there has been some cut in price point as well.

Any particular price point or particular product category, that the competition is more intense and that you can elaborate more? The second question is regarding on the overall picture. I mean, since 2011, we have started seeing some period of price stabilization and then the price cut again.

Do you think, if they are still sensible to expect if competitions normalize that you would be able to increase the voice and SMS tariff again, or that is already behind us and we really need to look for growth only from data from here? The third question is regarding the fixed line.

The fixed line performance has been well and we have seen the margin at 39% to 40%.

Do you think there is still room for this fixed line margin to improve further, or this is the level that you would expect to maintain, or it could decline from here? Lastly, the question regarding your dividends, 75% of core earnings for us to look back, however, given the operational challenge that you are facing and also the pressure on EBITDA and higher CapEx into next year, how should we think about this look-back approach, or should be really – you have been declaring 100% for the past seven years, should we still use that as a base case? Thank you..

Well, maybe I can answer the first question, Chate. The escalation on the price point, it's largely occurring in the legacy services, which is voice and SMS, and it's done on a regional basis. And since towards the end of the third quarter, we have responded and matched the prices of competition wherever we could..

Hey, just to answer the two questions, one on the fixed, and then secondly, on the outlook for the dividend, I'll answer the easier one first, which is the fixed.

The margin I think in the first nine months is about 39% EBITDA, which is actually somewhat higher than for the full-year last year, when I think it was about 36%, because there were some items that impacted the fourth quarter. So the full-year of this year 2014 (sic) will already be somewhat higher than we experienced in 2013.

And the initial outlook for 2015 is for a similar level of margin in about 38% to 39% level. So it's not an increase in terms of looking out over the next few years, but it does seem that we have reached the stage, I think because of the revenue mix that we're now seeing on the fixed line that the margins are stabilizing just below the 40% level.

In terms of the dividends, you will see from the balance sheet that the net debt-to-EBITDA is a little bit higher – quite a bit higher than we've experienced in recent years, it's about 1.46 times. So, it's something that we're looking at quite closely.

Now, having said that, as there are no acquisitions, or any other significant similar items expected between now and the second quarter of next year, the net-debt-to-EBITDA should fall before then, so we are looking at that, but we are looking at other things as well.

Second thing we are looking at is that if there are assets that we could monetize to help bring down the debt level, I think we still have some attractive properties here, which we are taking a look at. We still have a residual investment in SPi, which could help reduce the overall debt level.

And as you know, we still have a big investment in Beacon, which we can look at. Another factor could be what is the appropriate net-debt-to-EBITDA level? I think you are aware that we've worked with a ratio of about 1.5 times for several years. That is a very, very conservative level.

We are investigating whether there is some ability to flex that, still to stay with a very conservative leverage, but maybe a little bit higher than where we've been in the recent past. So it's an interplay of a lot of different factors, and that's why I think we call it partly a look- back and partly a look-forward.

So in the first quarter of next year, we'll assess all of these factors and determine whether, what the appropriate level of special dividends will be.

But obviously, we are aware that we create an expectation in respect of that special dividend, and it would be our intention to stay as close to that as we can into those for this year and looking forward..

Thank you very much. Just a follow-up question, just two things. The first thing is regarding the potential increase in voice and SMS tariff back to before this round of competition.

Do you think that is a sensible expectation, or you do not think there is room to do that anymore in this market? And the second question is regarding the CapEx, I understand that it will be elevated next year, any early guidance that we can look for, for that unlike flat year-on-year, or we should expect something even higher? Thank you..

With regards to a price stabilization or decrease in prices for the legacy services, we continue to seek equilibrium in the competitive situation. However, at this point, as you know, it's quite intense already, and we do not see this in the near future to ease off.

But as I said before, we are no longer prepared to give up market share [technical difficulty] situation..

Chate, I think on the CapEx, as indicated earlier by both Manny and Poly, there is an accelerated build-out in the balance of 2014, to accommodate, one, I think the additional data usage, and two, really because of – to address to an extent the competitive situation.

So we expect as we go into 2015 the competitive situation to remain challenging and maybe even as we go into 2016, also the data usage to continue to surge. So we would probably see 2015 higher CapEx again, though we've probably – with a caveat that the budgets and things are still not complete.

It's probably not going to be more than, say, 10% higher than their revised 2014 number..

Thank you very much. That's very clear. Thank you..

Thank you. Our next question comes from Neeraja Natarajan. Your line is now open..

Hi. Thanks for the opportunity.

I guess my question is more on how you are approaching the market and competition from here on? Obviously, we saw the free Internet plans, what else do you – where are the other areas that you feel you need to address, any thoughts around that? And I mean, do you also have to look at your current pricing plans, marketing strategies, maybe you start focusing more on the postpaid further? Any color on that would be very helpful.

And secondly, what are the KPIs that – internally that you are maintaining, for example, to – I mean the free Internet has already been extended to January. So what are you going to be measuring to sort of pull this back or change you stance? That's the second question.

And thirdly, on the network, does it make sense to sort of invest significantly in the next one, two years, because we seem to be sort of upping it every year and on and off. So what is the time horizon that you take into account when you make these plans? Any color on that would be helpful. Thank you..

I think on the network side, we are taking effectively a two to three-year time horizon. But I think that the horizon needs to be reviewed on a regular basis and will be calibrated to take into account how quickly data services are being used by the consumers. So that includes a lot of factors.

It includes what is the take-up of smartphones? What percentage of smartphone users are using data? How data is being priced and to what extent we move towards volume-based plans and the like? How many users are prepaid versus postpaid? So I think we would agree with you, it makes sense to take a two, three or even a three, four-year time horizon in looking at the network.

But I think it also has to be calibrated or recalibrated on a regular basis to determine whether it needs to be increased or not, and I think that's what we're doing. At the moment, as I said, we are seeing a rapid take-up of mobile data, and I think we are adjusting the network accordingly.

We are anticipating the next few years to remain quite competitive. And to the extent that the competitor is spending heavily on its network, obviously we would like to maintain our lead in that area. So we will have to calibrate accordingly. In terms of the plans, one of them, as you mentioned and Poly, mentioned is the free Internet.

I think the other area is, again, as mentioned by Poly, is that there is a lot of regional price competition, and what that actually means are effectively price cuts. And I think we have taken the view over the past month or so that we will match these cuts.

So I think that is the other strategy that goes along with the free Internet to maintain market share. I think it's also correct to say that that there is an increasing focus on the post-paid area. Post-paid is where we have seen the earlier take-up of data because of the early adoption of smartphones.

So, I think there will be greater focus on that area and again, we'll find that that's going to be significantly more competitive going forward as well..

Sorry, if I may just follow up on that, I mean in the past, it's always seemed like Globe has been a bit more front-footed in terms of approaching the market.

So I mean, while you are seeing on one side matching pricing, but should we see some more other initiatives as well, are there other opportunities?.

I think there is a lot of opportunities. I think the bundling of the data with content is an area which I think has opportunities to basically differentiate the market going forward. But I think a lot of it is the quality of the network and the coverage and continuing to provide that to the subscribers.

But there are other services, content related, payment services related, things that we're working on in conjunction with the local entities of Rocket Internet here which we can offer to our subscribers. So, yes, there are things other than price and the free Internet offerings.

Well, Rocket, can we speak to that first?.

No, no sorry, go ahead. .

In line with our partnership with Rocket Internet, we are now about to launch three services in partnership with Rocket, and their businesses in the Philippines, these are foodpanda, EasyTaxi and Zalora, which are leaders in their particular areas.

These services are focused on two areas; one is enabling customers – consumers who are unbacked and unguarded to be able to participate online, using our vouchers, but operate on our Smart Money platform.

The second is enabling these companies to distribute revenues to their respective partners using the Smart Money platform, particularly its Trade Money platform. So for example, EasyTaxi, if EasyTaxi collects the payment from the consumer online, then they use the platform to distribute the share of the taxi drivers, and vice versa.

If the taxi drivers collect from the consumers, then they distribute up a share of the Rocket company to the Smart Money platform.

Based on the success of this initial ventures with Rocket, we plan to aggressively roll out in the region, starting with Indonesia, moving on to Vietnam, Thailand, and Myanmar, and next to Pakistan and Bangladesh in Asia, and then to the rest of the Rocket companies across the globe, where they are strong, like they are number one in Brazil, Nigeria, Russia, Iran and some other big countries.

These are just the initial services we can work on together with Rocket. There are still others that we are continuously [technical difficulty]..

All right, thanks very much. One last question, if I may, in the past couple of years, there has been some asset monetization. In terms of the next 12 months, what will be the criteria to drive further sales? Is it just the balance sheet or anything else that you would keep in mind? Thank you..

I think it's really a case of looking at the assets and see whether they remain keen on both of the business going forward. So it's partly – it would be principally driven by balance sheet management, but also opportunistic, if there is a good offer for the asset and it's non-core, we would certainly consider it..

All right. Thanks very much..

Thank you. (Operator Instructions) Our next question comes from Arthur Pineda. Your line is now open..

Hi, sorry. Just one follow-up question with regard to the media business and the pension fund, can you just give us a little bit more color in terms of how that has been trending over the last few quarters going to the third quarter and potential implications on the funding on the pension fund? Thank you..

Hi, sorry. Just one follow-up question with regard to the media business and the pension fund, can you just give us a little bit more color in terms of how that has been trending over the last few quarters going to the third quarter and potential implications on the funding on the pension fund? Thank you..

I think we are encouraged with how the media assets are performing, signal in particular has been performing very well and continues to add subscribers and build its EBITDA and profitability, and I think the outlook going into 2015 and 2016 is encouraging.

At the TV5 level, they have taken a what – is described as a shrink to grow strategy, which seems to be quite successful in terms of reducing the costs and as a result the losses have decreased.

And again, the preliminary outlook for 2015 and 2016 is that, while still loss-making, they will be at significantly lower levels than we've seen in the recent past. So, the implication for the retirement fund remains the same.

We have to undertake evaluation of the liability and the assets at the end of the period in conjunction with the actuary, and we would adjust the retirement contribution that PLDT seems to make prospectively.

So the – as you know, I think after the contribution in 2014 is quite a bit higher than 2013, because the value of the underlying assets did not increase to the same extent that we injected the funds. So that is likely to be the case again in 2015.

However, given that the Signal is performing very well and the losses on TV5 are reducing, it's likely that any additional contribution that we have to make is at a significantly lower level than we've seen in 2014..

I think related on to TV5 plus Signal is self-sufficient on cash..

Yes..

And the print assets are doing reasonably well..

Yes. So we look at the assets – that's a good point, we look at the overall asset base. So you get a significant improvement in the Signal asset, and because of the lower losses at TV5, again, it's an improving situation. But it still requires funding, but the increase is at a much lower level than this 2014 over 2013..

Sorry, just on the – Signal is already profitable as of end of this year; is that correct?.

Signal, yes..

Signal, yes, it's profitable. EBITDA positive and bottom line positive..

Both EBITDA and profit..

Understood. Thank you very much..

Operator:.

. :.

Hello, yes.

I just like to ask whether we should expect margins in 4Q 2014, EBITDA margins to contract even further since traditionally, that's your lowest margin in 4Q?.

I think as indicated earlier, we do not expect the revenues, particularly at the wireless side to match last year's fourth quarter, given the various competitive intensity and other challenges faced by the business. So there will be further pressure on the margins..

Yes, that's my only question. Thank you..

Do you have any other questions, Mr.

Huang?.

That's it. Thank you..

Okay, thank you. Our next question comes from Jaime Jose Del Puerto. Your line is now open..

Yes, good afternoon. I would like to ask – I'm just wondering, if you've changed your accounting treatment regarding your Rocket Internet investment, because initially, you recorded that cost.

Have you changed your accounting treatment into recording it backdoor market?.

No, no, it's still [Technical Difficulty]..

Do you plan to change that treatment now that Rocket Internet is listed?.

No, no, it's still maintained. We anticipate – it's a long-term investment and an important investment for us, because as the way I was explaining earlier.

The investment also – as a result of the investment, there are quite a number of initiatives that we are undertaking with them, some of which the ones which are here in the Philippines will actually be launching quite soon. I think the target for the three companies, Zalora, EasyTaxi and foodpanda is to have these launched by the end of this year.

And then as anticipating that these goes well, the idea is that to look outside the Philippines, actually within the first six months of next year, and offer an online payment platform in conjunction with the various e-commerce sites of Rocket next year.

So it's an investment, which I think we are in for the long-term, because we think it's a good investment. And then secondly, it's of significant strategic interest to us, because we will be working with them closely going forward..

Our accounting classification consider that investments available for sale and this will follow the accounting treatments next year. But as Chris indicated for us, it's something that the strategic value in (inaudible)..

I see. I see. Okay. Thank you..

Thank you. As of the moment, we don't have any questions in queue. I will hand the call back over to Ms. Melissa..

If there are no more questions, operator, can you just read the replay information for today's callers?.

Okay. Thank you. Now, I would like to give everyone the instant replay information for today’s call. This conference will be available on a 24-hour instant replay starting today daily on through November 18, 2014. Replay information for this 3 PM call. The international caller number is country code 8-523-0184-112. The U.S.

toll free number would be country code 1-866-845-9413. Our UK toll free number would be 0-800-376-1752. The Singapore toll free would be 800-120-5660. The Japan toll free number would be 0-053-112-2222. The Australian toll number is country code 612-820-60821. The pass code will be 6841 and the conference leader is Ms. Melissa Vergel de Dios.

I will now turn the conference back to PLDT for any additional or closing remarks. Thank you..

Well, we just want to say thank you to all who joined us this afternoon. Thank you also for your questions. And we look forward to being with you when we announce our full-year results early next year to indicate prospects for 2015 and beyond. Thank you..

Thank you. And that concludes today’s conference. Thank you for your participation. You may disconnect your line in your own time..