[Abrupt Start]. 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 presentation, we have with us Mr. Manny Pangilinan, Chairman and CEO; Mr. Al Panlilio, Chief Revenue Officer; Ms.

Anabelle Lim Chua, Chief Finance Officer; Mr. Joachim Horn, Next Generation Technology Solutions Adviser of Smart Communications 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. Thank you, Melissa. Good afternoon to all. Just wanted to really -- happy to report our unaudited financial results for the year 2020. It is of stellar performance that we were able to achieve in quite difficult period. But we were only able to do that really by working together to achieve our goals. We were passionate about the work we do.

We knew our purpose is to serve our customers and [indiscernible] of our employees. We work together to really empower Philippine Airlines. It really started with the hard work of our Chairman and VP, who was here every day of work during the lockdown. So it just boosts our commitments for our customers. So if I may go to the next slide.

This, I feel are the 6 success pillars we had for 2020. First, really about people. We were not only customer-centric and focused all our programs to address the requirements of our customers, but we were also employee-centric. We wanted to make sure our employees are safe in serving our customers.

We have a big effort on PPEs, vitamins and medicines to make sure that our employees were taken care of. We even went to work from home, but end of mind was to be -- able to be -- to also serve our customers safely. Second, our ways of working during this pandemic was we were able to really hyper collaborate, we use technology to make it happen.

We were able to decide quicker. We were more agile. We make decisions. And because of that, I think that also resulted to the success that we had in 2020. Third, brand love. I think we were very active in terms of our campaigns. Really showing that we wanted to -- our brand to be top of mind to our customers.

So all the programs we have embarked on, we wanted to be relevant to our customers. And in doing so, hopefully, we've been able to increase the brand love of our companies, both PLDT and Smart. Network and technology.

But despite the initial hiccups during the lockdown in late March to April, we were able to still recover on our plans for the year, and we spent almost the same level of CapEx to 2019.

A great job by network and technology group by really finding ways to be able to deliver the service, continue the service and making sure that we are ahead in terms competition in terms of our capabilities and customer experience, which is really the fifth bucket.

A focus on customer experience, making sure that we are the benchmark of the industry, and we have benchmarked ourselves against other countries in the region. And I think that's the cost of experience we feel is deserving of every Filipino.

Transformation started off in 2016 by MVP and will continue to be a pillar moving forward, but maybe underappreciated past few years, but it has been very significant progress in our transformation capabilities, not only in our technology platforms, but also in our processes, and we will continue to do this. We are not done in this space, for sure.

So that led us to a very strong year in 2020 with net service revenues of PHP171.5 billion, which is the highest full year revenue in history of the company. So our revenue growth in terms of pesos is PHP13.8 billion and 9% growth versus 2019 amidst the pandemic and the limitation of our work during the lockdown.

And 73% of this was really attributable to data. And if I go to each of the segment and Wireless led the way, having grown by PHP10.6 billion, ending 2020 at PHP82.7 billion, which is a 15% growth compared to 2019.

You see that the programs that we focused in, we launched the GIGA Life, we talked about the passion of our customers, GIGA Pro, Giga Video, Giga Games and we were also very strong in TNT. We are now the #1 brand in prepaid. We are very strong also in sports content, and we will continue to do -- develop content that is relevant to our customers.

And our push on Smart 5G. We were the first to launch 5G. And that is, again, going to be an ongoing initiative for us moving forward. For Home, which is really a breakthrough year for home, ended up at PHP41.4 billion or PHP4.3 billion growth versus last -- or double-digit growth of 11%.

And really the home being a new battleground in the industry, where people really work and study at home and not just entertainment. And we are also doing a lot of initiatives to continue to improve our process to be more efficient operationally, but at the same time, improving installation and repair as a main battle cry for the group.

And we have improved tremendously in the second half, of course, in terms of installation, and we will continue to -- we have continued to improve that in the first two months of 2021.

For Enterprise, hardest hit among the segment, but still showed growth of 5% or $2 billion, really trying to help every business from small to big recover during this pandemic, and we have actually launched certain products also during the lockdown. BEYOND FIBER was launched on ending June.

The biggest study packages, the eHealth packages, we have even hosted a Philippine digital front virtually during this time. And again, the focus of closing accounts like Google and Alibaba that focused also on a lot of activities for our data center.

And for International, again, having a long tail in this business with our relations with Orange, we're able to mitigate the decline. But there are also growth areas in international, A2P and even Free Bee which is an app that's offered to all the companies abroad. In fact, it's not for the hit on roaming because start overs was not possible.

We would have ended the year almost back, again, 2019 if not the decline for roaming. Anabelle? [Technical Difficulty]..

Revenues for 2020, a solid 9% increase or PHP13.8 billion year-on-year. With that top line growth, our EBITDA increased by 7% to PHP88.8 billion for 2020 at a 51% EBITDA margin. We saw a bit of increases in the cash OpEx, inclusive of the provisions. Without the provisions, our cash OpEx would have been up by 8% instead of 11%.

Depreciation and financing costs rose as a function of the increased investments we've been making behind our network. With all of that, our total core income came in at PHP28.1 billion, which is PHP1 billion or 4% ahead of 2019. Reported net income was up PHP24.3 billion, a PHP1.8 billion increase year-on-year.

Just showing the revenues on a quarterly basis over the last 3 years, other than a dip in the second quarter, during the early days of the ECQ, we've seen an acceleration in our quarterly momentum with respect to topline growth.

So we ended the year with a PHP44.9 billion revenues in the fourth quarter, which was 8% ahead of the same quarter in 2019 and 3% ahead of third quarter. So that was the highest quarter for PLDT with respect to our revenues.

Likewise, in terms of our full year revenues, we did reach an all-time high on PHP171.5 billion after a 9% year-on-year increase. So data clearly led the growth for the PLDT Group, with data growing 18% across our Mobile Internet, Home Broadband, Corporate Data and ICT businesses. That data now accounts for 73% of our total revenues.

Domestic voice, SMS, International voice have been under decline. But things like SMS and International voice now have -- accounted now for a smaller percent of our total revenues at 4% and 2%, respectively. This, again, shows the revenues and how they have grown over time.

And you see here that data revenues have clearly led the way with data revenues in 2020 being over 4x the level in 2012. So from a Voice, SMS business, our business has truly become a data-driven one. Just to recap again, our EBITDA grew by 7% on the back of the higher revenues, offset by higher cash OpEx and slightly higher provisions.

So PHP88.8 billion for the year and 51% margin, with a higher EBITDA and some other higher income, we saw an increase in our core income, not exactly the increase in depreciation and financing expenses. So with respect to our EBITDA, the PHP88.8 billion is also an all-time high.

We show here the development over the last few years from PHP68 billion to PHP83 billion to now and PHP88.8 billion for 2020 at a quarterly average of about PHP22.2 billion a quarter. With respect to our telco core income that came in at about PHP7 billion per quarter.

So aggregated to PHP28.1 billion for the year, higher from 2019 by 4% or PHP1 billion. So a bit of explanation in terms of how the telco core income and the reported income relate to each other. We do have quite a number of one-off nonrecurring items that were booked in 2020. So we show here some of the key ones.

We had a gain on the plus side and gain on the sale of our Smart headquarters.

On the minus side, we did have another round of manpower rightsizing with a onetime MRP charge of PHP2.6 billion, and we did recognize accelerated depreciation for the remaining copper facilities we have, given our plans to fully migrate copper to fiber as well as we took a view on shortening the life of our 3G assets.

So today, the PLDT Board also declared a final dividend, equivalent to PHP40 per share, which adds up to PHP78 per share when you comp the interim dividend of PHP38. So that's a 60% payout based on the core earnings of PHP28.1 billion or a core EPS of PHP130 per share.

On the balance sheet side, we're pleased to report that our net debt-to-EBITDA ratio was at 2.05x at the end of the year, quite healthy gearing level beside the higher CapEx requirements. Even when you pro forma the cash dividend payout or the final dividend declaration, the net debt-to-EBITDA ratio would be roughly 2.14x.

Debt maturity is fairly well spread out. In terms of FX exposure, only 6% of our debt remains unhedged, and then 15% are closing rate. Average interest cost, 4.66%. I'm also pleased to note that our USD 600 million U.S. bond issue that we did in June 2020 was made by IFR as the Philippine Capital Deal of the Year.

So on the CapEx front, initially, we had guided that the CapEx may be lower because of the restrictions that we faced during the lockdown period. But we're pleased to note at the end of it all, we were able to come in very close to the 2019 CapEx accomplishments.

So PHP71.9 billion, largely focused on the technology side of PHP56.6 billion, but also about PHP10.5 billion directly related to business requirements, particularly on the install side.

For the 2021, our guidance is at PHP88 billion to PHP92 billion CapEx investment for the year, with the key targets that we spell out here, 5G rollout of over 2,800 base stations. 4G, to introduce 4G to over 4,000 base stations. Additional ports for fiber of 1.7 million, additional 125,000 kilometers of fiber.

We also continue to invest behind our data center capacity to serve the growing hyperscalers demand. So some of the key highlights from a network standpoint, you see here that we've been able to roll out and grow our network across various metrics notwithstanding pandemic.

Homes passed, 9 million homes passed at the end of the year with over 4 million ports available for home broadband and enterprise broadband. Fiber footprint of 429,000, unmatched by any competition in the country, and we're adding another 125,000 kilometers to this number this year. We continue the roll out for 4G as well as 5G.

The 5G now we are keeping over 1,400 5G base stations as of the end of Feb, and that's a growing number as we speak to date. In terms of coverage, we cover 96% of the population of the Philippines with our wireless networks at 48% of -- having this -- of these -- for our fiber broadband network.

Devices, we're seeing that increasingly, people are shifting to LTE 4G 74% of the base are using 4G now, and that is a number that continues to increase. And you'll see that the dependency on 2G and 3G is diminishing. So at this point, let me turn you over to Mr. Pangilinan for the latest news for 2021..

for the wireless revenues, we expect high single-digit growth for 2021; for home revenues, we expect high double-digit growth in revenues. It's just the fixed broadband side of our business. And for the Enterprise revenues, high single-digit growth for the year.

The decline in revenue for international would be modest starting 2021 and will likely continue to be modest in the coming years. So it's not positive, assuming travel resumes, and we can gain back our growth in our roaming revenues. Capex, around PHP90 billion, PHP88 billion to PHP92 billion. So roughly PHP90 billion for the year.

Higher than the PHP72 billion we spent in 2020. Telco core between PHP20 billion to PHP30 billion, more like PHP30 billion as a target set really for management. And the good news is that we are prepared to increase our dividend payout by 5% or to 65% of our telco core as we use in compute our dividend payout basis.

So that summarizes our prognosis for 2021. And I think we're ready for your Q&A..

We're now ready to take your questions. [Operator Instructions]. The first set of questions came from of Carlos Angelo Temporal of APS. First one, given the recent news of Converge reportedly in talks with SpaceX starting satellite broadband. Is PLDT looking into tapping this technology of low orbit satellite broadband as well..

Yes. We are talking to various of these companies which are currently popping up in the industry, not only since this year, we actually are in talks since 1.5 years with various companies. Low orbit is an interesting technology, also, I personally believe it's a little bit -- been gone out of proportion in terms of what they really can do.

It's a fantastic technology for covering those areas. We cannot cover with our terrestrial technologies. And in fact, PLDT has been for the longest time, satellite capacity provider with our Visa services we give to various industries, also to maritime businesses. So I think we understand that business very well, and we are looking into it as we speak.

The key question will be the financial viability, given the limited ability to spend here in the Philippines..

Next question. Globe subscribers continue to decrease, particularly TM subscribers. While TNT appears to be absorbing most of the increase in subscriber count. With that, are there particular areas where the room SIM take up for TNT or even Smart are significant..

Jane? Are you there, Jane?.

Yes. I can hear..

Yes, go ahead..

Did you hear question?.

Yes, sir, yes, I did. For the value brand TNT, we've actually seen the growth for the brand across all areas. Except for the PCPs and this one in NCR, but a significant growth is observed in Visayas and Mindanao. And in terms of the business, in terms of revenues, the growth is coming from the adoption of data among this particular segment..

The next question, what's the level of DE or net debt-to-EBITDA that management is comfortable with?.

Yes, we ended the year a little over 2x. So we've always indicated that we're comfortable with a 2x to a little about 2x net debt-to-EBITDA ratio. That remains to be the management policy..

And the last question from Mr. Temporal. For comparability reasons, what is the current measure of tel's fiber footprint, excluding the last mile of fiber deployment..

So as a total, the fiber length is of about 424, which was by end of last year, the case. The last mile fiber footprint is about 250,000 kilometer. The rest is backbone and intermediate fiber and various other things like fiber base stations and so on.

But I just want to emphasize that the way we have built the network, the last mile fiber is as valuable, can be used for any service as any other fiber is..

The next set of questions come from Bernese of Atrium. Could you share with us a trend in gross subscriber installations for wired home broadband in fourth quarter compared to the third quarter.

The number of 75.5,000 average in September to December and the 100,000 target in 2021 mentioned in the disclosure, does it include wireless as well or only wired?.

Only wired. That's only wired. And you have to consider that November and December, there were a number of typhoons, it could have been better..

And Christmas..

And Christmas..

Holidays, yes..

And then the next question is, what is the monthly installation rate for wide home broadband in January and February of 2021..

Much better than the fourth quarter. Obviously, improving every month..

The next set of questions come from of Miguel Sabidal BPI Securities. PLDT team, thank you for the briefing, and congratulations on the results. Would you be able to provide color on what you saw in terms of consumer behavior in the fourth quarter, particularly in terms of basket size..

Jane, basket size?.

Okay. The average basket size of the prepaid customer base has actually increased quarter-on-quarter in the same year of 2020. So we saw the biggest basket size in -- obviously, in December because of the pent-up demand for storage for load. So it's pretty steady comparing it, in fact, to where we are now, it still remains to be steady..

The next question.

Should we expect PLDT to continue with the higher data allocation for Mobile this year? Or are we going to see a gradual wind down of the additional allocations?.

Jane you can answer. But I think we will continue to push for data..

Okay. Sir, If the question pertains to the data packs that we have. We actually enhanced the data packs, our data offerings, beginning January of this year. This is -- obviously, this is the need of our customers for data solution is becoming even bigger.

As at start of the year, we launched the free storage where we doubled the data allocation every day of the packs under the GIGA platform, the GIGA storage platform, et cetera, et cetera. So we will be coming up with more free flow of presentations in succeeding months and so on..

Next question from Miguel is regarding the common tower policy.

Could we get a sense on what we're seeing for the common tower policy on the PLDT side? How many tower providers is PLDT looking to tap this year? And how much of the new cell site builds for 2021 will come from common or lease towers?.

Yes. Current -- sorry....

So we have currently 6 tower companies under contract. And we are talking to a few more. So we may add 2 or 3 to that. It depends on their capability. And we are looking into -- actually doing most of our new towers, which we have planned for this year and the years to come. With those tower companies, of course, if they are able to do that.

And at the moment, we talk about we see 1,500 new towers we want to build. And at the moment, we're talking to those tower companies to do all of that. Now if they cannot do all of them, we will do some of them. But the target is maybe 90%, 95% with the tower companies..

The next set of questions are updates on the network rollout progress of the third operator.

How ready is it? And when is it expected to launch?.

I mean the launch date has been publicly communicated. We should not talk about this because we can't, but it's next week. And what we heard is they have 1,600 sites, and apparently, they met the 37% population coverage. Far away from the number of sites other operators have. We have 10,000 as towers grow pass.

And the public opinion was, this is not enough. So I think you can relate the number of towers Dito has to the other towers we have and derive your own opinion about it. As far as we can see, they are far behind. Any area where they are intending to launch they are far behind the coverage we provide, at least.

So at the beginning, this will be a market better for them, but they will get better over time. So we are not underestimating them, but I think we should always look at this as a pinch of salt and reality. I think this year, they will struggle to get the network stable and look at a reasonable service in place.

So I think this year, the impact will be quite limited..

Another Dito question. How does PLDT plan to counter the plan of Dito start rolling out in Mindanao and Visayas.

Can you share more about current trends of internet in Visayas and Mindanao markets?.

As a matter of fact, at least as far as we know about Dito's rollout in those areas, I think they are at about 25% to 1/3 of the number of sites we have there. So I think at the moment, they probably have chosen areas which are easier to roll out. And that's the reason why they went more rural.

But sooner or later, they have to face the challenging rollout task, for example, in metro modern coverage, much more difficult to get sites. But sooner or later, they will have to get there. So -- but they will, I'm sure about that..

Yes. I think, I agree that you are in the Dito will get better. But TNT, the service is not expanding too. We will get better. We will get bigger. And so we are actually not afraid of Dito, to be honest. So just why, in many ways, the concerns of analysts, I think, are quite displaced..

Another Dito question, what aspect of the business do you think has biggest impact due to Dito start of commercial operations? And how will this affect the bottom line?.

I think this concern is your concern.

Yes, frankly, right?.

Yes..

I mean, we have to -- our CapEx this year will be PHP90 billion, at least. So where are they? So how far would you -- how would they margin to catch up just on the network side..

The next question, any partnerships, acquisitions or other investments planned for this year..

I think really on the horizon, we have been approached by foreign investors and operators on the data center side because we were aware that that's one of the hard investment items nowadays on investor's radar screens.

We've taken the view that, clearly, it's an area that offers a significant potential for PLDT, particularly with respect to our ability to attract hyperscalers and the shift that's happening on the Enterprise side from pure connectivity to solutions, to building solutions layer on top of their ability to connect enterprises, both large and small.

But we prefer -- if we're going to do it, it's going to allow foreign investors to come into our data center, which I think will offer also a significant gain on either dilution or divestment.

We would prefer, not the private equity investor because they offer basically money, but somebody who is in that space who could provide added value to the business.

We're -- in terms of being attracting hyperscalers that are already approaching PLDT or tempting us with their business, enabling us to create a regional presence that are attractive to us or bringing in new business into the -- into PLDT team. Apart from that, I don't think looking at any venture outside of what we have now..

The next question. What caused the jump in depreciation as well as asset impairment for the fourth quarter..

As part of the year-end review process, we, of course, looked at some of the carrying values of our fixed assets, and we did take a view that we were going to shorten the lives of certain of our fixed assets.

So that -- this include, as we highlighted, the remaining copper facilities because we have announced our plans to migrate all the copper customers to fiber, and we've started, in many areas, already, the fiber overlay and -- or some of them will be completed in the next few months.

So basically, we already depreciated, in full, the fiber -- the copper facilities. 2G, we had started shortening the life of that. So 2G assets, only 1 year left to it. 3G, we took the view of a shortened life, not until 2024. Then we looked at certain other items in the network that will be part of our modernization program.

So that include things like batteries, antennas, micro base stations, some of our core assets, et cetera. So a number of items that would be part of our network modernization program, where we also took opportunity to accelerate the depreciation during the fourth quarter.

The other item, when you talk about the one-offs last year was really the higher provisions for bad debt. As we all -- we appreciate, collection rates were lower last year than the historical averages we had.

When we also take into account the PFRS 9 expected credit loss analysis because of the negative GDP growth, the more negative macroeconomic factors, that also factored into the assessment of expected credit losses and resulted in higher provisions for 2020.

But that as the economy recovers, as the economic indicators improve, I guess there will be a reassessment of those provisions..

Next question comes from Kervin Sisayan of Manulife. I want to clarify a question earlier. Is it correct that we are looking to provide more free promos and higher data allocation going forward to address the growing demand, are we looking to increase pricing or keeping it stable..

Jane?.

I think we'll keep prices stable, but I think Jane has offered deep story for all, again, which we did last year.

But Jane, you might want to add to that?.

So right now, you've actually already enhanced a data facts. We both doubled the passion allocations with the fee storage for all pack. We are preparing for further enhancements in the coming months, but again [indiscernible] will be down [indiscernible]. So we will launch if we need to..

Follow-up question from Bernese of Atrium. I want to clarify again on the fixed wire broadband subscriber growth. In the fourth quarter, net add subscribers versus the third quarter were around 79,000.

Given that the monthly installs were an average of 75.5,000, may we ask what's causing the churn? And if PLDT has been seeing improvement in the churn rates going into 2021..

Joachim, do you want to have pick that question?.

Just to answer the question, we did hold off. We did have some special treatment for our customers, given that the impact of the pandemic and making sure we kept as many of our customers as connected for as long as possible.

Some of that treatment, we actually concluded at the -- in quarter 4, which actually saw a slight increase in our churn, as we started to look at a different way of managing those customers. In terms of overall churn, we are seeing churn. We do have different technologies within our base.

Within our fiber customers, we are actually seeing a very good profile for churn. Obviously, as we migrate our customers from copper to fiber, which we announced in August last year, a very large program of ours, we are seeing churn improve across the base..

Finally from Bernese, her last question.

May I ask about the CapEx associated with migrating subscribers from copper to fiber and how many subscribers are left to migrate?.

I think the number of subscribers left is around 400,000. The CapEx, I just don't know..

That's actually embedded in our whole fiber rollout. So for most areas, we already have built the fiber..

And it's very synergetic because we use the fiber build also for new customers. So it's very difficult to isolate the migration itself..

There's another question on Dito. Can you share your expectations and ARPU with the entry of Dito..

Dito's ARPU..

[Indiscernible] announced data package over there..

Yes. Or Dito's ARPU will be 199....

199 for 30 days today. Again, we're going to -- I don't think we can answer that question. I guess what we have to continue to do is what can we do and offer the market. Obviously, we'll be watchful of all the packages in the market, not only Dito..

I think one disadvantage Dito has is they are not launching 5G according to their own statements. While we are a full blast on 5G rollout, which will have our upward trend..

Next question is from Tekwani Morales. Congratulations on the results. You mentioned that you would be replacing all copper into fiber, when can we expect 100% of customers on fiber..

So the ADSL customers, which is the slow copper, we want to basically migrating during this year. That's the target by end of this year, all ADSL slow copper is from China. Besides that, we have a relatively modern VVDSL technology, which will take another two years. Depending on how far we are with our fiber overlay rollout.

So that, in the fast copper, we will replace up to 2023. But they are already enjoying 30, 40 mbps. So a reasonably good speed, actually comparable..

And the last question we have in the queue.

Can you confirm your core income for full year 2020?.

2020?.

Apparently there is a misunderstanding, right?.

There's a different figure on Slide 37. So maybe I will just point to Slide 19 for the reconciliation of telco core income down to report. [Operator Instructions]. Otherwise, we'll give the floor back to Mr. Pangilinan for his final words. There are no other questions..

Thank you very much for joining us in this briefing. And thank you for your questions. And I guess, we will speak with you again when we announce the first quarter results on May 8. Let me just say that the first months of this year has been good. We are on budget in respect of the results, revenues and bottom line. February looks also quite good.

And the first few days of March also are looking good. So -- but we hope to bring you better news in the first quarter, assuming there's no second or third wave of the pandemic. So thank you again, and I wish you all a happy Easter. Thank you..

Right. A podcast of this briefing will be available on our website after the call. That concludes our briefing today. As always, should you have any further questions or clarifications, please reach out to PLDT Investor Relations. Thank you very much. Stay safe..

Thank you..

Thank you..

Thank you..