Okay, it's 3:30. Maybe we can start. So good afternoon, and thank you for joining us today to discuss the company's financial and operating results for the full year of 2022. This is our first face-to-face briefing after almost 2 years. So we welcome those who've joined us today at the venue and the 58 people who joined online.

So a copy of today's presentation is posted on our website. And for those who have 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 podcast of this event will be available on our website after the call.

QR codes for the presentation, the MD&A, the FS and the podcast are on screen later and in the confirmation notices e-mailed to you. For today's presentation, we have with us our Chairman, Mr. Manny Pangilinan; Mr. Al Panlilio, President and CEO of PLDT and Smart; Mr. Danny Yu, Group Controller; Mr.

Shailesh Baidwan, President of Voyager; and Attorney Marilyn Aquino, who's our CorSec and Chief Legal Counsel; as well as other members of the PLDT management team in the back. At this point, let me turn the floor over to Mr. Panlilio to begin the presentation..

data center and cloud and cybersecurity. So at this point, I'd like to transfer the mic to Danny for a more detailed presentation..

PLDT and Smart transport assets affected by modernization program; migration of VVDSL network to fiber; initiative to sunset 3G technology; replacement of existing aerial cables with underground; and the write-down of legacy network equipment at the Makati headquarters.

Today, the Board of Directors declared a payment of the final regular dividend of PHP 45 per share and, on top of that, final special dividend of PHP 14 per share for a total of PHP 59 per share.

In addition to the interim regular dividend of PHP 47 per share and interim special dividend of PHP 28 paid in September of 2022, total dividends for 2022 amount to PHP 134. This represents a payout of 88% and a yield of about 10% computed on yesterday's closing price of PHP 1,381.

PLDT's balance sheet continues to be strong with net debt-to-EBITDA at 2.25, an improvement from last year's 2.38. Gross debt amounted to PHP 251.9 billion, of which 17% are dollar-denominated and 5% unhedged. Interest costs for 2022 is 4%, while the average life of debt is about 6.73 years. Next, please.

Total CapEx for 2022 amounted to PHP 96.8 billion, consisting of IT and network of PHP 76.9 billion and business CapEx of around PHP 12.2 billion. Included in the CapEx spend are investment to support the home broadband business, capacity to support the rise in network traffic, the build-out of our 11th data center and 3 international cable systems.

Next, please. This page just shows the usual network highlights. On the fixed network, we passed 17.2 million homes and covered 17,700 barangays, representing 42% of all barangays in the country. For 2022, we built 1.5 million fiber ports, bringing the total to 6.1 million.

Utilization of these ports remain high at 50% to 60% level, and we intend to further improve the utilization. PLDT's total fiber footprint remains unmatched with a total of over 1.1 million kilometers. Insofar as our wireless network is concerned, our population coverage stands at 97% with a total of 76,500 base stations.

We have about 38,800 LTE base stations, and about 82% of the total handsets on the network are LTE-based. Next page. A few of our 5G statistics are found on this page. You'll note that the number of unique 5G devices and 5G data traffic continue to rise. Our 5G speeds remain faster than competition based on Ookla Speedtest.

So I now turn you over to SB for the Maya presentation..

Thank you, Danny. Good afternoon, everyone. For Maya, 2022 was a year of growth across all our business and also a significant transformation of our fintech ecosystem. On the enterprise side, where we provide payment services, we have the payment gateway from some of the largest online and face-to-face companies across the Philippines.

And in this business, we strengthened our market share position as the market leader even further as we processed more and more transactions, added QR Ph and other payment sources. So we are the number one processor for transactions across Visa, Mastercard, BancNet, QR in the Philippines.

On the consumer side of the house, this was a year where we transformed the erstwhile PayMaya into Maya. We added a number of new services, completely changed the customer interface. And this was brought about with the launch of Maya Bank, which happened in the middle of 2022.

And with the Maya Bank coming at the heart of our ecosystem and us unifying Maya Bank in the same consumer app, as we had our erstwhile wallet, we were able to significantly change the number and add the number of products and services that we offered and, more importantly, provide customers with a very strong unified customer experience.

And we saw the benefits of that, if we go to the next slide, please. In terms of the take-up, so we saw, by the time we exited 2022, we had more than 1.5 million bank customers who had deposited with the bank close to PHP 15 billion. And we had also disbursed over PHP 3 billion of loan to customers to help them with their financial needs.

We continue to see this momentum. If you go to the next slide, please. So through the course of 2023, we are expanding the number of services and products.

So on the consumer side of the house, we continue to add new saving methods, allowing people to create personal goals to help them to enable and inculcate a savings behavior, at the same time, launching newer and more products on the lending side or the borrowing side to help them tide over any financial needs.

What we have seen is, as we provide a unified customer interface, the customers are transacting with us 2 to 3 times of what they would normally do if it was a wallet only. So we are seeing deep engagement from the customers because this is now their primary account.

On the other side of the house, we continue to expand our footprint on the SME and the MSME part. These are segments which are hugely underserved.

And by helping them to digitize their payments by providing them access to all kinds of payment acceptance from QR, wallets, bank wallets or bank applications, we are now expanding to provide them facilities to be able to deposit their cash and also be able to provide them with short-term working capital.

So through the course of 2023, we'll be expanding the focus on both these segments with the addition of a number of new products and services that we'll keep rolling out through the course of the year. With that, I will hand it back to Al..

edotco digital -- sorry, EdgePoint and Unity of Aboitiz. And the leaseback terms, including tenor and lease rates, are similar to those transactions also. So despite the different financial conditions with our interest rates, we're able to maintain the same values per tower and the same terms and conditions from the previous transactions.

So this brings total towers monetized to over 7,500 of our towers for a total consideration of PHP 98 billion. The other transaction that we just announced recently is the purchase of Sky Cable Corporation's broadband business. This is valued at PHP 6.75 billion for 100% of total issued and outstanding stock. Obviously, this will not be completed.

It is subject to closing conditions, including obtaining government and regulatory approvals that we should expect in the next few months. So we will continue to disclose and announce as those approvals hopefully come to bear. So I'd like to move the -- to MVP for the 2023 outlook and guidance..

Okay, thank you. Thank you, Al, and good afternoon to all of you, both here and online. In terms of service revenue growth guidance for this year, 2023, we expect growth in revenue line to be mid-single digit. The Home revenues, home broadband will continue to grow mid-teens.

The momentum for Enterprise revenues will continue, underpinned by data centers and IT solutions. And in Mobile, we expect the environment to be challenging, partly because of the SIM registration, which will affect revenues in the short run, of course, inflation and continuing competition.

EBITDA, mid-single-digit growth for 2023, partly because of some growth in top line and aggressive cost containment in the course of 2023. CapEx Will be lower from the peak CapEx you've seen in 2022. We're guiding at between PHP 80 billion to PHP 85 billion.

That number of PHP 80 billion to PHP 85 billion includes principally the fresh CapEx of PHP 63 billion, and there's about PHP 20 million or PHP 22 billion of carryover CapEx from the previous year. Then free cash flows, principally dividends. I believe we should be able to maintain regular dividends of 60% of our core income for the year 2023.

Telco core tentatively being put at an improvement over the telco core of PHP 33.1 billion for 2022. I think we need time to be able to recast our numbers, particularly the telco core income for 2023, since the universal settlement agreements were just signed a few days ago, the last one being yesterday or 2 days ago, yes.

So we need to really look at our numbers again to see how we could perform better in 2023 and '24 and '25. So that finishes our guidance portion..

So we're now ready to take your questions. For those online, you may type your questions in the Q&A box in the upper-right side of the screen. You may also click the Raise Hand button and wait for me to call your name before you unmute your microphone. You may also send your questions via e-mail to PLDT_IR_center@pldt.com.ph.

Please indicate your name and company name, so we can get back to you for any additional information you may need..

So allow me now to take questions from the floor. There are microphones, raise your hand, so we can bring the mic to you. First question? Anyone? If there are none, we'll get a warm-up from Ranjan.

Ranjan?.

I have a couple of questions. First is on the accelerated depreciation, if you can go back to the number. I believe it's PHP 51 billion. It's a huge number. Considering the issue that we had last year of CapEx overruns over 4 years, and now even the CapEx has been spent and deployed, it seems to have a much shorter life of assets.

Is that something that the management is looking at as well like $1 billion of accelerated depreciation in a single year? Is it -- I mean it sounds quite a large number. What is the source of that? How is the company looking at ensuring that the CapEx that they deploy generates a return on capital rather than the asset being impaired.

That's the first question. The second is on the Maya business, if you can talk a bit more about the profitability of the business.

How are the bottom line trends of that business?.

It's basically technological in demand changes, Ranjan. To answer your first question, that's the only underlying reason. There's no other..

Okay. It seems like a big number, right, like $1 billion of impairment....

Yes. Because if you look at the breakdown, you've got PLDT and Smart transport assets affected by the modernization program, that's already PHP 19.2 billion. We also migrated our VVDSL to fiber, that's PHP 9.7 billion. We also -- we initiated this 3G technology mainly because there are only about 4% of the total devices that's latched on our network.

Then you have a replacement of existing aerial cables with underground, that's PHP 3.2 billion. Plus the write-down of legacy network equipment at the PLDT headquarters in Makati, that's around PHP 1.8 billion. We don't expect a similar level for 2023, of course..

And these are all existing assets..

Yes, these are all existing assets..

Is that okay, Ranjan? We'll do the second question on Maya.

SB?.

Thank you for the question, Ranjan. So as I mentioned, we have the Enterprise business. The Enterprise business will be segment EBITDA positive in 2023 around the third quarter of this year itself. And then we've got Maya Bank, which we are working towards profitability in the third quarter of 2024.

So in about 2 years from launch, we expect and hope to make the bank profitable. And because of these 2 businesses, the overall company should be profitable by the fourth quarter of 2024..

Is that okay, Ranjan?.

Yes..

Thank you. Second question online from of Sun Life. Katie? Okay. While we're waiting for Katie, we'll read the question that was sent through e-mail. This is from Marvin Obordo of F. Yap Securities. Could you provide color on the accelerated depreciation? I guess Danny answered that.

Does this already include the assets related to the PHP 45 billion budget overrun? And could you provide some breakdown on how much is related on it or related to it?.

They are not interrelated at all..

What was accelerated or provided for are assets already in the books.

The PHP 45 billion and now PHP 33 billion, we disclosed that, right? Because the extent of what we disclosed last year in December was an estimate of about PHP 48 billion of outstanding POs, right? Because of the negotiations with the vendors and the universal settlement agreements reached with the major vendors, about 4 of them, that has been brought down to PHP 33 billion.

So that's the new one. Those are -- represent POs whose products need to be delivered or put into service as well as services to be rendered in the next year or 2, right? So this accelerated depreciation really refers to existing assets.

As Danny indicated, the transport network, the 3G network because there's only about 4% of total devices we have in of our subscribers on 3G, right? And VVDSL has been overtaken by the technology of fiber.

So it was just a few years ago that we put up the VVDSL service to replace the copper infrastructure, but now we're finding out that it's really better to have fiber rather than the VVDSL. So these are the package of assets that we deem to, on the base of prudence, to write down to simply write off.

In a way, part of it is a cleaning-up process of the balance sheet, both the settlement with the major vendors and now these assets that may be either obsolescent or on the threat of obsolescence, right? So in some respects, it is quite punitive.

But better to clean that house -- clean up house at this stage while we have the exceptional gains as well..

Okay. A follow-up question from Marvin and also a question from Manuel Castro of Regina Corp., basically, the dividend outlook. I think MVP already answered that earlier.

But the follow-up question is, will there be another special dividend later out of the proceeds of the additional towers that will be sold?.

Well, that's a difficult question to answer, so to speak. How do I answer this? Well, last night, I spoke to -- well, you know Chris Young, right, from First Pacific. So we were looking at the overall financial health of PLDT.

And I said that, look, come 2024, I think we have the ability to be free cash flowing after dividends, the regular dividends; and certainly, in 2025, enough free cash flow to enable PLDT to start reducing our debts; and certainly in 2026. Where's Leo? Okay.

Is that correct? So -- and I told him that we still have -- we have sold 1,000 towers approximately of the 1,600 of the second package of the towers. So we have about 600 towers to close for the balance of the year. And with respect of package 1 of the towers, we sold -- the balance to be sold is about 800 towers. So we still have 1,400 towers to go.

Once all of these towers -- assuming all of these towers are sold and completed for sale, the total proceeds will be about PHP 98 billion of cash flowing to PLDT. Now I think in the media briefing, I think Al was asked whether we intend or there are plans, so there are discussions ongoing with respect to a sell-down of our data center.

And the answer is that, no, nothing on the table, nothing serious. So -- but if we do, I think it will give rise most likely to some gain, depending, of course, of the valuation and the extent of the sell-down, 10%, 20%, 40%, right, that could produce a gain. So I think we just have to wait for events to come to fruition in the course of 2023.

And then, I guess, if the towers are indeed completed within the year and Al in his wisdom decides to sell, let's say, 40%, 30% of data centers, we may produce actually excess cash to the requirements. And so I guess the answer would be, let's look back.

If we're able to do all of these things, the significant gains from asset sales and are we open-minded about the special dividend, yes, why not, right? At the moment, since the share price slid today, we're probably back to 10% yield based on the regular special dividend we declared out of the 2022 income..

Okay. And then to wrap up....

Is that clear enough? Or anyway....

Okay.

To wrap up the questions from Marvin, his last question is, is there any update on the pending suit filed in the U.S.?.

Well, so far, there has been no developments in that case. We have not been served any summons or any pleadings in respect of that suit. So we will await further development, but at the moment, no development..

Okay. Next question we'll take from online, Luis Hilado..

Just two questions from me. In terms of the outlook for depreciation and amortization this year, given you've taken that hefty accelerated depreciation, does that mean that it should be relatively flattish outlook this year, even with your CapEx? Second question is regarding the broad guidance that telco core income will be higher this year.

Just wondering on the Voyager side, will this be a year of still more investments, so we should expect higher costs for Voyager this year versus last year?.

On the depreciation, if you look at our CapEx last year -- or rather total PPE, it was around PHP 302 billion. This year, it's just going to be PHP 292 billion, I mean the end of 2022. So to answer your question, hopefully, it's going to be slightly lower..

On the Voyager side of the house, 2022 was a year of high investment because we launched the digital bank and transformed the business. So in 2023, as I said, we see the enterprise business becoming EBITDA positive. So our requirements in terms of our EBITDA losses will definitely be much lower than 2022..

Okay.

And one last question online before we give a chance to people -- Luis, you had a follow-up?.

No..

All right. So the last hand raised is from Heather Lim..

Heather from Sumitomo Mitsui Asset Management here. I just have one question. On the PHP 33 billion CapEx budget overrun, so some of it already recognized in FY '22 CapEx and then some of it is in the '23 CapEx.

And other than that, so what is happening? Is that the products for the PHP 33 billion will be delivered this year, next year, in the next 1 or 2 years, as you mentioned? And just to confirm, there was no debt taken to pay any of the vendors?.

Most of these CapEx items will only be delivered over the next 2 or 3 years..

Okay. Okay.

And so that PHP 33 billion is just purely in the PHP 80 billion to PHP 85 billion guide? Or it will be in FY '24 also?.

I didn't get it. Sorry..

Will it only be in the '23 guidance? Or will it spill over into '24?.

It's going to be spread out over the next 2 or 3 years..

Okay, understand. Right.

And no debt was taken needed to pay vendors this year, right?.

None yet so far, right?.

Anything else, Heather?.

No, that's all..

Thank you. Now we'll take questions from the floor. Anyone, raise your hand so we can pass the mic on to you. Rachelle..

Sir, just a question on the PHP 33 billion. It mentioned that it's on the larger suppliers.

But does it -- so is there a possibility of it rising or if you don't get the same terms with the smaller suppliers or is that the maximum? The PHP 33 billion that you have , that's the maximum?.

Yes, I told that's the agreed amount with them. So it's unlikely to rise beyond that level..

All right. Just another question.

Could you give us an update regarding the management reorganization that you announced before?.

Which company? We would be here all night , Rachelle, right? No, I mean, kidding aside, you mean in PLDT?.

Yes, yes..

I'll leave it to our CEO here, yes..

Yes, no, no, we've started also doing a refresh on key positions. I think reorganization is an ongoing thing. As I said, the business also runs. So there are changes. Even without this issue, there are changes that are happening across the board in the transformation office of Noel. Also in network, there are changes happening there.

Also in the wireless group, something is happening also there. So it's a continuous review of what is the right organization structure, never going to be perfect. And as the business demands change, we have to continue to adapt.

But specifically to this one, I think we're able to refresh certain positions, certain leaders in certain groups in the company..

I think I just want to ask, did you implement new systems or in relation to this so that the issue won't recur in the future?.

Yes, that's been heavily discussed also during the Board this morning. A lot of details also coming from audit, a lot of details coming from the final report of Milbank together with PwC. We have already started adopting and implementing a number of improvements in the end-to-end CapEx process.

Just to name a few, we are implementing controls and enhancements in policies, procedures, budget planning approvals and monitoring, including investments in better tracking tools. So it's a bit of automation is also needed.

Improvements on project management systems, data systems, make sure the company is equipped to efficiently monitor and optimize CapEx spending. Even our procurement process has been quite deliberately slow as of the moment to make sure that we're able to look at all projects, but hopefully, we normalize as we move forward.

We need to simplify our processes, especially in purchase order processing. That has been a very complex process, and that's something we need to improve on. We obviously need to improve our vendor management processes also at the same time. At the end of the day also, this will be implemented by people.

And I think we do have to enhance training for employees who were involved in the CapEx process, and that's something that we're also working on. So it's a much longer list than this. This is just a summary of the major initiatives. But yes, we have started and we will continue to really improve.

It's also being highlighted at the Board level where we are also, I guess, reporting in more detail in terms of the CapEx processes that we're doing and approvals that the Board has approved. I hope that answers the question..

Any other questions from the floor?.

This is Jan. So a few questions on the operations side first. I noticed that the fixed broadband gross adds remained steady at the 50,000 range per quarter. Churn gradually grew quarter-on-quarter.

What's the reason for this? And any plans to offer lower price plans for the fixed broadband side?.

I'll give it to Jeremiah, who heads the Home business, and explain both churn and products that you're looking to.

Jeremiah?.

Thanks, Al. The first question on churn actually gradually increasing, if you recall, last year, we experienced quite a large calamity with Odette, right? And it took us -- we did share with you that it had taken us some time to restore full services back to all the Odette-affected areas. That wasn't done until about the later part of April, May.

So by the time we started processing and actually billing our customers in those areas, you didn't start seeing that take effect with our churn until about the third quarter.

We actually extended quite extensively financial services for our customers, extended their payment plans and really tried to give them as much opportunity to be able to stay with us. Unfortunately, some of those customers were not able to recover and actually have opted not to renew their services with us.

So you would have seen an uptick in our churn in quarter 3 and quarter 4. The biggest chunk of that was actually attributed to the delayed impact of Odette that came through from earlier part in the year.

We have seen -- obviously, with rising competition, there is going to be naturally more opportunities and more options for customers, right? So we have seen a slight uptick with regards to churn, but that's something that we can continue to work with our customers closely to make sure that we actually provide them with the best service as possible so that we don't give them opportunities or reasons to leave us.

I think on the second part of your question, really was around other services or other products that we'll be looking to make available to our customers.

So PLDT has always provided a range of products for our customers, right? If you look at our broadband services, our fiber services, they actually start from as low as PHP 999 and can range all the way up when we have services like our 10 gigabit per second plan. We make all of these products available.

And ultimately, we want to serve all the different segments of the market, and we give them those options.

Now for other segments of the market where it may actually be a little bit more difficult to be able to get to, we are very fortunate that we are a fully integrated telco and that we also have a mobile network, which actually is one of the strongest mobile networks in the country.

So we're able to offer other segments of the market with a fixed wireless solution. Our fixed wireless solution is available all the way down from sachet-based prepaid pricing on a per day or a 7-day or 1-month basis and enables them to actually use it as much or as little as they want depending on their individual circumstance.

So we're looking to actually use a full array, a full spectrum of plans for our fiber as well as our fixed wireless offerings to ensure that we serve all segments of the market..

All right. I have another question on the Sky Cable purchase. It seems to be cheap.

How will this improve PLDT's existing subscriber base?.

Would you like me to? So one of our commitments is to grow connectivity. As we mentioned, I think, actually earlier on today, both Manny and Al talked about one of the big drive from government to connect as many homes and as many people as we possibly can. This is one way that we can actually do that.

Sky has an extensive network, and this will actually be augmented within the PLDT network. So it allows us to expand our reach and also expand the number of customers that we can serve..

In terms of -- what is your name again?.

My name is Derrick from CLSA..

Okay. Derrick, in terms of numbers, Sky actually has 2 businesses, one much bigger than the other. Approximately PHP 5.5 billion of revenues are attributable to the -- their fixed broadband, right? And the EBITDA flowing from that business, PHP 5.5 billion, is about PHP 1.7 billion.

So automatically, we should raise the targets, right, of Jeremiah for the year -- or not quite the year. We don't know when it will close because the transaction is subject to PCC. So the potential impact, assuming we do not incur any debt, is it should flow directly to his P&L.

The smaller bit, which is quite surprising because the origin of Sky has been pay TV, so that has now shrunk in large part because the government shut down their DTH. So we migrated at about 1.2 million subs on DTH, and we migrated about 2 years ago about 1 million of that over to Cignal.

So they're left now with approximately about 150 million pay TV subs..

There's about 250,000 pay TV subscribers, of which about 150,000 are in Metro Manila..

Metro Manila. So we will migrate first the 150,000 over to Cignal, so which really doesn't show up in our accounts. So -- but that's -- and then we probably migrate a portion of the balance in the provinces over to Cignal, maybe not the entire 100,000.

So it will have a modest impact on the P&L and cash flow of Cignal because Cignal has about 4.2 million subs. So adding about 200,000 is about 5% or so of the subscribers. The advantage of the pay TV subs of Sky is that the ARPU is much higher than the ARPU of Cignal, about twice as high.

So I think it will be moderately beneficial to Cignal moving forward.

And definitely, if you had about 320,000 subs, that's about a little over 10% of the -- you have about, last year, 2.9 million, no?.

2.9 million fiber customers..

Fiber customers. So it will be more than 10%, maybe 12% additional..

Derrick, anything else?.

I have one last question regarding Maya. So until when the -- when will the high interest rates last for deposits? And it seems like the cost of funds will be impacting the profitability of the bank in the next year or so..

Yes. Derrick, so at this stage we are offering that, we're finding that the customers to earn that high interest rate need to do a number of transactions and spend with us. And each of those use cases, of course, on the margin for the company when you do those transactions.

So what we are seeing is that, that engagement creates a very rich data set for us, which then goes into a credit scoring model because the customers that we are attracting are customers who, in certain months, have excess cash, but in certain months, if they have to buy a laptop or have to buy a good or do something, also need access to cash, right? So by putting high-engagement banking, as we call it, it's not just vanilla interest rate, but you really need to do and spend and transact with us to earn the higher interest rate.

We actually learn about the customers and then are able to lend them as and when they need to do that. So that's part A of the answer. The second part is the rates are adjustable.

And at this stage, for us to park the excess liquidity with BSP, we earn overnight fairly strong interest rates on the overnight placements out of the short-term placements that we are doing. As the world changes, interest rate changes, we will, of course, be looking at balancing our cost of fund and our spreads over there.

But really for us, at this stage, the focus is to expand the credit aspect and lending more and more. So how we design products to ensure we get more and more data on our customers, whether it is SMEs or whether it's consumers, using their banking behavior in terms of transactions and then translating that into our lending models..

Any more questions in the floor? We have a few e-mails, but ?.

Can you give us an update on Starlink and what's the possible impact on your business?.

Is Mitch here? But Mitch, maybe you can talk about -- we're also talking to Starlink in terms of some of the services that they want to acquire from PLDT. I see Starlink as complementary to our service. I think there are areas where we're not there, and the satellite is obviously available. But you also have to look at the commerciality of the service.

I think, first, I think you have to buy the dish, which, as far as I know, is about PHP 30,000 one time. And the monthly service fees I think that they charge is about $100, so that's about PHP 5 200. So it's quite steep. If you look at the ARPUs that I think Danny showed for Home, it's about PHP 1,300.

And you're already having difficulties of people churning out because they can't pay the monthly service. So it's complementary to our service, obviously, but I think it depends whether the market can bear the cost. Maybe Mitch can add to more of a relationship on that Starlink..

Yes. So our international enterprise team handles the Starlink and SpaceX relationship. So we were actually the one that powered them up in the Philippines. It started with Pagbilao here in Luzon. It's the only one live right now. And they're planning to expand in Visayas and Mindanao. We are also in discussions on a possible go-to-market partnership.

But as ASP or Boss Al mentioned, again, it's a question of affordability from the retail side. But from an enterprise side, whether you're a mining company or a resort on a specific island that's dependent on microwave, it's a good alternative for that. So it complements, basically.

But from a service perspective, it's soon to be seen or we'll see how -- when the consumer market actually adopts it, we'll see how the performance will be soon..

Any follow-ups?.

My next question would be on the Individual segment. We noticed that it has shown declines versus the previous year.

Can you enlighten us on what will be your strategy for 2023 to lower the declines or possibly return to growth?.

I'll take that. I'm Francis. I think to answer your final question on what we're doing for 2023, it's important for us to understand what drove the decline in 2022. I just have 3 key points. The first one, actually, 43% of the decline or a total decline of PHP 4.13 billion actually came from because we sunsetted Sun.

Okay? So 43% of that or around PHP 1.8 billion we lost because of Sun prepaid and Sun postpaid. Unfortunately, the subscribers didn't migrate to Smart or TNT. And that's why you will see, actually, our mobile data revenue grew up, but we have a significant decline on our SMS and voice because that's where most of the legacy offers of Sun are.

Second point, or if you look at the trends quarter-on-quarter, 42% of the decline actually happened in quarter 1, and that's around PHP 1.7 billion, and PHP 1.3 billion of that is actually Smart prepaid.

Now what we've done in quarter 2, when we look at the business of total Smart, it's fixing the fundamentals, strengthening the brand proposition, reinforcing our network superiority. And we came up with more relevant and competitive offers, like the POWER ALL that we launched in the second half.

So from a PHP 1.3 billion decline, we were able to manage to bring it down to PHP 80 million in quarter 4, and we will continue to do that in quarter 3. The third point, in the second half when the inflation hit us hard, we have another brand, TNT. And we saw that the inflation hit the subscribers of TNT, being a mass brand, much harder.

So there was like around a PHP 650 million decline coming from our TNT business. So having said that, to answer your question, I think moving forward, I think what we have seen also in quarter 1, of course, one key thing happening this year is SIM registration.

It's very important for us, in order for us not just to reverse the decline or remove the decline, but to further grow is to be ahead in SIM registration. And I'm happy to say that as of today, we are 5 million ahead of our competitor. We've also noticed that those who have SIM registered, there's a 5% increase in ARPU.

So that's one key thing we're going to do. Second, we're going to continue to strengthen the fundamentals of our businesses for prepaid and postpaid. So going back to what Al said, it's -- at the end of the day, it's providing the best experience from network, providing the best offers and exciting them with new products and innovation.

So we're going to stick to those 2 strategies -- or 3 strategies for 2023..

Any other questions from the floor? There's a question. Katie sent her questions. She wasn't able to ask them online. Basically, she's asking about the status of the Makati operating permit and unpaid taxes..

Well, that's been resolved that same week. Yes, we were able to have a settlement with the City of Makati. And by that Friday, I think they have taken out the closure notice on the building. Actually, they didn't really -- they just put the sign. They didn't really padlock or prevent our employees from entering and exiting.

But the same day, that's on Monday, same day, we were in touch with the office of the mayor. And there was a settlement already done the next couple of days after that. So by Friday that week, the sign was taken out. So that's been resolved..

Okay. And also from Katie on the CapEx question, together with that of German de la Paz, any upside to the PHP 33 billion CapEx overrun? I think that's similar to the question that Rachelle asked.

Is it my understanding that PHP 33 billion CapEx overrun will be for the next 2 years?.

Actually, depending on when the delivery of the hardware and the services come in, no? So -- but we expect maybe the next 2, 3 years for the delivery of the PHP 33 billion..

And then finally, from German, how does management plan to utilize the PHP 12 billion tower sales proceeds?.

Wait for Sky, so the Chairman said, but Danny?.

Well, I mean the balance would be for general working capital purposes, right? So....

Yes, partly Sky..

What?.

Partly Sky..

Partly Sky, yes. But that won't happen. I think -- I don't know, maybe the Philippine Competition Commission will need to approve the home broadband side of it. So it might take them 3 months or so, we don't know..

I think just one last comment on Sky Cable. I think what's -- aside from the additional 300,000 plus that we're looking at, I think they have 1,800 multi-dwelling unit or MDUs that are -- that gives us an opportunity to upgrade those services in those MDUs. Some of them are hotels, some of them are condominiums.

And I think eventually, fiber becomes a better option in those areas. So it's really improving customer offerings, customer experience as far as broadband is concerned.

And a lot of those are high end also, no, Jeremiah?.

Yes..

There's a hand raised. Hussaini, you can unmute your mic. Hussaini? If you're not able to speak, you can e-mail your questions to us. Any last questions from the floor? Hussaini? You're coming in choppy..

Yes, we will try my best. So just 2 questions from me. One is on SIM registration. Just wanted to understand that is SIM registration having any competitive implications? I mean in other markets where SIM registration took place, we have seen some competition creeping up.

So just wanted to understand how it is progressing and is there any impact on competition? And the second question, again in competition, more related to and macroeconomic situation in Philippines. Is that having on consumer spending, to some competition? Just want to....

Hussaini, the last question, if you could repeat.

Did you ask whether inflation is having an impact on competition in the Philippines?.

Yes, I will try to -- can you hear me?.

We can hear you, yes..

Yes. So the last question is linked to inflation, higher inflation and relatively weaker macroeconomic situation.

Is that having any impact on consumer spending and which in turn is leading to competition, competition in the sense more value for money kind of packages or more, let's say, packages from -- in the market?.

I can answer those 2 questions. On the first one, on SIM registration, definitely, it will have an impact on how our brand or our business will be more competitive. Like I said a while ago, I think this is the window of opportunity for you to actually get privacy. There's a lot of dual SIM-ers in the Philippines.

And normally, when a subscriber would register his SIM, there's already a commitment to stick to it and, therefore, lesser churn. So definitely, I think the brand or the business that will do a better job in SIM registration will have a bigger competitive advantage this year.

And that's why we've investing a lot of resources and effort to make sure that we are ahead of our competition when it comes to SIM registration.

On your second question, definitely inflation, since it hit us hard in the -- at the start of the second semester of last year, what it has -- what we have seen is -- I think not just for us, if you look at the numbers of our competitors, it definitely affected, number one, the lower-income consumers even more than the middle to upper income.

And then in our case, those are mostly the TNT subscribers; and in our competition, that's TM. You will see that both brands are more affected in terms of business because what happened is those consumers actually have lessened their use. They've lessened their frequency of using their mobile.

They've either wait -- they just wait to go home to use someone else's WiFi or they've lessened watching YouTube or lessened looking at their social media because they're saving for the more essential expenses in the household. And we see -- we think that inflation will continue to be a challenge for us this year.

As you know, inflation rates haven't really gone down. But we've learned a lot on how to counter that. We make sure all our offers are more competitive and we put more value for money in all our promo offers for -- especially for prepaid..

So a follow-up on that from Ken Gotianse -- oh, sorry, Hussaini, did you have a follow-up?.

Yes, that's it from me..

Thanks, Hussaini. So there's a question from Ken Gotianse. Looking at Mobile, it appears that you lost some revenue market share in the fourth quarter from being flat year-on-year in the 9 months.

Could you elaborate on the weakness being seen in the Mobile segment relative to competition?.

Okay. I think in quarter 4, what we saw was, again, because compared to our competition, we have a bigger contribution in our business for the value brand like TNT compared to our competition. And again, during the second semester, even until -- I mean, fourth quarter, what happened was the highest inflation rate happened in December.

And we were more affected by the inflation because our TNT business, which caters to the lower-income consumer, has a bigger contribution to our total business. As compared to our competitor, it's actually the opposite. Their bigger brand is Globe, which has a better share amongst the, in terms of spending-wise, amongst the middle to upper class.

So I think that's one. That's why they managed to grow their ARPU even higher..

This next set of questions were coursed through Leo, so obviously from the banks. Let me read them. Does PLDT expect any write-offs in 2022 or in 2023 arising from the CapEx overspend? I think that's been answered earlier.

Why was the CapEx overspend an issue? And why did it take so long to discover this? How is the CapEx overspend reflected in PLDT's books? What are the exact causes of the overspend from the perspective of market dynamics, procurement process and reporting? And then what measures and policies are going to be put in place? I think that question has been answered as well.

And please disclose the results that the forensic investigation conducted..

We've already disclosed the result of the forensic investigation in our disclosure today, which is that there is no evidence of fraud, intentional concealment or bad fate conduct on the part of any employee of the company.

So -- and the other question, the question is whether -- when will it be reflected?.

Yes.

Was it reflected in the books?.

Oh, when it will be....

Because that's privileged information..

Yes. The investigation, we -- the report will not be disclosed. It's an attorney-client privilege. So what we have disclosed is the result of the investigation. But the other question is when will it be reflected, the PHP 33 billion, the CapEx carryover.

The note in the 2022 audited financials included a note on the universal settlement and the PHP 33 billion and the fact that the 20% will continue to be -- there will be continued engagement on the 20% nonmajor vendors.

And the outcome of the universal settlement for all the vendors will be an item or will be reflected in the 2023 audited financial statements..

Yes. I think there was a question on what was the main reason for the overrun. I think it's really the multiyear contracts that was the main reason that there were overruns. It was not an over-order, but really just the monitoring of the CapEx. We were not able to include the multiyear contracts..

And just to clarify, when we talk about overrun, we interchangeably use overrun and carryover. It's actually really a carryover, the CapEx that will be continued in the next few years after their commitment..

Okay. There's a follow-up from -- sorry, there's a follow-up from Katie regarding the tax issue. I understand that the matter was settled in a short span and the office was not locked. Nonetheless, there are still some outstanding tax issues, and it was also reported that there was no permit issued since 2019.

Can the company confirm that the proper operating permit has since been issued and provide an update on the unpaid tax matter?.

For the charges against both Smart and DMPI for the business permits has been issued, they are just negotiating with Makati City to cancel the surcharges, interests and penalties that are being assessed before we settle the statements of accounts.

And then eventually, they aim to process the permits hopefully within this month for the issuance of the permits for both Smart and DMPI -- SBI. But the compromise agreements have been signed for both Smart and SBI. Yes..

One last round of questions from the floor before we deal with the ones sent by e-mail. Last chance. The last one from Ken Gotianse was on Maya. There's a sizable gap between deposits and loan disbursements.

Could you talk more about your approach on asset and liability management?.

Sorry, in relation to what has been explained earlier, the issue on surcharges and penalties is something that we are convincing Makati not to charge us because from the beginning, when this issue was pending and pending in court, we consigned the amount for the payment of the business permit.

So in our view, we should not be liable for penalties or surcharges in this case, and that is the ongoing discussion..

[Foreign Language] pending tax issue, which is the bigger tax issue in relation to the franchise tax. So since that was pending for a number of years and PLDT was trying to pay for the business operating permits, as and when they fell due in any of the relevant years, [Foreign Language]..

Katie, what the Chairman said is we wanted to pay the permits, but they didn't want to accept them. So we can't do anything. That's why Attorney MaVA said we consigned the amounts with the courts due to the pending tax issue. So if we can move on to the last question, if there are more questions from the floor. That one was from Maya -- about Maya.

There's a sizable gap between the....

We're also -- of course, there was clearly a difference of opinion as to the quantum of taxes due flowing from the franchise tax. So that's -- I don't want to get into the details of that because the -- anyway, we were willing to pay at least what we think was due and then maybe the differential we could argue a bit later.

So at least we settled that point because [Foreign Language], particularly Daily Inquirer, is that we were unwilling to pay the franchise tax that was due to Makati City. We were, except for the calculation. So [Foreign Language].

Until finally, it was settled by way of compromise [Foreign Language] we were evading taxes, right? [Foreign Language] Anyway, there was a compromise number, so [Foreign Language], well, for the meantime..

Okay. And the final question, on Maya, there's a sizable gap between deposits and loan disbursements.

Could you talk more about your approach on asset and liability management?.

Sure. As we said, we're very pleased that the customers have reacted so positively to the launch of Maya Bank. People have found it extremely easy for us to be used and have transferred their funds over. And we are seeing a lot of usage overall, not just depositing with us, but like I said, the whole model is based for them doing transactions with us.

So first of all, that helps us create revenue from the various transactions. The second, in the short term, as I mentioned, the placements that we have with the excess liquidity with BSP, pretty much 0 risk-weighted placements, giving us very high returns at this stage.

So in terms of us being able to cover for that, we are able to cover for that cost of funding. The second part, in terms of our assets, yes, again, we are seeing on the loan side of the house, people taking up and the disbursements are beginning to build out pretty quickly.

Now in the Philippines, as we know the coverage of the credit bureau and national ID are still weak, so we want to be smart in the way we disperse loans as we launch various scoring models. These models need a little bit of time as they learn about the customer behavior, but we are seeing, like I said, a rapid ramp-up.

So what we disbursed in the first few months of 2022 towards the end about PHP 3 billion. In the last couple of months, we are disbursing close to that number and now in a quarter. So we are seeing a big -- a steep buildup. And on top of that, we are launching new products.

So SME, for example, for segment, even for consumer, there are new products coming out. So it is about being prudent on the lending side of the house, as you would expect us to be, to make sure that we are able to manage the flows and any losses.

And on the consumer side of the house, at this stage, excess liquidity is actually being parked with us getting fairly handsome returns. But yes, we are seeing now the buildup.

And as we launch more and more products with different tenors, with different line sizes, we will start seeing the asset liability beginning to match, getting closer in terms of disbursement of loan versus deposits..

Hussaini, you still have your hand raised.

Did you have a follow-up question?.

No, no, sorry. I forgot to lower it down..

All right. If there are no other questions from the floor and none from the participants online, last chance. Okay. So if there are no further questions, we'll now turn the floor back to Mr. Pangilinan for his closing remarks..

Well, let me just reiterate, I think, our collective thanks for your attendance today physically and online.

I think it's, actually, to all those present in this hall, it's good to see you after a 3-year absence, right? And we plan to give you a better idea of the telco core income guidance for 2023 when we announce our first quarter results sometime in May this year. So hopefully, we could see some of you, all of you and more of you come May.

We -- I'd like you to know that we feel the disappointment that you guys must feel as well that we're failing in our governance in relation to this CapEx issue.

And so for the past 5 or 6 months, a great deal of attention has been paid by management in rectifying that particular issue and, of course, the relevant controls that have to be imposed, including personnel, I think, to your question, Rachelle. So we are mindful of that and remind you as well that we have taken a severe knock on our reputation.

So we know we have to -- a big job ahead in trying to prove that the governance principles, which we have adhered since the time that First Pacific invested in PLDT sometime in '98, is continuing to be upheld.

And in mitigation, the -- whilst we cannot publish in full the report of Milbank and the other accounting and legal advisers that they have engaged in the course of their forensic investigation, we have disclosed the main conclusions flowing from that report. And MaVA told the Board that we -- she will retain a copy of the full report in our offices.

And anybody, any director or adviser of the Board is free, welcome to come to the office and read the full report. Maybe I guess, there's a U.S. Secrecy Act at some point, after 50 years, we might be able to release the report to you. But I think some of you are young enough perhaps to survive the 50 years, right? So [Foreign Language].

So we know we have a big job to do. But through it all, what we endeavor to do this afternoon to you and to media is based on the 2022 numbers, you've seen the numbers, it is as strong as it can ever be. It is certainly much stronger than the numbers you've seen with respect to the other telcos who have all reported their results to you.

And we will certainly endeavor to improve on our 2022 results and make it better in 2023 and beyond. And because we do want to prove that despite these difficulties that we have encountered in the last 5 or 6 months, we will recover a stronger company than it was before because as I told media, somebody said, let's not waste this crisis.

Let's use it as an important event for us to remedy what's wrong and move on. It's important as well is my reminder to Al that we get back on the saddle that we should return to business usual as quickly as we can and do certain things that will improve both the processes, the controls, the operations and the profits of this company.

So thank you again, and we wish you all a Happy Easter, right? This is our Good Friday, actually. We were flagellating ourselves the whole day. So thank you. Thank you..

And that concludes our briefing. Thank you for joining us today. Have a good Easter. Join us for refreshments outside. Good evening..