TELCO CORE INCOME UP 10% TO ₱25.4B, ON TRACK TO REACH FULL YEAR
GUIDANCE OF ₱33B
REPORTED NET INCOME ROSE 45% TO ₱27.4B, INCLUDING GAIN FROM
TOWERS SALE
9M22 CONSOLIDATED SERVICE REVENUES AND EBITDA HIT ALL-TIME HIGHS
OF ₱141.9B AND ₱75.4B, RESPECTIVELY
DATA/BROADBAND NOW 80% OF TOTAL SERVICE REVENUES
FIBER-ONLY HOME REVENUES SURGED 52% TO ALL-TIME HIGH OF ₱35.7B,
NET NEW FIBER ADDS AT 489K IN FIRST NINE MONTHS
ENTERPRISE REVENUES HIT NINE-MONTH RECORD OF ₱35.2B, UP 9%
OOKLA’S FASTEST BROADBAND NETWORK, BEST MOBILE NETWORK FOR
Q1-Q2 2022
TOTAL FIBER PORTS AT 5.9M, 1.29M FIBER PORTS BUILT IN 9M22
PHILIPPINES HAS THE 5TH FASTEST INTERNET IN SOUTHEAST ASIA -
OOKLA®; PLDT, FASTEST BROADBAND IN PH SINCE 2018
SMART IS FASTEST MOBILE NETWORK FOR APPLE, SAMSUNG AND ANDROID
DEVICES -OOKLA
PLDT S&P CSA SCORE AT 59 FROM 51, MSCI RATINGS UPGRADED TO ‘BBB’
Despite increasing economic headwinds, PLDT Inc. (PSE: TEL) (NYSE: PHI) (PLDT) grew Consolidated Service Revenues (net of interconnection costs) by 4.5%, or ₱6.1 billion, to a nine-month all-time high of ₱141.9 billion in the first nine months of 2022, as consumers thrived on their digital lifestyles in the new normal.4
In the third quarter, PLDT Group’s Service Revenues grew by 4%, or ₱1.7 billion, to ₱7.7 billion, compared with the same period last year.
Data and broadband, which grew by 9% or ₱9.3 billion to ₱113.2 billion in the first nine months, continues to drive growth, contributing 80% of Consolidated Service Revenues.
For the first nine months, Consolidated EBITDA increased by 6% or ₱4.3 billion to ₱75.4 billion, also an all-time high. EBITDA margin was at 51%. In the third quarter, EBITDA grew 2% or ₱0.5 billion to ₱25.0 billion, compared with same period last year. Consolidated EBITDA is trending to cross ₱100 billion for the full year despite the stressful economic conditions.
Telco Core Income, excluding the impact of asset sales and Voyager Innovations, grew 10% or ₱ 2.3 billion to ₱25.4 billion in the first nine months. Reported Income jumped by 45%, or ₱8.5 billion, to ₱27.4 billion, which includes ₱22.3 billion in pre-tax gains from the towers sale up to the third closing.
“Enterprise seems to be our bright spot as we continue to empower businesses in their digital transformation and help promote the Philippines to be the next major ASEAN digital hub. Our 11th and, by far, largest data center is also on-track to be completed in late 2023,” said Alfredo S. Panlilio, PLDT and Smart Communications President and CEO. “Meanwhile, PLDT Home continues to grow despite increasing challenges to people’s wallets due to continuing high inflation and the prolonged impact of Typhoon Odette.”
“Our goals are pretty bold, as we aim for big targets, even knowing it is not going to be easy,” Panlilio added. “We are aware of the headwinds that we face, and certainly, this will not be the last time we will encounter challenges,” he said. “What is key here is that while we continue to drive revenues by responding to our customers’ needs, we are trying to put discipline in place by focusing on strong efforts to control our operational expenses and improve operating efficiencies.”
Consolidated Net Debt as of the first nine months amounted to US$4.038 billion while net-debtto-EBITDA stood at 2.36x. Gross Debt was at US$4.414 billion, with maturities well spread out. Only 18% of Gross Debt are denominated in US dollars with 5% or US$0.24 billion of total debt unhedged. PLDT maintained its credit ratings from Moody’s and S&P Global at investment grade.
In connection with its pioneering sale of telecom towers and related passive telecom infrastructure, PLDT said that as of October 3, ownership of a total of 4,435 towers or 75% of the 5,907 towers covered by the sale and leaseback transaction had been transferred to the tower companies and a total cash consideration of ₱57.7 billion has been received by the Group. Proceeds from the sale of the towers will support operating and capital expenditures. The transaction is timely as it allows PLDT to avoid additional debt against a backdrop of a rising interest rate environment. PLDT expects additional closings before the end of the year, with final closing anticipated to be completed by the first quarter of 2023. In addition to the 5,907 towers sold, or committed to be sold, the sale of additional telecom towers is currently under evaluation.
Home: Continues to grow by reaching deeper into the unserved market
PLDT Home continues to connect homes with fiber, posting service revenues of ₱14.6 billion in the third quarter and bringing Service Revenues for the first nine months to an all-time high of ₱42.7 billion, up 21% or ₱7.3 billion year-on-year.
Fiber-only service revenues grew 52%, or ₱12.2 billion, to ₱35.7 billion in the first nine months, on the back of increased gross additions of 286,000 customers in the third quarter, partially offset by higher churn due to the continuing clean-up of customers affected by Typhoon Odette as well as rising economic challenges impacting customer wallets.
The growth driver of Home, fiber-only revenues account for 84% of total Home revenues, up from 67% compared to a year ago, and higher than the 70% recorded in full year 2021.
This brought PLDT Home’s fiber subscribers to 2.9 million, having added 489,000 net new fiber subscribers in the first nine months of the year. Total fixed broadband subscribers as of endSeptember is at 3.24 million. “This supports our view that there is still growth in what remains to be an underpenetrated market, albeit future revenues will likely come from regional areas where rollout is needed and from lower market segments. As we reach deeper into the market, we are exploring lower denomination plans to address affordability,” Panlilio said.
Despite setbacks caused by the after-effects of Typhoon Odette and tightening economic conditions impacting customers’ disposable income, PLDT Home is looking for ways to provide relief to its customers. In partnership with Maya Bank and Maya, PLDT Home will offer qualified financially distressed customers with a range of financial solutions and payment alternatives to help relieve the growing pressure on customer wallets.
As a result of PLDT’s continued efforts to modernize its network and connect more Filipinos nationwide to fiber, the country’s broadband speeds are now among the fastest in the region. Based on the latest Speedtest Global Index report from internet analysis firm Ookla, the Philippines ranks fifth in terms of median download speeds among Southeast Asian countries.
Enterprise: Revenues steadily rising with the economy re-opening
PLDT Enterprise logged its highest quarter ever in the third quarter of 2022, as it continues to support the digital transformation needs of a wide array of businesses, from micro SMEs, to large conglomerates, even spanning global companies. Fixed Data and fiber broadband, Managed Networking Services, Wireless Solutions, Data Center and Cloud gains have sustained Enterprise growth momentum, and the focus on digital transformation has mitigated the impact of economic challenges. The resilience of PLDT’s network in the face of calamities like typhoons, along with improving operational efficiency gains on installs and repairs, have also helped maintain momentum.
PLDT Enterprise posted record-high revenues of ₱12.0 billion in the third quarter, up 8% or ₱0.9 billion from the same period last year, bringing revenues in the first nine months of the year to ₱35.2 billion, up 9% or ₱2.8 billion, year-on-year.
PLDT Enterprise’s all-time high revenues are on the back of the resurgence of business activity post-COVID lockdowns, the strong support for the government’s digitalization agenda and the expected growth in demand for data centers from hyperscalers, with the exponential increase in data generated within the Philippines, and regional transit traffic.
Overall fiber and networking revenues for the fixed business continue to provide robust sources of growth, increasing by 17% with fiber-only lines growing 20K in the first nine months versus the same period last year, while third-party data center racks in service also increased by 6% over the same period. Data center capacity is at 78% or 4,600 racks, as Enterprise continues to build ahead of demand.
PLDT Enterprise has also launched the “Sulong SME!” campaign, where it empowers small businesses to innovate and thrive in a fast-evolving digital enterprise landscape. Through this program, MSMEs are provided with simple yet attainable digital solutions to help them navigate and power through their digital transformation journey.
From an ICT business perspective, growth is driven by similar record-high performances from Data Center and Cloud, ahead of the operation of the PLDT Group’s 11th Data Center, Vitro Sta. Rosa and overall cloud transformation initiatives.
ePLDT remains committed to being the trusted digital transformation partner of choice, by sharing both technical and business expertise, to help Enterprises cut through the complexities of their journey, making digital technology work for their organization.
Individual Wireless: Improving momentum despite headwinds
PLDT’s Individual wireless segment has been able to see steadily improving revenues in an environment of constrained consumer wallets and more aggressive competition, hitting ₱20.4 billion in revenues in the third quarter, pushing nine-month revenues higher than pre-pandemic levels.
This brought revenues in the first nine months to ₱61.7 billion, showing sequential quarterly improvements in 2022, and as the Group continues to leverage its network leadership and superiority and sharpening the brand definition of Smart and TNT with new promos that address customer preferences. Smart Postpaid is showing growth due to the “Power of Smart” network campaign and other new offers, while the Prepaid business has also shown improving trends in the third quarter, compared to the same period last year. The individual wireless business is seen to benefit from higher mobility and upcoming holiday spending. At the heels of the signing of the SIM Registration Law, Smart is also continuing its preparations to provide a convenient, easy and rewarding SIM registration experience for its subscribers.
Data and broadband contributed 84% to the segment’s revenues. In the first nine months of the year, active data users stood at 41.6 million, while average monthly mobile data usage per subscriber also rose to 8.8GB. Mobile data traffic grew by 30% year-on-year to 3,163PB.
As the company continues to stimulate the take-up of 5G devices and data traffic, the number of unique 5G devices on Smart’s network in the third quarter of the year grew 114% compared to the last quarter of 2021, while data traffic on Smart’s 5G network in the third quarter also increased by 220% compared to fourth quarter 2021.
Underpinning this level of performance is Smart’s wireless network, which was recently recognized by Ookla as the Philippines' Fastest and Best Mobile Network in its latest report covering Q1-Q2 2022.
The Best Mobile Network citation has only been given by Ookla to approximately 20 mobile operators in the world, with Smart being the first and only Philippine mobile operator to clinch the award since Speedtest started in 2017. To earn this citation, a mobile operator must lead in two crucial Ookla Speedtest AwardsTM categories, namely Fastest Mobile Network and Best Mobile Coverage, within the same test period. Smart is also the fastest mobile network for Apple, Samsung, and Android devices, based on Ookla’s analysis of Speedtest Intelligence® data for Q3 2022.
To enable customers to maximize Smart’s network, Smart has also launched value-packed offers, such as Power All and Double GIGA for Smart Prepaid and ‘Sulit Affordaloads’ for TNT subscribers, which offer more data at more affordable price points, bolstering Smart’s recovery momentum.
Maya: delivering next-stage financial services
The PLDT Group is spearheading the growth of the Philippine digital ecosystem through Maya, the only all-in-one money platform in the country. Maya registered record-breaking growth with one million bank customers and over ₱10 billion deposit balances, just five months after its launch in April this year.
The Maya app seamlessly integrates the features of an e-wallet, savings, credit, and crypto in one platform. Customers can efficiently manage their finances and build their funds through their high-yield savings accounts, which offer daily interest crediting. They can also quickly move their money to their e-wallet whenever they need to make a transaction and buy or sell crypto.
Maya continues to be the leading payment processor for enterprises through Maya Business, with over 810,000 registered merchant touchpoints nationwide as of end-September 2022. Its Maya Centers, meanwhile, with over 65,000 agent network touchpoints, serve as digital community hubs for cash in, cash out, QR and bills payments, and remittance.
To further unlock synergies with the PLDT Group, Maya provides more convenient access to financial services to PLDT Home, PLDT Enterprise, and Smart subscribers, delighting customers with exclusive joint promos and perks. It also enables payment acceptance and will soon provide working capital access to Smart's retailers.
"Maya's trailblazing growth continues to validate the preference of Filipinos for an all-in-one digital banking and payments experience. In parallel with government initiatives such as the National ID and SIM registration, we are propelling the digital adoption of financial services like payments, savings, and credit. Our goal is to bring these services to more people, especially those who need them most," said PLDT and Voyager Chairman Manuel V. Pangilinan.
Network updates: enhancing delivery of services, seamless customer experience
Reinforcing the Philippines’ position as a regional hyperscale hub, the PLDT Group has expanded its total fiber footprint to about 1,091,000 kilometers, consisting of over 231,000 kilometers of international fiber and almost 860,000 kilometers of domestic fiber, passing some 16.8 million homes in 67% of the country’s cities and municipalities.
PLDT’s fiber infrastructure supports Smart’s 77,200 base stations, including 7,300 5G base stations and close to 40,000 4G/LTE base stations deployed nationwide. Smart’s network covers 97% of the population with 3G, LTE, and 5G.
In the first nine months of the year, the group built 1.29 million additional fiber-to-the-home (FTTH) bringing total FTTH capacity to 5.9 million.
PLDT also recently announced the start of the initial phase of cable construction of the Asia Direct Cable (ADC) in Batangas. The construction of the 9,400-kilometer subsea cable will commence in the Philippines with target completion of all landing links at the end of 2023. When completed, ADC will link seven international cable landing points in the Philippines, Singapore, Hong Kong, Japan, Vietnam, Thailand, and China. Once fully equipped, this will provide PLDT an additional international network capacity of at least 36 Tbps for faster delivery of hyperscale data across East and Southeast Asia. The upcoming activation of ADC and Apricot cables systems will increase to 19 the number of international submarine cable systems of PLDT which includes the recently energized Jupiter Cable System. Once fully equipped, PLDT’s current international network capacity of 60 Tbps will expand to over 130 Tbps, remaining unparalleled in the Philippines.
Capex guidance
PLDT is in the process of reviewing its consolidated capex for 2022, which could exceed the initial capex guidance of P85 billion. Once the review is completed PLDT will issue a separate disclosure on the matter.
Sustainability: PLDT aspiring to be the region’s leading ESG telco
The PLDT Group continued to work towards its ambition focused on ESG leadership. In the latest S&P Global Corporate Sustainability Assessment (CSA) ratings report, PLDT attained an overall score of 59, a significant gain from its prior years’ scores of 51 and 47 for the year before. The S&P Global CSA applies standard criteria across 61 industries globally and evaluates 20 financially relevant sustainability criteria across economic, environmental, social and governance dimensions. This November, MSCI’s rating for PLDT improved to ‘BBB’ after four years at the ‘BB’ level.
Continuing its efforts to embed its sustainability initiatives in the business, PLDT Group is laying out a roadmap involving functional units across the organization which will all work towards improvements that will ensure that PLDT does business responsibly. fine-tuning its decarbonization roadmap, in coordination with concerned functional units, with 2022 and 2023 emissions reductions on track to exceed targets.
Under the Environment pillar, the Group instituted mandatory work-from-home (WFH) Fridays for non-customer facing employees, which is aimed at generating energy savings and consequently reducing greenhouse gas (GHG) emissions. The move is also seen to impact Scope 3 emissions because of reduced employee commute to and from the office. During the quarter, PLDT signed an agreement with First Gen’s Energy Development Corporation for the supply of geothermal power to six (6) PLDT facilities in Davao which will commence once the Mindanao WESM is operational. Smart is exploring the use of solar panels and batteries in running its cell sites in selected areas of the country to complement power sourced from the commercial grid and reduce the cell sites’ reliance on generators.
Under the Social pillar, PLDT Group has also continued promoting digital inclusion in education, livelihood and food security, disaster resilience and digital wellness, through programs such as the Digital Farmers Program, Innovation Generation Program, #PlantSmart, Central Visayas Institute Foundation Dynamic Learning Program, and #SafePH. Under #PlantSmart, PLDT and Smart launched their first GrowHub, an office-based edible garden placed in idle spaces in PLDT and Smart buildings. Initially launched in Makati, another GrowHub will rise soon in Cagayan de Oro.
Also under the social pillar are the areas of data privacy and cybersecurity. To curb mobile phone-aided criminal activities such as text scams, Smart has blocked SIMs that send ‘smishing’ messages, as well as Uniform Resource Locators (URL) linked to these illegal activities. From June to September this year, Smart blocked 203,000 numbers that were found to have been used in fraudulent activities. The network also blocked around 393 million smishing messages in the same time frame.
The PLDT Group also continued clamping down on the spread of child abuse materials online, adding more than 465,000 URLs linked to online sexual abuse and exploitation of children (OSAEC) to their blacklist as of September. Since the launch of PLDT’s child protection platform last year, the Group has blocked more than 1.3 billion attempts to open web addresses that host OSAEC-related materials.
“Sustainability is no longer a “nice-to-have” but a “must-have”, and one of the five key pillars of PLDT’s strategy. We want to be a responsible corporate citizen. We have already laid out our plans for decarbonization which are closely linked to our business. We have started to lay out our ESG roadmap, and the improvements in our CSA and MSCI rating scores affirm that we are on the right track,” said Panlilio.
Outlook
As the PLDT Group sustains its transformation initiatives against the backdrop of toughening economic headwinds, Management has offered similarly tempered optimistic views for the business. “Our third quarter performance has shown that the business continues to do well amidst external challenges—first COVID-19, then inflation and high interest rates, not to mention the ever-present typhoons—and the indication so far is that the full year performance will be ahead of last year especially as the fourth quarter is typically a good one. We must focus and execute well,” said Panlilio. “Ultimately, PLDT’s main advantage is having three revenue engines with strong competitive and complementary positions. This has made the PLDT Group resilient in challenging times.”
“We are also watching our capex levels, especially the impact of the weakening peso on our dollar-denominated debts and imported capex, even capex committed in previous years and current ones. With the disciplined effort led by our Transformation Office, we are trying to manage some softness in our topline, as well as tightly control our costs.”
"In recent years, we have taken bold steps to ensure telco leadership in many aspects: from our aggressive network transformation to our continuous product and service innovations. At the end of the day, we must remember that everything that we do is not just because we love technology: We are here to serve our customers and remain relevant to them, assuring them that they can count on us," Panlilio said.
Pangilinan concluded that: “At this time that the consumer wallet is diminished—when consumer income is under threat and Government finances are challenged—investments will emerge as a primary recovery tool. Hence, investments are needed, both by the Government and the private sector to drive the economy forward,” said Pangilinan. “The supreme task of nation-building is one that the Group is very serious about. We help as many people as we can, especially those below the line of poverty, in partnership with Government. After all, the essential task of PLDT, and indeed the ultimate test of our effectiveness, transcends the goal of delivering good and services for profit. It is, and will remain, the improvement of people’s welfare.”
