PLDT Inc (PHI) 2018 Q2 法說會逐字稿

Good afternoon, everyone, and welcome to the PLDT conference call. Please be advised that this call is being recorded. And at this point I would like to turn you over to Melissa de Dios, Head of Investor Relations, for the introduction. Please go ahead. Thank you.

Once again, thank you, everyone and welcome to the PLDT conference call. Please be advised that this call is being recorded. And at this point I would like to turn you over to Melissa de Dios, Head of Investor Relations, for the introduction. Please go ahead.

Good afternoon, and thank you for joining us today to discuss the company's financial and operating results for the first half of 2018. As mentioned in the conference call invitation, a copy of today's presentation is posted on our website. For those who've not been able to do so you may download the presentation from www.pldt.com under the Investor Relations section. A podcast of this briefing will be available at the website after the call.

For today's presentation we have on stage members of the PLDT group management team, namely Mr. Manuel Pangilinan, our Chairman and CEO; Ms. Anabelle Lim Chua, Chief Finance Officer; Mr. Ernesto Alberto, Chief Revenue Officer; and Attorney Ray Espinosa, Chief Corporate Services Officer.

At this point let me turn the floor over to Mr. Manuel Pangilinan to start the presentation.

Good afternoon, maybe just to set the stage for this briefing, we just like to let you know, the operational results will be covered by -- and financial results by Anabelle and the rest of the management team. But we simply would like to let you know that at the outset that sometime this week we have signed a turn sheet with a group of investors that will make a significant investment in Voyager. This group of investors will eventually have a majority interest in Voyager so that our stake in Voyager itself after the injection of the relevant funds into Voyager would be sub 50%. It will probably in the neighborhood or 40% to 45%.

Still PLDT will be the largest single shareholder of Voyager moving forward. And the [term sheet] has been characterized in a way that it's a partnership with these foreign investors. So they will have significant management and of course board representation in Voyager itself. So the investment itself, apart from this significant cash which will be put in by the investors would likely result in a significant gain on the part of PLDT.

It is envisaged that the -- under the terms of the term sheet that we have 4 weeks under which to agree the definitive documentation. But I think we can probably conclude the decision documentation within 2 weeks so to speak. And thereafter, there will be consultation with the Philippine Competition Commission because we have to put this particular transaction to the -- to the PCC which may take anywhere between 30, up to 90 days. 90 days if they move us to Phase 2, within 30 days from the time that they are happy with the papers submitted to them if we stay within Phase 1.

So we would hope that it would take no longer than 90 days from the time we submit the decision, the documents. It breaches the rules of the PCC on 2 counts. Number two is -- number one is that we're selling more than 35% equity stake in Voyager. And number two, the quantum of the investment is significantly higher than PHP 1 billion, so we will do that. And I think investors are aware that we will have to go through the process. It is indeed a condition precedent to closing.

So with that I'd like to turn over to Anabelle who will talk about the financial results.

Good afternoon, everyone. So we will -- with that announcement we will focus back on first half operating and financial results as announced at lunchtime today. So let me just say at the onset that our results reflect the new PFRS 15 which impacts revenue recognition. But the same time we do percent the numbers and the pro forma (inaudible) basis just to make it comparable year-on-year.

So in this first slide we do show you a breakdown of our financials. First of all what we describe as a telco results, that is without Voyager and without the asset sales and then the Voyager results separately.

So excluding Voyager, first the telco core income came out to PHP 13 billion which is 6% higher year-on-year, and that was on the back of a 4% increase in top line, a 7% year-on-year rise in EBITDA to PHP 34.6 billion in a pro-forma basis. Now we do highlight Voyager's results in the first half here. Voyager reported effectively a negative contribution, about PHP 1.3 billion, to the PLDT results for the first half. And as you know, Voyager continues to enable consumers and enterprises with digital platforms in the areas of financial services, digital payments and marketing technologies. So the ramp up has resulted in more significant cash flow than in prior years. So certainly the announcement as indicated by Mr. Pangilinan would help us in this respect.

Now together when we look at the numbers together, our consolidates service revenues amounted to PHP 72.5 billion on PFRS 15 basis. That's 2% higher year-on-year. With the new accounting standard there is a PHP 1.8 billion downward adjustment in our service revenues that is offset by PHP 1.6 billion upward adjustment in nonservice revenues. And therefore at the EBITDA level it's only a PHO 0.1 billion change, so quite marginal.

So if we look at our financial for the same accounting basis as last year, our revenues would be PHP 74.2 billion, that's up PHP 3 billion or 4% higher than first half '17. And then if we exclude our decline in ILD and NLD total revenues, service revenues were actually higher by 6% year-on-year. Consolidated EBITDA reached PHP 33.2 billion at PFRS 15 or PHP 33.3 billion in old accounting. So very little difference. Both at a 4% increase from first half last year. EBITDA margin improved slightly to 43% from 42% prior year.

Core income from the telco operations, as I indicated earlier, was PHP 13 billion, up 6%. With the Voyager numbers core income would be PHP 11.7 billion, which is slightly lower by about 1% compared to prior year. Now there are few other nonrecurring items that affect our reported income at the end of the day. So the major ones which I'm highlighting here, first one is we had a PHP 1.4 billion gain from the sale of our 6.8 million Rocket Internet shares that happened in the second quarter this year.

Last year we had the bigger asset sale gain of PHP 6.6 billion, and that related to our sell-down of our final equity interest in Beacon, Meralco.

Now aside from the realized gain from the sale of Rocket, we still have 3.3 million shares that we're holding on to and we recognize a 1.5 billion reval gain on those shares based on the market price of rocket at the end of June of EUR 27.50. As we speak, Rocket has actually been trading over EUR 30, so there is another potential gain, reval gain in the third quarter.

Now offsetting this, we do have an accelerated depreciation of PHP 3.6 billion which arise from the shortened estimated useful life of some of our network assets which have been part of the aggressive network transformation program of PLDT and Smart. Now this is something that we had reflected in the fourth quarter and this PHP 3.6 billion reflects the balance that we have to book this first half. And there will be another PHP 1 billion approximately for the second half.

And with that, that just complete the, accelerate the depreciation relating to the soft out of our NCR network. So reported income, that stood at PHP 11.8 billion, so that's 29% less than prior year, and that's really because we had the higher gain from asset sales last year.

Now just looking at quarterly trends from our service revenues. We're pleased to note that the topline from stabilizing in 2017 the quarterly revenues have started to trend higher. So each quarter's revenue is higher than the prior quarter in 2017 and the upward trajectory sustained in the first 2 quarters of 2018. And our revenues in the second quarter at PHP 37.5 billion is the highest level attained in a quarterly basis since 2Q 2016.

And then the turnaround is particularly evident, if you consider that from 2Q '16 to 2Q '17 there was a decline of PHP 2 billion in revenues. And then subsequently, 2Q '17 to 2Q '18 we saw PHP 1.8 billion increase. So we attribute this PHP 3.8 billion positive swing to the continued strong growth posted by our Home and Enterprise businesses and the positive results now for Wireless Consumer group which will be discussed in more detail later by Ernesto Alberto and his team.

But very quickly, focusing on the contributions of the major business segments, PLDT Home set the pace for growth on Smart, increasing by 14% year-on-year to PHP 18 billion pesos for the half, an improvement of the 12% growth we were posting in the first half last year. So growth was clearly underpinned by the demand for fiber-powered broadband service and data broadband revenues were up 38% actually year-on-year.

Next the Enterprise Group posted revenues of PHP 18.7 billion, and it raised its growth rate to 9% in the first half. Previous quarter we were reporting 7% and now we are able to show, reflect a 9% growth rate already. So that means the 2Q revenue growth was actually 12% versus same quarter last year which is significantly higher than the 7% growth that we were seeing in the first quarter. So again, Jovy will talk about this business in more detail later.

And then here in terms of the individual Wireless Business Group, this has shown a 2% increase year-on-year driven chiefly by growing mobile data revenue, so while it looks more than 2%, the increase in facts represents a sharp turnaround because we were reporting something like 17% decline in the first half of 2017. So this increase was driven really by the rise in mobile data revenues year-on-year as a result of higher smartphone ownership and greater data adoption.

In terms of our international carrier business, just to complete the story, the revenues from this legacy segment has been declining and were lower by 15% year-on-year in the first half. Note however the decline of 15% percent is actually lower than the 23% reduction we were seeing in the first half of last year. In terms of the mix between wireless and fixed, the fixed part of the international revenues is actually now quite low at about 15%. So most of it is wireless. International, which is about PHP 2.9 billion in the second quarter and PHP 0.6 billion is in for fixed. So that's coming up from a PHP 4.6 billion Wireless International in the first quarter of '16 and PHP 1 billion for fixed international in the first quarter of '16 as well.

So to quickly recap, the 3 main business units that account for 90% of our revenues grew 7% year-on-year, so that's higher than the average of 4%. It hit PHP 66.6 billion service revenues total. And the improvement of PHP 4.3 billion follows a decline of PHP 2.5 billion in the same period last year.

So this will be discussing in more detail. But as indicated earlier, Home and Enterprise are about 50% of our revenues. And together they grew 11%. Wireless consumer is about 40% of our revenues and has turned the positive 2% rise this year in contrast to what happened last year. And data clearly is the growth driver for all of this business units. For Home 75% of our revenues are now data, for Enterprise 64% and for Wireless Consumer it's 45%.

So that leads me to the next slide which shows the overall service revenues by services type. So for data broadband and digital platforms all told is about 54% or the largest component now of our consolidated revenues, and it grew 21% year-on-year to about PHP 39.6 billion for the semester. So that's on the back of growth in all Fixed Home broadband, mobile Internet revenues as well as corporate data. So as a result of this our data also is -- in terms of share to the fixed line business about 71% and for Wireless about 37%.

Moving on to the consolidated EBITDA. We show how we were able to improve it by 2.2 billion or 7% year-on-year to hit PHP 34.6 billion EBITDA. So clearly the improvement in the topline revenues coupled with more rigorous management of our OpEx growth improvement in EBITDA. Our margin for this year stood at 45% ex Voyager. We also showed the impact of Voyager and in the results there is a decrease of PHP 1.2 billion, our EBITDA, considering the cost of building up the Voyager business pillars. And as indicated earlier, the adoption of PFRS 15 has resulted in a marginal adjustment of PHP 0.1 billion in EBITDA numbers.

So turning to the next slide. We show our core income at several bases. So as indicated, core income is PHP 13 billion excluding Voyager, up PHP 0.8 billion or 6%. With Voyager the core income stood at PHP 11.7 billion. So there's about a slight decline of 1% compared to the prior year.

And in addition to this, some of the one-off items as discussed earlier where the gain from the sale of Rocket of PHP 1.4 billion. And then the other items that affect the reported income reval gain and the balance of the Rocket shares of PHP 1.5 billion in this numbers. And then the accelerated depreciation of PHP 3.6 billion as I indicated earlier.

So in terms of our balance sheet highlight, consolidated net debt stood at PHP 2.4 billion as of June 30. And the net debt to EBITDA improved to 1.89x. So that reflects the impact of having already received PHP 17.5 billion combination from the sale of Rocket of PHP 10.5 billion and PHP 7 billion from the discounting for MPIC receivables. So those positive inflows allowed our net debt number to be reduced compared to the year-end numbers.

And in terms of debt profile, 7% only that's unhedged and only 11% is on floating basis. So bulk of it is hedged and on fixed rate. Now today we did declare an interim dividend of PHP 36 per share, which is in line with our dividend policy of a 60% payout. We calculated this in the basis of the underlying core income of PHP 11.7 billion, so 60% of that. And another 60% from the gain of PHP 1.4 billion from the asset sale. So the dividend is payable at September 11 to stockholders and record as of August 28.

Now just on CapEx. In the first half of 2018 PLDT and Smart accelerated the rollout of the group's fixed and mobile networks, and that's providing a stronger lift for our revenue growth going forward. So our CapEx for the 6 months came in at PHP 21.8 billion, out of the expected CapEx investment of PHP 50 billion for the year. So we continue to step up the expansion of the reach of our fiber-to-the-home broadband network as well as the coverage and capacity of our LTE and 3G networks to better serve the rise in demand for mobile data services.

Data usage is clearly on the rise as a result of our network infrastructure buildout and a massive market adoption of LTE. Some stats, as of the end of June PLDT increased the coverage of fiber-powered fixed broadband network to 5.7 million homes passed which is up from 4 million homes passed from the end of 2017.

Our full year target of -- for homes passed is at 5.1 million, and actually as we speak we have already hit and exceeded that target. We also boosted our ports capacity to 1.86 million ports or nearly 85% of our year-end target of 2.2 million ports. In mobile Smart installed over 3,900 new LTE base stations which boosted the total count by 45% to 12,600 LTE base stations. This has enables Smart to improve its LTE coverage and also to activate LTE-Advanced which offers even higher data speeds in more areas of the country.

LTE-Advanced, we are utilizing carrier aggregation which provides us much higher mobile data speeds because we're able to combine the capacity of 2 of our up to 5 frequency bands. Now to compliment the LTE rollout, we continue to add about 500 3G base stations which has raised a total to over 10,400 3G. The stepped-up roll-out of LTE and 3G base stations enable Smart to meet its commitment to the government to provide high-speed wireless data services in over 90% of the country's cities and municipalities earlier than end 2018. And underpinning all of this network roll out was expansion of our fiber optic transmission and distribution network. In the first half we added over 29,000 kilometers of fiber cable. And this has increased a total fiber footprint about 204,000 kilometers, clearly ahead of everybody else. And its boosting the reach capacity and resiliency of the PLDT's fiber network. So with this I'll turn this over now to Ernesto Alberto to discuss in more detail the revenue results in the first half.

Thank you, Annabelle. Good afternoon to everyone. I'd like to put the context (inaudible) the revenue different lines of business as it affects our revenue line augmenting what Annabelle had already presented earlier. Today as we report our first half 2018 financial and operating results. We are pleased to advice our highlights. The company generated revenues of PHP 37.1 billion for the second quarter of 2018, which is a 5% and PHP 1.9 billion revenue growth over the PHP 35.2 billion in the year-on-year comparable second quarter of 2017.

Notably this performance is preceded by 5 quarters of continuous revenue growth, reaching a revenue level that the PLDT group has not seen since the second quarter of 2016 or 2 years ago. Viewing the performance from a half year perspective, we have achieved a 4% growth and a PHP 3.1 billion gain year-on-year from the first half of 2017 of PHP 70.5 billion to the first half of this year of PHP 73.5 billion. This also represents over PHP 8 billion recovery swing over a 2-year period coming from a steep negative PHP 5 billion decline in the first half of 2017 at PHP 70.5 billion from the first half of 2016 at PHP 75.5 billion.

Attributable to the steep decline is a drop in our wireless business which is shaded by the color green in the slide. The drop in 2016 first half to 2017 first half from PHP 35.2 billion down to PHP 29.3 billion.

Highlighting our first half 2018 performance per business segment, let's start with enterprise. Our enterprise business delivered 9% growth, representing incremental PHP 1.6 billion in revenues for the period. The three main business drivers of this revenue growth performance are our enterprise wireless business with an unprecedented 26% growth, our ICT revenues in enterprise growing almost 2x faster than that of the industry or market with growth estimated at 17%, and the consistent rise in our fixed line revenues driven by robust and high demand for data, reflecting our ability to bundle connectivity solutions with manages services to enterprises over our data access offerings.

On to Consumer Home. Our Consumer Home business continues at its strongest. Year-on-year growth topping at record 14% and PHP 2.2 billion in incremental revenues for the first half of 2018. As we continue our network expansion, leveraging on our over 5 billion -- sorry, 5 million fiber homes passed and nearly 2 million in deployed ports and our focused improvement in our quality of our delivery and our customer experience for broadband in the home, the Consumer Home business increased new subscriptions and delivered higher ARPU from both new subscribers and our ability to upsell our existing subscriber base to higher home broadband plans.

With respect to the Consumer Individual or our Wireless business on the other hand, it has now evidently overturned years of continued revenue decline and is now gaining confidence on a clear sustainable growth path through the following. First, our superior data network in both 3G and 4G as cited by third party independent network rating agencies, OpenSignal and most recently Ookla.

Second, our accelerating growth in both data subs and usage, particularly in increasing adoption of video content through partnerships with global players and leading content providers, most recently our partnership with YouTube. Third, our rising ability to monetize such increase in data subs and data usage.

These allowed our Consumer Individual business to deliver a respectable 2% growth and PHP 500 million for the first half of 2018 coming from very steep declines in the periods prior. These growing areas of our business will account for a strong 7% performance or PHP 4.3 billion in incremental revenue growth for the first half of 2018.

Moving to our challenge international business on the hand, this business while still challenged has favorably seen a tempering in revenue decline in the first half of 2018 from PHP 2.5 billion recorded in the first half of 2017. It has more halved to only PHP 1.2 billion decline for the first half period of 2018.

All told, this enabled our group to post the aforementioned 4% growth or incremental PHP 3.1 billion in consolidated revenues for the first half of 2018. At this point I would like to call our segment heads to present the performances of both our enterprise and consumer business in more detail. To start, this will be started by Jovy Hernandez, our Senior Vice President for Consumer, followed by Renren Reyes will touch on consumer business in Home and Wireless respectively.

Thank you, Sir Eric. Good afternoon, everybody. We are pleased to report that the enterprise business has improved our growth performance from 7% in the first quarter to 9% in the first half of 2018 with an incremental growth of PHP 1.6 billion. Our fixed line business grew by 5% or an incremental growth of P660 million primarily driven by the continued demand for data. Our voice base has declined by 4% but that's been offset but the robust growth of our data business. Broadband grew 17%. And our domestic database which is primarily inter-branch connectivity solutions by 8%.

Our Wireless business continued to grow like never before, growing at 26% versus the same period last year with an incremental growth of PHP 680 million (inaudible) growth contribution that has surpassed the growth contribution of fixed line in the first half of 2018. Corporate postpaid grew by 23% and we achieved net new subs of 36,000 lines which were predominantly steals from competition. Wireless broadband also grew 20% as enterprise has started to leverage on our stronger LTE network which was reported by both Ookla and OpenSignal to be the superior LTE network in the country today. More importantly, our wireless growth was not limited to traditional plain postpaid subscriptions as we grew our IoT or end-to-end solutions by 46%.

Our ICT business continued to grow at almost 2x of market at 17% with an incremental growth of PHP 250 million versus same period last year. Our data center business grew by 15% as more and more companies offload their IT assets to us by way of our colocation services. Our cloud revenues also grew 35% as more and more companies leverage on the value of OpEx (inaudible) CapEx propositions in the IT space. Our managed IT and managed services businesses grew by 25%, a testament that our engagement with enterprises are becoming deeper consistent to our strategy of going beyond access.

Allow me now to give a bit of detail on our 3 business lines. Our fixed line business continues to grow driven by data. We are aggressively pursuing engagement with larger enterprises moving beyond access and going into business-enabling solutions. This allows us to take advantage of 2 things. One, we veer away from price and bandwidth discussions rather on the value that we deliver to their business. And two, these solutions are driving the need for enterprises to get more bandwidth. Banking and finance for example, remain to be a very vibrant industry. As they try to become closer to their customers, we see more branches, a lot more offsite ATMs being deployed and online banking transactions are growing, ALL of which have to be supported by data.

I'm sure everyone aware also that the BPO experienced lower growth this year with a single digit vis-à-vis its historical double-digit growth performance over the past 10 years. However, we're seeing a resurgence of the IT-BPM industry. Concentrix for example has bought the largest BPO company, Convergys, and they are now targeting to grow their FTE base to 75,000 employees by year end. Another interesting topic in this industry is where will the growth of this industry going to come from?

Shown in the next slide is a new facility in Palayan, Nueva Ecija. And Nueva Ecija is about 130 kilometers up north from Metro Manila. And some people, as you can see from the picture, have coined this facility to be literally in the middle of Palayan or rice field. Sutherland, one of the largest BPO companies in the country is going to locate in this facility and is targeting to have over 1,500 FTEs by June 2019. And the same is happening in Clark, Pampanga; Palanga, [Patahan]; and in Spring Valley in Roxas, Capiz to name a few. This in line to the government's push to expand the industry outside of Metro Manila, which is part of the Next Wave Cities program.

The public sector domain also remains robust, being driven primarily by local government units. We also continue to enable the SME segment and we have launched the MVP Bossing Awards 2018, which will happen end of this year. This platform further inspires entrepreneurship in the country and it continues to be an effective channel for us in evangelizing that adapting technology if needed for their success.

Lastly, we continue to expand in our international markets. Our U.S. Enterprise and Asia-Pac teams are growing over 40% year-on-year and it has enabled us to acquire a new enterprise relationships, and we have been able to bring new businesses to locate in the Philippines.

Next, our wireless business is growing like never before. Our aggressive campaign on winning more corporate postpaid lines from competition allowed us to deliver net new (inaudible) of 36,000 in the first half of 2018. An example would be [Talus] which we recently won. This would be one of our larger wireless deals as we enable the wireless requirements of 13,000 Talus employees. This will deliver for us fresh wireless revenues and more importantly it's a steal from competition. We also enable a lot more digital brands as we -- and I'm sure everyone is aware of the rights sharing companies that have emerged (inaudible). New ones have come to floor and we are all enabling them. O2 might have from (inaudible). We have thousands of subscriptions out there enabling their drivers and/or their cars.

More nation building NLGU enablement as we enable cities and municipalities with 911 plus their command center operations we also enable them with wireless solutions such as our Smart SOS dispatch which targets to make their public safety operations more efficient.

On the ICT space, we dominate the enterprise ICT market. We had the Philippine Digital Convention which had -- which has become the largest high city or digital event in the country. We brought in close to 1,500 attendees and this is where we evangelize the benefits of ICT offloading and we featured the new digital solutions that the group has to offer. We opened VITRO Cebu 2, our second data center in Cebu. Our first one is fully occupied already. And this is our 10th data center in the country. This has further sealed our industry leadership in the data center space which will allow us to garner future growth in this market.

Last but not the least and more -- as more and more companies pursue their own digital transformation strategies cyber security becomes even more relevant. We had Hacker's Code event which featured the world's most famous hacker, Mr. Kevin Mitnick. And during the same event we have launched the cyber security solutions portfolio in our security operations center house in ePLDT.

Given this dynamics, the more important question is how are we fairing versus competition. In this regard, corporate data has been the revenue line item that we can compare like for like versus competition. And given that data is the key indicator for future growth we are pleased to note the following. First, we are more than 2 times the size of competition from a revenue perspective. Second, despite having the bigger base we grew 3 times faster than competition. And third, it has allowed us to gain 1% market share bringing us to a very clear leadership position of having 68% of the enterprise market in the country.

That being said, we are very focused on our customers. We work hard every single day in trying to understand our customers better so that we can become the trusted end-to-end expert ICT partner for our customers, helping them succeed in their own businesses. Their success is our success.

Good afternoon once again. That's for Enterprise. I now turn you over to Ren Reyes for the consumer business.

Thank you, Jovy. Good Afternoon. I'll be sharing our first half 2018 performance for the consumer business starting with home then following on with wireless.

I'm very pleased to report that -- I'm very pleased to report that the PLDT home business has sustained its record double-digit growth performance in the first half of 2018 with revenues hitting PHP 18 billion for the first time ever in a semester. Adding PHP 2.2 billion or 14% growth in value driven primarily by data comprising 75% of the business and growing at plus 21%.

Household penetration is on an all-time high, now with 2.2 million unique subscribers. This is an addition of 175,000 new subs and 9% year-on-year increase in our base spread across all regions in the Philippines including new areas we now serve with fiber.

ARPU is also at a new high and fast approaching the PHP 1,400 mark. This plus 4% year-on-year growth was driven by new subs availing of higher value plans, upselling higher plans to our existing subs as we fiberize and modernize the facility to accommodate faster speed. And also upsells of our beyond-access offers such as Best Buy Bundles, security with FAM CAM, entertainment with Roku, Cignal, Netflix, iflix and the NBA. And home devices such as tablets, branded Telpads tabs and Tab Tabs.

Just relating this overall result to the latest industry figures, it is clear that PLDT home is widening its lead in the home broadband segment as its revenues outgrow significantly the industry's.

Now that we -- now what are the key highlights driving the PLDT home growth? I believe the first factor has just been identified by the makers of the most widely used speed test app, Ookla, whose sample size is near 2.5 million, a very robust and possibly the most robust sample size for such a endeavor and who recently PLDT with a fastest fixed network award with PLDT getting a speed score of 17.31, eclipsing that with our competitors at 10.89 and 6.58. It is really PLDT's quality network that has been our driving force in terms of driving preference for our service. And while there is a general belief already that we are the superior network, we are now sharing this news, [NPR] and [Digital], that PLDT unequivocally has the best and fastest fixed network in the country.

The second key factor is the aggressive roll out and utilization of our fiber ports. We are happy to report that our fiber port roll out has reached 1.9 million ports with home (inaudible) reaching 5.1 million with our network team actually delivering way ahead of our schedule as mentioned by Anabelle.

Fiber port utilization on the other hand has increased by 2.5 times versus H1 2017 from 329,000 ports used to now 840,000 ports used as of first half of 2018, which has driven our growth in household penetration. Our effective analytics modeling and on-ground campaigning has accelerated our ability to use these particular ports.

The third highlight of our performance is the progress in our fiberization or modernization of our existing copper facilities. Of which 548,000 ports have already been modernized. And of this 548,000, 335,000 are already working ports with existing subscribers who now are enjoying a modernized network capable of delivering fiber fast speeds of up to 100 mbps. This progress of sub improved the CX of our existing subs and provides us a higher base from which we can offer subs up-sells to higher bandwidth bands. In line with this modernization program I am very happy to announce that our -- that starting this August we will be increasing our minimum speeds for our three entry plans to keep in pace with the growing usage requirements of our home subscribers. So for plan 1299 we will be increasing the minimum speed from 3 mbps to 5 mbps. For plan 1699 we'll be increasing from 5 mbps to 10 mbps and from -- and for our plan 1899 we will be increasing from 20 mbps to 25 mbps. So starting this August as we roll out this new speed upgrade all those in the modernized network will automatically get a much better CX and much higher speed than at the same plant that they currently have. So this allows us to make sure that they keep in pace with what they actually use at home and more relevant to the current times.

Lastly, we are also happy to announce that PLDT Home -- to announce PLDT Home's entry into the home broadband prepaid segment. We -- with the aim of offering our prepaid markets the country's #1 broadband at an offer suited to their payment habits and running on the country's fastest network. To give everyone a flavor of what this is, allow me to share with you (inaudible).

(video playing)

So this offering is clearly competitive with that of our competitors but we bring 2 distinct advantages to the prepaid segment. Number one, this is running on the country's fastest mobile Internet network which I will share with you later, and therefore we deliver better CX. And number two, we are known as a brand to deliver the best in terms of CX in terms of home broadband and now they can enjoy that with -- they can enjoy that service or prepaid -- the prepaid subs can now enjoy that service with PLDT. So this ends the home part of the presentation. I will now move on to tackle what over the past years has been the more challenged part of the business, Consumer Individual.

So I am actually pleased to share with you that the wireless business has posted its third consecutive quarter of growth. Solidifying its turnaround as revenues accelerate to hit PHP 15 billion in Q2, first since Q4 2016, and posting a second successive quarter of 2% growth, thus finishing the first half at plus 2%. This PHP 2.9 billion swing from the -- this is a PHP 2.9 billion swing from the momentum of 2 years ago. Q2 also delivered the highest net new subscribers in the last 4 quarters, helped by our continuous and effective retention programs, product offers, improved data CX and acquisition efforts.

Subs base grew by 370,000 or plus 0.6%. Our quantum of subs growth we haven't actually experienced in years. Important to note, that it is actually data revenue that is driving and delivering this growth increasing by 1.1 billion a robust 19% year-on-year driving over our stability for our turn around. This continued growth in data -- this continued growth in data brings data contribution to wireless revenue to a new high of 46%, providing a much larger base from which we build the higher growth business. This new high shows a strong and consistent progress towards our pursuit of pivoting to a data-led business, which we aim to achieve towards the end of the year as we target crossing the 50% mark.

Now to give a better sense of how we're delivering this turnaround and the data share gain let me share with you the following core drivers year-to-date. At the core of this growth is the rollout of the best and fastest network. In the last report we shared with you that Smart was awarded by open signal an independent third party OTT 4 awards which validated that we are indeed the fastest network in the country. I am pleased to share that we have recently been awarded by a second third party OTT, Ookla, with the Philippines fastest mobile internet award.

This further validates the quality of our new data network. And this remarkable progress in the rollout of our quality LTE network has been a key driver of our growth. The second driver of growth has been the success in our LTE migration efforts, which has yielded significant take up with 50% -- 57% of active subs base now in LTE SIMs and 31% on LTE smartphones.

If you look at the progress over the past 18 months, in Q1 2017 only 10.9 million of our active subs base had LTE SIMs and which we have nearly doubled to already 21 million coving now 57% of our subs.

Worthy to note that for our prepaid business ARPU increased by 16% 3 months after the SIM upgrade. So as we continue to pursue this SIM upgrade plan we actually expect more and more growth to be driven through our prepaid business -- with our prepaid business. On LTE smartphones we more than doubled our user based from 5 million in Q1 2017 to 11.6 million, now covering 31% of our active base. These efforts to move our subs to LTE buying more and more prepaid data packs has resulted in very strong growth in mobile data traffic.

In fact we are growing faster than industry of 79% year-on-year growth for first half 2018 and notably plus 90% year-on-year growth for Q2 2018. This data usage growth is a critical success factor as we are able to increase our share of data traffic which allows us a bigger base on which we can monetize and grow as we move to the future and pursue our data pivot aspirations.

Lastly, a key driver for the second quarter and the first half as a whole is the big success of our YouTube promo. YouTube user adoption has reached 4.13 million daily users and is generating higher ARPU from both existing base and new activations. So looking at the numbers on subs in traffic, our qualified based or those availing of key promotions grew by 323%.

More importantly, the free YouTube users grew nearly 400%, resulting in YouTube traffic increasing by 8x. Happy to share as well the top-ups have also increased. For existing users ARPU has increase by plus 9%, for new activations the new type of -- the subs that we are attracting are now spending more by as much as 103% from previous periods. Last but not the least, this promo has also significantly improved the LTE smartphone adoption by plus 53%.

Clearly, this partnership and promotion is delivering on its designed rational intent of moving light and nondata users to become data users by building their mobile video viewing habit. As such, we will continue to build on the success.

We will pursue our YouTube partnership and make it an even bigger success as we implement a targeted Phase 2 promo from August 1 to October 30, 2018, where we optimize the program to focus on light and medium users to further boost mobile video adoption rate.

In summary, Consumer Individual has turned around. We are making strong progress in pursuing our data pivot aspirations and are now just 4 points away from becoming 50% data business contribution. Given the growth momentum and stronger data fundamentals and success of the YouTube partnership we are gaining confidence in being able to grow further and faster moving forward.

Thank you and good afternoon. I now give the floor back to Ernesto Alberto for a summary.

Thank you, Ren. And thank you for your kind attention to the detailed presentations. Please allow me just a couple of slides to recap my colleague's presentation.

I would like to summarize by sharing with you our group's two-fold strategic intent, first, to widen our lead -- first, to widen our lead in the fixed line business, and second to solidify our turnaround efforts in our wireless business.

Starting with the fixed line business of Enterprise and Home. In a like-for-like comparison of the PLDT Enterprise business with our competition the total market grew 12% from PHP 15.4 billion in the first half 2017 to PHP 17.3 billion in the first half of 2018. Our share of the corporate data revenues was at PHP 11.8 billion or more than 2x that of (inaudible). This represented a PLDT growth rate of 13%, we regain more of the industry growth rate. Consequently, this has allowed us to gain a 1% market share improvement in the first half of 2018 to 68% from 67%.

Similarly on PLDT Home, the total industry home data business grew 18% from PHP 18.7 billion in the first half of 2017 to PHP 22 billion in the first half of 2018. PLDT's share of this home wallet is PHP 13.3 billion which is over 1.5x the home data revenue base recently reported by our competitor. The comparative growth rate over the period is 21% for PLDT Home and 12% for the competition which resulted to PLDT Home gaining a 2% market-share improvement from 59% to 61% by the close of the first half of 2018.

Over to the consumer wireless business where our strategic intent is to solidify our turnaround efforts. As mentioned earlier, we shall underpin our efforts through the following programs. First we continue to focus on networking improvements. Over and beyond the citations and recognition given by third party leading carrier rating agencies, Ookla and OpenSignal we continue the mission improving our customer experience for our network, particularly on 4G and widening such coverage.

Second, our prepaid top-ups which forms a large part, an 87% part of our total wireless revenues have bucked the trend and seasonality in terms of daily prepaid top ups, closing in on delivering 180 million per day from previous year average of only about 160 million per day.

Third, on the LTE migration, we are migrating, as Ren had alluded to earlier, more of our 2G and 3G subscribers to LTE SIMs and LTE devices which enables these subs to enjoy a richer digital experience over data through our much improved wireless network. Last but not least, we are driving habit of data usage and monetization. We are stimulating data usage with our existing subscribers, most recently driven by our very successful YouTube promo which has lifted our total data traffic to increase by a factor of 8x since launching the promo. This has allowed us to build a traffic inventory base which we are now monetizing through increased subscriber subs and subscriber ARPU. And the growing habit of data usage within our sub base gives us sufficient confidence of sustainable mobile data revenue streams in the forthcoming periods.

In closing, the PLDT group remains steadfast and committed to our strategic aspiration to our continuing business transformation, in network, in processes, in people, and that is to be this country's leading and most trusted technology provider for all our customers, be they consumers or enterprises.

Once again, thank you to your kind attention. At this point I would like to hand over the floor to [Doy] Vea who will share with you updates on our Voyager business. Thank you.

Good afternoon. Further to our Chairman's earlier announcement, I'd like to give you a very quick update on Voyager, just one slide. For Voyager the first half of 2018 has been a story of very rapid growth, in terms of unique accounts, user activity and transaction volumes across the different Voyager platforms.

Let me now go through certain metrics. So PayMaya in terms of unique consumer accounts grew more than 5x year-on-year. On bullet 5 you can see that the BSP in its latest National Financial Inclusion Survey report showed PayMaya as the leading e-wallet recognized by 36% of the adult population. On Lendr, which is our lending platform, unique consumer accounts posted more than twice increase in growth year-on-year as well. This is on the back of signing up more than 100 partners both banks and nonbanks. For freenet which is our free access and rewards platform consumer accounts grew 150x. As we speak, freenet is the top free lifestyle app and the top trending lifestyle app on Android.

For PayMaya consumer and PayMaya merchant transaction volumes this grew by 5x year-on-year. PayMaya is now the biggest -- by far the biggest mobile acquirer in the Philippines serving the top 4 largest mobile merchants, which include Philippine Airlines, Cebu Pacific, Lazada and Zalora.

By way of validation, FINTQ was given the top recognition last July as the outstanding financial inclusion partner of the BSP from a field that included the World Bank, ADB and large commercial banks. So these are I think indications of where we can go from here and we look forward to an even faster growth and market traction the rest of the year and beyond. Thank you.

Let me now turn you over to the Chairman for guidance.

Thank you, Doy. In terms of guidance, we are just maintaining all of the numbers which we indicated to you in the early part of this year. So in terms of recurring telco core income before Voyager, we are guiding at PHP 23-24 billion. We expect the revenues from Home, PLDT Home and corporate data from enterprise to continue showing double-digit growth for the year, for the balance year and for the full year. And the improvements we've seen in our wireless business should continue for the second semester of this year.

It is anticipated as well that the declines in ILD, NLD, SMS and [seller] will continue albeit at the slightly smaller delta. What we will experience on the cost side is that we anticipate higher depreciation charge for the balance year and of course lower equity earnings because the sale of beacon was made sometime last year.

In terms of the Voyager accounts, we would hope to close the transaction in the fourth quarter this year which will have I guess minimal impact on the P&L. But could produce a significant gain to PLDT on disposal.

On the CapEx side we're guiding what we've guided before at PHP 58 billion. You've seen the CapEx number of midyear which is for us -- which was PHP 21.8 billion and to be roughly 55% wireless and 45% fixed, dividend payout 60% of the core income including any asset sales will be made for the entire year. Thank you.

We're now ready to take questions. We'll take questions first from those who have joined us through the conference call facility before we take questions from those who are here in the floor. Operator?

(Operator Instructions). Our first question comes from Luis Hilado.

I had 3 questions. And first was regarding the potential sale of Voyager. Do you have any broad expectations for what the use of proceeds will be and if you could give us some indication there? Second question is regarding the YouTube promotion, you mentioned Phase 2 for light and medium users is now being implemented, what the -- could you give us some color on what that entails? And in terms of Phase 1 are you going to tweak the terms there so that you can monetize more? And third question is regarding the recent court of appeals decision, with that decision are you able to rehire some of the contractors that you had to discontinue previously?

Okay, let me take the first question, Luis. On the Voyager investment by these investors, the amount of investment will be by way of new shares, so new funds will be injected into Voyager to defray the funding requirements of Voyager for the next 3 years or so. So it's a fairly significant quantum. Now as such, there is no secondary sale by PLDT's shares to these investors. Albeit there will be some -- there's an agreement that part of the funds could be used to repay certain advances that PLDT has made to Voyager in the latter part of last year and any advances made within the year up to the date of closing. It's capped at anywhere between PHP 2 billion to PHP 2.8 billion in terms of those advances. So actual advances capped at anywhere between PHP 2 billion to PHP 2.8 billion. So that's really the only cash that we get. Of course the accounting treatment is something else. And as I indicated, that the accounting of the transaction is such that it will -- it's likely to produce a significant gain to PLDT.

Luis, let me take the second question, Renren Reyes. So on the YouTube, on the YouTube Phase 2, just to give a bit more color. First, you need to understand that since -- even before we started the promotion we've actually set metrics from which to track performance and so that we actually become pointed and achieve our objective. So we've actually parsed the video user base to nonuser -- nonvideo users like medium use -- light users, medium users and heavy users. From this tracking of the different user bases what we've seen is that while in total we are actually gaining ARPU we're actually gaining much higher ARPU among new users, nonusers and light and medium users whereas we're somewhat cannibalistic on the heavy users and therefore in the Phase 2 we're actually decreasing the number of promo SKUs that will be included, that actually included in the promo. So from previously 188 SKUs we're going to be down to 67, particularly taking out the promos that the heavy users have been buying, so which is actually linked to your follow-up question on the same. This actually allows us to start monetizing on the heavy users. While we continue to actually build the habit among light to medium users and further -- while actually from what we've seen in the first -- within the first phase, they are actually monetizing as we go along. And I think very important as well, just to give more color, 95% of the growth is coming from our existing user base, right? So which is exactly how we designed the whole promo.

I'll take on the third question on the DOLE issue. This is a Ray Espinosa. With the issuance of the Court of Appeals decision we have been able to reengage the existing contractors as well as engage new contractor so that we can regain substantially our strength by the end of next month. So we are proceeding earnestly in terms of talking to all of the service providers.

Great. Just one follow-up question regarding the gain from the Voyager sale, would that be applicable for declaration on dividend or is that an exceptional item?

Well, theoretically it does because it's a gain -- it's a gain on disposal. So the question is whether we are able to declare dividends (inaudible) the gain. I guess it's a function of how the cash position of PLDT would look like as the year progresses. You can see we have a significant CapEx level for the year. Albeit I think our EBITDA would rise in this year compared to last year. So the question really is whether we do have sufficient cash to be able to raise the dividends, that's what you are asking, right? As a consequence of the gains realized from the disposal of Voyager. We have made divestments in the course of the year, principally the Rocket shares which is generated about PHP 10.5 billion. We managed to liquidate the certain of the outstanding PNs issued by Metro Pacific to PLDT, so that generates around PHP 5 billion as well. So -- was it PHP 7 billion?

Yes.

PHP 7 billion. So there are Rocket Internet shares left with us, about 3.3 million shares. And I believe we are still liquidating that in the market. So you know in terms of the cash position of the company it's been growing, that's why the net debt to EBITDA ratio has dropped about 1.89 as of June 30. Now does that put us in a position to raise dividends, that's your question. Then I think we just have to wait towards the end of the year when we have a better sense of how the numbers are looking like for the entire year and perhaps a view as to how 2019 would look like. If prospects are good and I think it -- frankly, I think it will be better next year then, yes, we're prepared to revisit the dividend policy.

Our next question comes from Arthur Pineda.

Two questions for me, please. Firstly, on the Department of Labor ruling, I'm just wondering if you can discuss potential cost implications if you do have to hire these 7,200 employees on a full-time basis. Basically what's the cost differential of a full-time employee versus a contract employee assuming that you have to absorb some of the benefits? Second question I had is with regard to the mobile business, it seems to be so challenging, if I look at Slide 69 it's down 1% Q-on-Q for the second quarter if you look at the entirety of the mobile division. Now you had dominant LTE network speeds for nearly 2 years now. I'm just wondering, what else needs to be addressed to grow faster on this business?

On the first question, I think just to clarify. The Court of Appeals decision actually enjoin the implementations of the regularization orders and actually set aside also certain findings by the DOLE of labor-only contracting in quite a number of functions and aspects of our operation. So we are looking at a number that's much less, substantially less than 7,000, if we were to regularize any with respect to other aspects of our operations where the Court of Appeal said that PLDT and the DOLE should sit down and figure out whether these areas are covered by the exceptions or fall within what is called core functions. So any number of hires that eventually will come from this outcome is going to be much less than 7,000. I should also add that when we look at the positions that need to be regularized eventually. We also have to take into account our future mode of operation which actually is an output of the various transformation initiatives that are ongoing, plus the major automation and artificial intelligence platforms that we're introducing this year.

So Ernesto Alberto here, like to tackle the second question on the remaining challenges. Admittedly much work needs to be done. Let me frame it to say that Globe is indeed ahead of the curve in terms of their sub-base adopting data and the ability to monetize that data traffic. If you look at competition's mobile data revenue, they are actually 1.7x larger than our base, which is really in contrast. A similar situation on reversal to our fixed business when it comes to home and enterprise. Now to the point of network being superior the last 2 years, that's not quite true. Actually the network improvement that we have put in place, in fact we -- it had to entail some refarming and redoing on our part. We were seeing improvements only in the fourth quarter of 2017 with the refarming. And it was open signal that actually had started to track us in the fourth quarter of 2017. But this tracking has actually led them to consistently conclude that once we switch on our 4G network it actually (inaudible) recorded the comparison numbers are clearly in our favor. Most recently it was Ookla that says the same thing. Third within our own sub-base, our sub-base in 2G, 3G sales. We are migrating our sub-base actually in a very aggressive to LTE SIMs and even going to LTE smart devices for them to be able to experience a very richer mobile experience over our improved networks. And YouTube actually caters to that strategy by allowing our people to have a free test and free taste of one of the better applications that you can experience over an LTE network, and that's video, and 90% of all video is YouTube. What has happened is that since we launched YouTube in April we are seeing an 8x traffic uptick on the promo and improvement in ARPU for some of the over 4 million (inaudible) an ARPU uptick of about PHP 20. Clearly I think the strategic intent is for us to build a traffic base and even more equally important a momentum of habit of usage on YouTube over to a larger base of our subscribers such that when they are used to the service and they continue to enjoying the service such is the opportunity by which we can monetize. So it takes a little more runway. We admit that we are on catch up mode. But as mentioned in the summary earlier, we're committed to just do that.

Our next question comes from Varun Ahuja.

My first question is on your EBITDA performance. So if you -- I believe second quarter last year you had PHP 1.5 billion of one-time expense related to MRP, so if you had just for that actually your EBITDA in first half -- or rather second quarter has fallen by around 2% to 3% and first half it has come off versus the growth that's being given on the slide. So just wanted to check, compared to competitor who is growing EBITDA 20% your EBITDA seems to be under pressure despite you showing strong growth in the fixed-line business. So is it largely a question of margin composition in terms of revenue mix? And how should we think about it going forward? That's number one. Number two, on the DOLE Department of Labor thing, when you're hiring -- when you are looking rehire these employees, are you renegotiating with your service providers into a new deal? Is it -- or it's going to be again on the same terms which earlier Department of Labor has found objections? So just wanted to check in terms of new hiring that you're doing, is it on the same terms previously which was done? Third, your thoughts on the new mobile operator being talked about and the terms of reference that has been put forward by the Ministry, how difficult do you think it is to maintain a 5 mbps kind of service level obligation? And how do you think the regulator will measure it? Or in your view, if you have to -- are your --is your network able to offer that 5 mbps committed level of service? So just want to check. So that's number third. And number fourth, tower sharing. I think the telecom minister has been looking to have tower sharing in Philippines and you have been pretty hesitant as of now in terms of sharing new towers built while Globe has been open towards that partnership. So just wanted to check, is there any change towards that in terms of going forward and building new towers collectively? And do you think the new tower policy which is being put forward will help in any way in terms of reducing the regulatory hurdles or time needed to build out a tower? That's it.

Hello, Varun. I'll take a stab at the first question. First, your observation is right, there was indeed an MRP charge in the second quarter last year of about PHP 1.5 billion. There is another MRP charge this year although at a smaller quantum of PHP 300 million in the half year results. Now but generally speaking, if you look at the various aspects of what's happening, first of all to support the revenue growth momentum there indeed has been a buildup -- significant build up on the network side, right, so aside from the CapEx, obviously you are now operating a bigger network with a bigger footprint. So there are increases in repairs, maintenance and other related costs to support the bigger network. Second, in terms of activity levels. For example, the home side, we are connecting more subscribers than before. So there is also -- so there is greater volume of business activity. So again, that does come with some operating cost involved to support that both from contracting authorities or even internal activities. The other thing is if you kind of look at last year, we did manage down our subsidies and provisions and marketing spend to a very, very low level actually. We came from a bit of an excess in the year before. Last year we really drove it very low. And I think the market -- marketing guys feel that to sustain the revenue growth momentum they do need to spend a bit more than last year, although not back what it was in prior years. And then lastly, probably just in terms of the nature of the business, as a general commentary is that since it's a data business it's just really more activity and more engagement from an overall cost and activity level. So there is some impact on margin from having a data business versus the old days when we were enjoying very high margins from incoming international or from SMS.

Okay. On your second question about the DOLE results from -- that come out from the CA decision, we are actually renegotiating terms with our service providers with respect to the functions that we still plan to outsource. We also take into account the future mode of operations I said, because these transformation initiatives that we have begun are actually yielding efficiencies for us. And therefore we may need less contractor services for instance in certain areas. So those are being reflected in the terms that we are negotiating both with the existing contractors and the new contractors that we're bringing on for competitive reasons. We have in fact seen in certain areas that the new contractors are able to provide similar services at lower cost, so we are engaging those contractors as well. On the third question about the new the third, the supposed third telco, I just find the minimum service quality being required (inaudible) ICT as underwhelming if you consider the fact that the third telco's introduction is supposed to stimulate more competition. The threshold of 5 mbps is just too low today given the consumption level of data that you have seen both from Smart and from our competitor Globe. So the demand for data is so high that speed of 5 mbps is not going to be satisfactory as far as the consumers are concerned. So I think by the time the third telco is able to roll out its first mobile service, the quality, the minimum quality of service required by customers will be much higher than what we are already providing them today. As you can see from -- as you may have gleaned from the presentation by the CRO. On the last, on tower sharing, we have always said to government and publicly that we support the tower sharing policy of the government with respect to new towers. Our existing towers are specific purpose-built towers, they are -- cannot be shared with other telcos, principally because it's structurally designed to support only our network. But we welcome the opportunity to be able to lease the towers from any of the new tower companies that may be qualified by the government. Certainly it will reduce our cost, it will also hasten probably the permitting of the new towers. Provided they are obviously in the areas where we need them we will lease them. But we also don't want to lose the right, which is our franchise right, to build towers as are necessary in order to support our services to our customers.

Are there any more questions?

Just 2 follow-up. Have you seen any improvement in tower rollout timelines or -- that's number one. And number two, the DOLE order, will it have any implications on revenue and cost spread for the third quarter?

On the tower rollout, there is very little progress actually in this common tower policy that's being pursued by the government. I think they're still studying what the framework should be for this new tower initiative. So we are as well awaiting more detailed news from the government. In the meantime, we are rolling out based on our own timelines and based on the network expansion programs that we have put in place for this year, 2019 and 2020. So that is going on at full speed. On the cost?

With respect to this DOLE issue, I guess there will be some impact in the third quarter. We just see there are some pluses and there are some minuses. So it's a little hard to second guess where it all comes out. The impact is of course it has affected our ability to serve and position. And so there is -- the new installs have not been to the level that we normally would have been able to do. So that's where the short-term impact is. Obviously as we now are able to rehire and go back a bit to normal situation we would hope to be able to catch up on some of the backlog here.

Maybe just to add, Anabelle. It also comes on the opportune time. We're also doing our backend transformation to [Trident]. And within this project on Trident we are actually looking to realize savings in terms of process improvements and automation in the way we run our business. So this will certainly have a positive impact as we relate our operational requirements vis-a-vis the people requirement and the platform requirements.

Are there any more questions in the queue, operator?

We no longer have any questions on queue.

Take questions from the floor. Anyone?

I'm [Gofer] from [Geo Securities]. I have a question for Ms. Anabelle. Just on the Rocket transaction because we had -- I think in the previous quarter we had a 3.4 revaluation gain, so I'd like to ask, how do we reconcile all the numbers involved with Rocket?

Since Rocket is listed, so basically the revaluation is just based on the listed closing price of Rocket. And then of course the euro-peso exchange rate which actually has worked to our benefit as well. So if you recall in the year end Rocket was at EUR 21.125 and then as of June 30 it's EUR 27.50. So the difference between EUR 27.50 and EUR 21.125, that's our reval gain. Plus there is actually a little more from the movement of the exchange rate, yes. So we now hold about, as of June 30 we had about 3.3 million Rocket share, so just based on that, yes. That price now is about between EUR 30, a little over EUR 30, sometimes EUR 31. So I guess we're hoping we would have some more gains in this third quarter.

So ma'am, since we -- should we take out the revaluation gain at 3.4 last quarter or should we restate the income for quarter 1 given the change in prices for Rocket and the transaction that happened in May?

The 6.8 was already sold, right, so we sold and realized 1.4 billion gain on it. So you don't calculate anymore reval and on it, right. You reverse whatever (inaudible) anymore, right. So then you just reval now on the 3.3 million that's left, yes.

That's revalued to EUR 27.50, and so far Rocket is doing between EUR 30 to EUR 31. So we are sort of safe. And I think we started to dribble out those Rocket shares in the market. So as and when they are sold there is a further around EUR 2 to EUR 3 of gain during the sale. Of course we are mindful that if at the end the share price drops then we might have to clawback back if it was below EUR 27.50, so that's the floor by which we have to draw back the revaluation. But I think we only are about 3 million -- 3.3 million shares. I think a number of the shares were (inaudible) so the gains have been crystalized. So the risk of the impact of a drawback is really quite modest. I think that (inaudible).

Just to add, the 1.4 billion realized gain we record it versus the year-end price. So therefore you don't take any reval on that anymore. So that remaining reval, that 1.5 is under 3.3 million, because, see, the other one we considered that all as part of the realized gain.

Then last question, ma'am. About the CapEx, do we have -- we have secured the funding already for remaining CapEx for the year?

Yes.

Anymore question? Last chance. There are no further questions, so we'll close this conference call. Join us for refreshments outside. Thank you.

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