PLDT Inc (PHI) 2023 Q4 法說會逐字稿

Good afternoon, and thank you for joining us today to discuss the company financial and [operating] (inaudible) for the full-year of 2023. A copy of today's presentation is (inaudible) on our website. For those who've not been able to download the presentation from www.pldt.com under the Investor Relations. I will know that ( technical difficulty) a podcast this event will be (inaudible) QR codes for the presentation is on the screen and in the confirmation, notices e-mailed to you.

For today's presentation. We have with us our Chairman and CEO, Mr. Manuel Pangilinan; Danny Yu, our Chief Financial Officer and Chief Risk Officer; Attorney Marilyn Aquino, our Corporate Secretary and Chief Legal Counsel; and Mr. [Doyle] Vea, Founder and CEO of Maya Philippines as well as other members of the PLDT Group's management team.

At this point, let me turn the floor over to Mr. Yu to begin the presentation.

Thank you, Melissa. Good afternoon, everyone. I am very pleased to share with you PLDT's financial and operating highlights for the year 2023. Consolidated service revenue for 2023 rose by 1% to PHP191.4 billion compared to the same period last year. On gross basis, service revenue grew by 3% year-on-year. Operating expenses were lower by 2% or PHP1.5 billion to PHP87.1 billion. The combined increase in service revenues and decline in operating expenses resulted in a 4% rise in EBITDA to PHP104.3 billion, a new all-time record high with EBITDA margin at 52%. Telco core income, excluding the impact of asset sales in Maya registered a PHP1 billion increase to PHP34.3 billion, higher by 3% year-on-year.

Next (inaudible). On segment basis, revenue growth continued to be broad based individual revenues accounting for about 43% of the total revenues grew by 2% to PHP81.8 billion. The home and enterprise segments registered new record highs, home revenues grew by 1% to PHP60.4 billion, with fiber only revenues having added 9% to PHP53 billion. Enterprise revenues gain by 1% to PHP47.1 billion.

Let me now go through the segments in greater detail. The next slide shows that while the headline revenue growth ranges from 1% to 2%, there are underlying data revenue streams growing more strongly in line if not stronger than the Philippine GDP growth.

In the individual segment, mobile data accounted for 87% of the total revenues are growing 8% versus segment growth of 2%, reflecting the drag from legacy SMS and voice. Fiber revenues posted a 9% growth versus 1% segment growth due to the impact of legacy non-fiber revenues. Under the enterprise segment, corporate data and ICT advanced 6%, albeit segment revenues grew only by 1%. Overall, excluding the drag from legacy revenues, total revenues actually registered at 6% year-on-year increased.

Next [page], please. The individual segment showed sustained quarterly growth in 2023, signaling early signs of recovery for a business that has faced many challenges over the past years against an improving backdrop and an early signs of market repair. Individual revenues grew by 2% to PHP81.8 billion as a result of various initiatives implemented by the business unit. Average data usage rose by 19%, while our pool grew by 17%.

Worth noting that revenues in the fourth quarter of 2023 gained 6% following a 6% rise in prepaid and 4% growth in postpaid. Mobile data revenues underpinned the growth with a 6% rise to PHP71.1 billion. Active data users rise to PHP39 million as of end of December 2023, with usage having grown 19% to 11 gigabytes. Mobile data traffic hit 4,900 petabytes in 2023, higher by 11% compared to last year.

Initiatives to accelerate revenue growth in the individual segment include offer that increased usage in velocity, rationalization of packages, the launching of innovations such as prepaid ECMs, load unload and online retail channels, as well as more efficient and experiential trade operations.

Next please. While home broadband revenues rise by only 1% and fiber only revenues, which now account for 88% of the total home revenues improved by 9% or PHP4.5 billion versus last year. PLDT is of the view that there are unserved and underserved markets in the home broadband space. These include new areas, potential customers at the lower end of the market as well as niche markets at the higher end. Unique to PLDT is the ability to leverage on both fiber and fixed wireless technologies to serve a broader market segment. An example of these are fixed wireless broadband service that we offer in areas where port facilities are not available or to the lower end market on prepaid basis with less than 500 ARPU.

Another example of leveraging on our integrated network is our industry first always on broadband service, which is able to deliver seamless ultra-high-speed connection, ensuring customers uninterrupted access for work study and entertainment. In 2023, fiber net adds stood at 234,000. PLDT continues to enjoy strong brand equity and superior network quality, making it a formidable competitor in the market.

Data and ICT remain to be the key drivers of our enterprise business, which registered a year-on-year growth of 1% to PHP47.1 billion excluding the impact of a pre-terminated or non-renewed contracts, enterprise would have grown by 3%. Revenues in the fourth quarter were up by 6% quarter-on-quarter. Corporate data climb by 4% due to higher fiber and managed IT services. ePLDT or ICT, recorded a 15% rise in revenues, mainly from data center and cloud services.

The Sta Rosa data center remains on track with the first 10 megawatts capacity expected to come onstream by July this year. Full capacity is expected to be a year ahead of competition with ePLDT well positioned to serve the existing robust demand from hyperscalers. In addition, our growth pipeline is fueled by our focus on enabling digital transformation initiatives of corporate SMEs and government including the creation of smart cities and the first sovereign cloud. Our enterprise business has also achieved preferred partner status with Cisco, Fortinet, Microsoft, and Google demonstrating strong solution capabilities and a robust partner ecosystem.

Next, please. The tight management of costs across the board continued resulting in a 2% or PHP1.5 billion drop in total operating expenses, including provisions and subsidies increases in repairs and maintenance, mainly due to increased electricity arising from expanded network as well as the higher cost of services arising from SIM registration were more than offset by lower compensation, lower selling and promo, as well as lower provisions and subsidies. The combined effect of higher driven revenues and lower costs resulted in a 4% improvement in EBITDA to PHP104.3 billion, another record high with EBITDA margin at 52%.

Exceeding guidance. Next page, please. Telco core income for the period rise by 3% to PHP34.3 billion from 2022, reflecting the impact of higher EBITDA and lower depreciation, partly offset by higher financing costs and tax provision. On a reported basis PLDT income expanded to PHP26.6 billion, mainly from the gain from tower sale and leaseback transactions, ForEx and derivative gains, but partly offset by MRP expenses in impairment of assets. Note that our share in losses from IR stood at PHP2.2 billion or PHP1 billion lower than last year, in line with our expectation of Maya's break even by the fourth quarter of this year.

Today, next, please. The Board of Directors declared a payout of a final dividend of PHP46 per share, which together with the interim dividend of PHP49 brings totals to PHP95 for 2023. This represents a 60% the payout in line with our dividend policy. The record date is set for March 21, while payment date is set for April 5.

Next please. PLDT's balance sheet remains healthy with a net debt to EBITDA at 2.3 times lower than the 2.44 times at the end of September 2023. We are confident to hit our target leverage of 2 times with the anticipated increase in EBITDA reductions in CapEx and with the receipt of remaining tower sales proceeds, gross debt amounted to PHP256.9 billion, of which 16% are dollar-denominated and 5% unhedged.

Interest cost for the period stood at [4.58%] pretax. While the average life of debt is less than seven years. The total CapEx for the year amounted to PHP85.1 billion consisting of network and IT CapEx of PHP69.9 billion and business CapEx of PHP7.4 billion of the PHP33 billion of prior year's commitments, PHP21 billion was included in the 2023 CapEx. The lower CapEx for '23 from PHP97 billion in 2022 is in line with our objective of bringing down CapEx and aiming for positive free cash flow. Moreover, CapEx intensity before you do stood up 42%, lower than 50% in 2022. In addition, the CapEx of PHP85.1 billion is PHP19.2 billion lower than the EBITDA of PHP104.3 billion. For 2024 our CapEx guidance is PHP75 billion to PHP78 billion, consistent with our aim to continue to reduce CapEx.

Next, please. This page shows the usual network highlights on the fixed network. We passed [PHP17.5 million] homes covering 18,600, but on days representing 44% of the total bottom guys in the Philippines, we are present in 70% of towns and 91% of municipalities nationwide. Total fiber ports grew to PHP6.3 million as we reaccelerated port rollout, we continue to carefully rationalize the rollout to ensure optimal utilization.

PLDT's total fiber footprint remains unparalleled with a total of 1.1 million kilometers. On the network -- on the wireless front, population coverage for our wireless networks stands at 97%, about 82% of the total handsets on the network or LTE. The number of unique 5G devices and 5G data traffic continues to show growth from the end of 2022 based on OpenSignal latest report, smart leads with the Philippines best 5G coverage and availability.

Before we discuss the guidance, let me turn you over to Mr. [Doyle] Vea to discuss Maya.

Good afternoon. Happy to update you on Maya, exciting base for Maya as it leads the way towards revolutionizing financial services in the country. We are making significant breakthroughs towards growth as we leverage our strong ecosystem to build the number one digital bank in less than two years. We achieved this on the back of very creative and innovative banking services delivered to our payment customer base, consisting of consumers and enterprises, some big numbers.

As of end 2023, we had 3 million depositors at 2.1x year-on-year growth from 2022. That number is now 3.4 million. We ended the year with a PHP25 billion deposit balance 70% higher than our balance by end of 2022, and that number is now PHP27 billion. Importantly, we disbursed a total of PHP22 billion in loans, a massive 6.9 times year-on-year leap from 2022, and that's now PHP25 billion.

On the enterprise front, we solidified our leadership as the payments backbone of the Philippines by empowering more and more businesses to accept various payment methods seamlessly. Our omnichannel offering has established by as the number one processor of payment transactions for credit and debit cards where we hold 51%, 52% market share and on QRPH transactions where we have a 44% market share based on visa and bank net data.

Maya is now successfully bringing banking to the micro small and medium enterprises in the Philippines. We provide higher business deposit rate, deposit interest rates than traditional banks, and we offer up to PHP2 million unsecured credits to businesses that typically do not have access to credit. So for 2023, we posted a 4.4 times growth year-on-year on enterprise loan disbursement. We are committed to supporting the financial needs of businesses of all sizes through all-in-one digital banking.

Now on the consumer side, on the consumer side, our all-in-one digital banking platform is driving multiproduct adoption with Maya as consistently the number one ranked consumer app in Google Play and app store among local finance apps. We have pioneered what is now known as high engagement banking by integrating consumer payments with a bank account.

We offer up to 14% per annum interest rates on savings accounts for consumers as a result, bank customers trends up two to three times more than payments only customers. Borrowers with savings accounts are more engaged and have lower default rates. Our consumer, our pool posted a remarkable 80% year-on-year growth in 2023. Our high engagement banking strategy resulted in the doubling of our depositor base to 3 million, as mentioned earlier, and boosted our deposit balances to PHP25 billion as of December 2023.

We also recently introduced a suite of savings and wealth building products, such as Maya time deposit plus Maya funds and Maya stops, which are all doing very well. Meanwhile, the enhanced Maya card, the fastest growing prepaid card in the market enables users to use their Maya account globally. We are now the number one prepaid card in international usage among Philippine prepaid cards.

All our customer transaction data, our channel to our AI powered credit scoring platform as a consequence, we're now championing consumer lending in the Philippines by using alternative data. We have built proprietary AI models driven by machine learning, enabling a surge in loan disbursements in 2023. Last Tuesday, evening, we launched a prosumer campaign featuring Liza Soberano and Dolly De Leon. I hope you saw it and you liked it. It's now trending virally in social media. So that's all for me. Thank you.

Good afternoon and thank you for joining us this afternoon. Let me start off with our guidance for the consolidated service revenue for 2024. We are guiding service revenue at mid-single digit growth over 2022 revenues. We foresee continued increases in data broadband revenues, attenuated somewhat by the legacy services, legacy products that are negative will continue to show negative as they're replaced by the new data and broadband services.

EBITDA's being guided a similar manner, mid-single digits, supported by the top-line growth, but we need to continue to manage our costs as we did a good job last year in 2023, where the cash OpEx line, you showed very little increase and intention to push EBITDA margin above the 52% margin that you saw in 2023.

Telco core is being guided at the north of PHP35 billion for this year. And dividends at the regular dividend, about 50% with a look back for most likely 10% additional and therefore 60% core for 2024. Capex has been guided at between PHP75 billion to PHP80 billion, most likely below sub PHP80 billion for the full year, including carryover CapEx from 2022. But the bulk of the CapEx for this year will be the fresh CapEx. So I think Danny is describing the usage of then also Danny referred to greater free cash flow effort this year because we wanted to reduce our net debt to EBITDA closer to 2 times. It was reduced somewhat in 2023 to 2.3. And if we're able to sell an interest in our data center, then the intention is to devote most of the proceeds to reduce debt so that that should bring us somewhere closer to 2 times net debt to EBITDA.

I think that's basically it -- so Melissa.

So we're now ready to take your questions for those who are 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, can also send your questions via e-mail to PLDT underscore IR underscore center at pldt.com.ph. Please indicate your name and company name so we can get back to you for any additional information you may need.

Allow me now to take questions from the floor first, before we go to those who have joined us online. There's -- there are microphones in the aisles and there were questions sent online by Gab and [pranav], do you want to as the questions yourselves, if you want me to read out the questions for now.

First for the fibers segment on additions in the segment slowed [SSG] due to saturation in the markets you're present and which segments you see it coming from moving forward?

So I believe the question was on fiber growth and what we're seeing on fiber growth. I think when you have a look, I'll start off, I'll zoom out a little bit because if you have a look at the presentation that Danny just took us through it showed the home segment growing by 1%, which actually looks quite muted. Just want to remind everyone what actually sits in the home segment and are actually three big parts of our business. Number one is our fiber business, which actually grew 9% year-on-year, right? So actual fiber business, which is our biggest area. It's the future business for us, is actually growing at a rate of 9% year-on-year.

The second bit, that's actually inside the home business is fixed wireless. Now many of you would know in the market we have actually seen a correction and a change in that. In fact, we're seeing fixed wireless subscriber numbers quite substantially decline year-on-year. We saw a similar amount. Fortunately, for us, it's not as much as say, for example, the overall market. So actually things are over an improvement in terms of market share there. In fact, when you have a look at our quarter three or quarter four numbers, we are starting to see some growth as well come out of fixed wireless. So we're starting to use fixed wireless in areas where we don't have a footprint. We're also using fixed wireless to attack a different segment of the market.

Third element that actually sits in our home business is actually our legacy business. Our legacy is whether it's our copper through our ADSL VDSL as well as our voice business and cooling business. That is actually a really up in the past has actually been quite a large business for us but has been undergoing a lot of declines. And that's what's actually dragging down the overall home performance. If you look at our overall number, if you look at that, that itself was actually negative PHP3.1 billion or decline of 35% year-on-year. So when you exclude out some of the legacy business declining businesses, you actually will see our fiber business continuing to grow at a rate of 9% year-on-year.

Now having said that, would we like to see more growth in the fiber business as we've seen in the past?

Absolutely, that growth is going to come from two areas. Number one, as we actually as Danny had mentioned, in 2024, we plan on reaccelerating our deployment of our fiber network to more areas. You would already know in 2023, we actually had quite a humble 170,000 ports that we deployed five different from what we've done in the past 2024. We'll actually see a reacceleration of the deployment as we cover more areas and make fiber available to more homes in the Philippines.

The second one is actually making sure that we sweat our existing infrastructure where we are today, we are already starting to see a focus in terms of customer experience. That's making sure that the lines that we provide actually get the best network experience and making sure we service our customers as best as we can. With as we focus in on some of those existing areas. It's also then having other products that will allow us to target the different segments of that market, right? Those segments, whether they are the high end, which we've recently launched gigabit fiber to be able to service the fastest broadband service available in the Philippines going up to 10 gigabits or down to the lower segments. But we also have prepaid fiber available to certain areas where we have excess capacity. So we do see continued growth available in the home market, and we will actually be using that two pronged approach to different ways of actually attacking it one is rolling out and the second one is sweating our existing footprint.

And just to follow-up on that, you mentioned you had a prepaid hybrid so --

Yes.

how is that trending so far.

So we've actually been in customer trials for prepaid, as we mentioned in the very, I guess when it was first launched, it was something that was heavily discussed. We've been very cautious about how we've actually deployed that. We want to make sure that it is revenue accretive and value accretive for all of us. We sit very differently, PLDT's in a different position than some of our competitors. We currently enjoy 55% to 65% to 60% utilization. So if you look at billable lines, we have 55% port utilization. If you look at it from an overall, obviously, you have some customers that you are at different levels of suspension in connection, you're actually sitting at about 62% utilization. So we have a lot more of our customers, a lot more of our ports being used. We want to make sure that we use prepaid fiber to target areas where we have excess capacity as opposed to other players in the market, which actually have significantly lower utilization levels.

Okay. Thank you very much.

Thank you.

Sorry, I just have one more question. For the mobile segment a smart has been faring better in terms of getting new subscribers and actually stay ahead of your competitor.

So do you see this as a long-term indicator of revenues in this segment, do you see that picking up? And are you seeing competition in the mobile space broadly?

Hello, I probably have to respond quickly to the question. Number one, we came from a SIM registration bill that was enacted and put in force last year around the third quarter. So obviously, we saw a decline in our overall subscriber base. We have seen healthier retention of customers ending at over [PHP58 million] last year combined for both prepaid and postpaid. Obviously, there's a lot of work now to do to rebuild the base. And we are pushing very heavily both on the postpaid and prepaid businesses. And we are also pushing a lot of efforts around the e-SIM, which we launched on prepaid initially for digital delivery and now also available postpaid as well.

So we understand that's going to be correction, no customers who were on rotation previously are probably not going to be as engaged as before, because they have to go to normal process of registration. And second, we also have to match this together with the growth in devices which are sold in open channels year-on-year.

Okay. Thank you very much.

Thanks, Pranav.

Gob did you want to ask two questions?

Hi, Gabriel Madrid from PEP here. First question is on the PHP13.9 billion in asset write-offs in the fourth quarter. Could you please provide more color on that?

(inaudible)

And follow follow-up on that fourth quarter depreciation was slightly lower than the typical run rate, but I think it was about PHP10 billion in the fourth quarter. Is that because of the assets that were written off? And do we expect that normalized run rate moving forward?

(inaudible) Okay, thank you. Second question is on Maya. I believe it was mentioned in the previous briefing that Maya was in talks with existing shareholders of possibly doing another fundraising round. Is there any update on that?

And after our PHP80 million or a funding round in December at this point, we are fully funded. So our focus is on growing the business, building more services and launching more services enlarging the base. So that's where we are at this point. Thank you.

And one last question.

(inaudible) add some color to that. Maya did the presentation to the Board this morning about the results for the first two months because we are obviously closely tracking their performance on a monthly basis because our target is to breakeven right? for [says] the fourth quarter of this year. So we want to make sure that they're on track to meet those targets. So the first two months showed that an improvement, (inaudible) improvement in their certain financial metrics. The segmented EBITDA has turned positive for the first two months compared to the loss last year. That is the EBITDA the operating level, if you take into account the the corporate overhead is still negative EBITDA, but 50%, roughly what it was of the loss that they showed in the first two months last year.

Similarly on a bottom line basis, the result was similar at 50% for a bit more production in their net loss for the first two months compared to last year. So on that basis, their cash burn is also 50%, thereabouts of the cash burn last year and you have cash [about] [PHP3.5] at the moment, [PHP4.4] in the 20 US left out of the US that Donny mentioned. So that's more than [PHP1.1 billion or PHP1.2 billion] incoming sometimes this month. Let's try this. So we think that that's provision more than enough buffer to accommodate our cash burn up to the third quarter. And our expectation is they should be at least breakeven, if that's like slightly cash flow positive in the fourth quarter this year. And then 2025, we hope they can see the light of day.

Great. Thank you very much. My last question is on CapEx the continued decline in CapEx is encouraging, although the rate of decline is much slower versus other Telcos. So I believe that's due to the CapEx overrun of 2022. So I just wanted to ask how much of that overrun amount is left to be paid out this year and maybe next year ?

For this year (inaudible) CapEx (inaudible)

So the rest of the CapEx was --

(inaudible - microphone inaccessible)

So the balance will be fully paid out by the end of this year from the overall.

Probably two more years.

Two more years.

(inaudible - microphone inaccessible)

Okay.

Fresh CapEx (inaudible - microphone inaccessible) [PHP25, PHP26] (inaudible - microphone inaccessible)

Okay. Thank you very much.

Thanks, Gab.

And there's a question from those who joined us online. Arthur, your hand is raised. You may unmute your mic.

Hi, thanks for the opportunity. If I can go for three questions, please. Firstly, on broadband on the total fixed broadband momentum, which seems to be quite soft for the last two quarters. You did mention that fourth quarter was weighed down by seasonal issues. [But] are you seeing this moving back to positive territory into the first quarter of 2024? What are you seeing for the year?

A second question was on mobile competition. What are you seeing on the ground? Are you seeing any increased activity? Our customer traction from the third player following their earlier capital raising.

And maybe just one last question on the data center side on the expectations here. Do you see this as immediately accretive upon operation in the end of the first half? Or do you need to ramp up contracts first, I'm not sure if the capacities are already pre-contracted. Thank you.

I might --

Go head, Jeremiah.

Okay. I might start off first on the question, Arthur, I believe it's around broadband seasonality and a slowing down in the second half of last year and what we see for this year. And I think if I paraphrase that roughly. The short answer is we had a limited rollout in 2023, and you can actually see some of those momentum actually start to come off as Danny has mentioned already, we actually do plan in 2024 an acceleration of that rollout. And so you'll actually start to see those things come online in the first half where we'd be looking to monetize them as quickly as we possibly can.

So we would actually expect to see that we'll start to improve some of the momentum, get the momentum back into the fiber growth -- fiber side of the business, getting back into, I guess, not maintaining, but actually growing. It's actually growth rate. So if you look at it on a quarterly basis, you're seeing 8% -- [7%, 8%], 9% growth rate, 78% in the last two quarters. We actually want to take that even further when you're only isolating out the fiber business, right? So obviously, we still have some of the legacy become to go that actually weighs down our number. But if you exclude that we do expect to see actually fiber over the next well for this year. Over the balance of this year, we actually do want to ramp up our growth in our fiber business.

There is a question on the data center, [Georgia].

So on the data center, we have active discussions with potential partners and that factors in the current capacity that we have of 28 megawatts plus the incoming capacity of 30 megawatts that we have for VITRO Sta. Rosa when it opens in July.

So that's re-contracted the upcoming 30 megawatts. Are you expect that when it launches is already revenue-generating?

We obviously have, we still have to fully sell out the 30 megawatts, but we have a very exciting pipeline of opportunities for our 11th our data center.

The hyperscaler data center [Sta.] Rosa also (inaudible) will be implemented in several stages, the first stage, solid 10 megawatts. And I think there have been there's one major hyperscalers have signed up, which we disclosure. So we're quite confident that the 10 megawatts, first phase will be substantially contracted for before we opened.

Now with respect to the existing data centers, we're actually full-up and so there are plans to expand the non hyperscaler data centers, particularly the one in Makati right? we are it's fair to say. I think we've disclosed that we are in discussions with several buyers or investors in the hyperscaler data centers, which are ongoing at the moment. But despite that, the business continues as usual. In terms of talking to potential locators on the in-center also for the hyperscaler data center.

Arthur, did you get all your questions?

Yes. So I had asked the second question earlier was on mobile competition. Are you seeing that picking up following the recapitalization and sorry, I just couldn't hear the answer on the CapEx a while ago because there was a microphone if I could just get clarity in terms of the CapEx expectation?

So for the mobile question first, Alex.

Okay. Let me respond first of the question, mobile. So first, let me speak of what we do. So we have continued to deploy differentiated offers. We talk about longer validity, larger bandwidth, better experiences with respect to competition and expect a lot more action online. And also a lot of the issues regarding sales and aftersales are obviously revolving around the social and digital media. A lot of concerns, though, on experience, I think it's already been mentioned that we're restarting our network build and we're intensifying investments and improving capabilities to deliver product lines that are going to be of value and really push it of customer.

Now with respect to competition, expect them to continue to build as well, and we'd like to ensure that we're able to compete. I think the question here in the end is how do you remain relevant and to continue to provide value.

The [Yu] why there's there are several requests for you to repeat your answer on the clarification of the impairments, they couldn't hear you.

Thank you. This actually pertains to an amortize subscriber acquisition costs of home chain customers or since the customers have already left us, there's a need to write down costs associated with the service. This includes costs of CPEs, installation and others.

Are these not taken out over at the two-year contract? Is not amortized normally within the two-year contract paid?

No, it's not.

I see.

Historically, we amortize it over a period of seven years, but effective this year was going to amortize over six years.

Understood. Thank you.

That's (inaudible) cost. But for CPE, we amortize it over a period of five years.

(multiple speakers) thanks, Arthur.

There's another day's time from Rachelleen, [Rachen].

Hi, good afternoon, and thank you for the call. So just wanted to get more color again on the data centers. So the 50 megawatts. Am I correct in understanding that only the 10 megawatts will be first online? And then so when will the full 50 be available.

Maybe Georgia?

Sure. So the build for Sta. Rosa is in three phases. The first phase that goes up in July is the first of 10 megawatts. The remainder of the year will enable the remaining will enable on another 10. And then the third, the balance of the remaining 10 will be enabled within the first half and next year.

Okay, thank you very much.

Thank you, Rachel.

There are no --

If I may add to that, I think, what we'd like to see as we're talking to foreign investors for operators also of hyperscalers or simply data centers abroad is to bifurcate the business. The data center business into two one is the hyperscaler side where they have to make commitments to us to bring in revenues from foreign locators in the Philippines for the hyperscaler data centers anywhere between 30 to 50 megawatts capacity for each of those datacenters in respect to what they call the domestic data centers, those below 30 megawatts, which will address the domestic market, not only in Alpha enterprises, but also the Amazys that we can handle by ourselves and they can take a minority a significant minority interest in the domestic data centers, which we can handle, [right] all over the Philippines.

So that's the way that's the direction we're taking in terms of this data center the business, right? So we don't have the capability to bring in by ourselves. I think it will enhance our capability. If you bring in somebody who is a major data center player internationally, so that's the logical being someone in on the hyperscale side of our business.

Rachel, you're okay with that.

Yes. Thank you.

Thank you. There are no other questions online we'll take a second round from the floor if there are any.

Derek?

Hi, I am Derek from CLSA. So I have several questions. First, on the data center side, again, for the planned stakes sale, how much are you planning to sell in terms of the stake? And I might have missed it earlier or have you already earmarked the CapEx for the next data center after the 11th?

And my second question would be in the on Maya, you mentioned a total loan disbursed of PHP22 billion for my eyes is all loans to customers or this is involved repurchase agreements and such? What's the actual LDR for Maya? And what's your strategy and expanding loans? Thank you.

Well, on the as I said, we will bifurcate, or we tend to bifurcate the data center business. So quite likely the hyperscaler side because they're the big data centers. So they insist that they with a majority. So most likely either 50% plus one share or 51%, and we keep the 49%, right? On the premise that we told that you commit to bring a certain level of new revenues and, of course, finance your portion of the equity required to expand not only Sta. Rosa, be it the full 30 megawatts but also new data centers, either by ourselves with them or in conjunction with real estate developers here in this country right? now in respect of the what they call the domestic data centers, we said we have to be majority and there will be a minority so that is not clear yet to go decided with them, whether we have 60% or it is 51% so.

Got it, thanks.

George, on the CapEx for this the next data center.

So that the sign -- is so we are actively looking for the location for the 12 data center. So we have there's a couple of candidates, but they have to be within a certain geographical location versus Makati, Clark and Sta. Rosa spread to be within say what you call a hyperscaler availability zone range so that they can maximize the cloud infra that is being put there. So after the selection, the design will then determine the amount of CapEx that we will need for that DC. So it still needs to be planned, but we have to essentially we're targeting that we have to build by late, starting late next year, if not early 2026.

Yeah, in respect of the CapEx for the entire 30 megawatts, the Board has approved that project in its entirety. But the [cities] face every face has got to, of course, the budget approval for the first phase of 10 megawatts and the next phase of [maybe] another 10. So that is subject to final approval by the PLDT Board and so forth and so on.

Now let me stress that the distinct advantages of PLDT and its data centers, number one. So of course, the connectivity. And number two is the assurance of power a number of these data centers require a certain proportion of power supply being removed. So I think it's only us this group that can provide a guarantee of power, continued power supply despite and of course, a proportion of that power supply the renewables.

Yeah, you got several questions. The first on what type of loans this PHP22 billion consists of they're mostly a personal loan on a 30-day [10 hours]. And some of it, a small part of it is business loans, which we're just starting to offer.

So on the other question, strategically, where we're pushing SME loans in well currently, as we speak, so that will comprise a bigger part of our loan portfolio for 2024. And I can let SB describe other loans. We are loans we are launching this year, but on LDR, current LDR is at 12%, 12% to 15%. Obviously, that's still low a lot of room to push it up towards the end of the year. We'll probably push it up beyond 50%, so that's on the LDR. So SB on the loans.

(inaudible - microphone inaccessible) two months back and scaling up nicely and then on the micro and the small enterprise, that's really the next area where we are focusing in a big way. We have already started disbursing micro loans since November last year. Now we are testing and launching those small enterprises. So these are longer-term loans, which help us as dimension to end the year closer to 50% rounded to deposit ratio. Those are [loan] that we're working on.

Okay, got it. Thanks for the --

[Thank you, Derek], your indulgence really need additional CapEx for microphones.

Do you why? there's a request for you to repeat your answer because you didn't have your mike on in respect of the CapEx over and how many, how much of the PHP33 billion was already absorbed this year.

We have already recorded PHP21 billion out of the PHP33 billion. Thank you.

Thank you. Any more questions from the floor or from online. If there are no further questions. I now turn the floor over, back -- there's one more question.

One question on the can you provide more color on the digital entity or the digit code that you're sending to the disclosure in terms of the contribution or the expenses that have been booked?

(inaudible) ask about basketball.

[PPV] we'll do the tougher question in that. No, so [since] we're actually forming what we call a digital company [or did you go]. So what we intend to do is harness the assets of the firm. You feel that it's a good starting point. Ultimately, it's really all about providing service to the consumer. But of course in a more digitalized [fashion] right? So a lot of that of course it will start from data that we have, definitely, this is going to be based on the consumers [opting]. And we intend to be what bring together address these of the consumer them in a [battery]. I think one thing Phillip we know that the Philippines simply we have today their own expression of a digital service for ourselves, right?

It's very iconic because via very young digital Savvy country. I mean if you look at Southeast Asia, right? We're very grow, we're probably one of the most digital very youthful, very creative, but unfortunately, we don't have real super app correct. It's still a very fragmented space. Yes, we do have Maya, we do have a [e-cash] heavy on payments, but what about in terms of servicing, what about in terms of providing peace. Providing the ability to conduct let's say by day-to-day activities, right? online. Anything that you can think about.

It's very complicated animals and first presented to us. So we have to slice and dice now. So the priorities which got indicated is the data, right? Because when you look at the spectrum of the group companies, you started the Telco versus the largest subspace and therefore, generates a lot of data. So the question is that we probably have the data digitally, but heavy recreate that curated to the point with the deployment of data analytics for it to be presented to the Board, for example, what was the buying pattern as the lifestyle of each of the subscribers, be it an individual or a corporate right?

So that replicates itself in Meralco, which is the second largest consumer base of the group. They have 8 million customers. We suggest have five people per household, for example, that's more than 40 million people plus institutions, hospitals, schools, et cetera, which are invariably part of the Meralco consumer base than the next is mainly that is PHP2 million in postpaid customers as well.

And the last is that always the hospitals has well, they do generate a lot of data about not only [else] conditions, but the way the [Dave] here. But with respect to the hospitals, they probably, at least, schooled in IT adoption that the pain points. As you know, we have been to our hospitals would be the digitalization, the Manualised medical records, when you check in you have to fill up every time you do that in the course of the billing it takes a while [it's like hotel] about equal every department you see [there] are understanding this, which takes a long time.

So that has got to be attacked individually persuading each of the companies to create the proper data lake and curating it to get that 360 degree view of their customers, then it will elevate to the next stage, which is how do you share the data that's when you run afoul of data privacy and all the wonderful things about regulation so that's the idea about the data issues confronting digital. Let me give you one example. Another example, Tolways, we have about probably 800,000 vehicles per day crossing out always, right? And if you transpose that to Indonesia, where we are the largest always we have 2 million vehicles per day in Indonesia.

Now [readers and] we know we can count the vehicles, but we don't know who they are right? when we get into that right now where we are forcing [Tolways] is to remove the values right? Because they can only do that if they have a more sophisticated number one payment system. So we have to tell them we must have 99% of the users of our roads on RFID's, a more sensitive detection system. So we could take photos of your license plate, but the photos will be useless unless we connected to the database of LTO, which is government. And we suspect that the database of that government agency would be incomplete data will be dirty. And what else. (inaudible)

So we have to fix that database. So we're anticipating that but imagine how useful it would be and thus reducing congestion on our roads and therefore reducing CapEx for just can run through the number [Tolboats] right, we have Tolboats but no, nobody is there so you don't give up. Similar to Hong Kong. You guys have been to Hong Kong, there is no -- it's a barrier less situation.

So [ayon] if we're able to combine the tollways San Miguel and [RTO] always. So it's a single payment system, no barriers. And our ability to apprehend the [people whose] low this year, either inadequate for no load at all, but Filipinos be Filipinos. There will always be the [pass away] that they want to pay in cash. So we will need at least one toll booth for this guy.

So yeah, but we are moving in that direction. And we should be able to tag these were the IT job of digital, the tag year entry and to tag your exit and automatically at your exit point, it's an automatic calculation of the fair dis [use] and it's an automatic debit against your payment system. That's the landscape that these guys have to achieve with the operational tollways so, right? So (inaudible).

Now underpayment discussed in support and in the end. So we have delayed the payment vertical the group is the payment gateway, which is by center, which is the biggest builder in the country with about PHP400 billion of gross transaction value. And it turns out look the [sis] as a its own payment gateway. So the marching orders is to merged to become the biggest payment gateway and to expand that business to the trillion something level right?

And then Maya's there is our biggest wallet, but it turns out [deep] there's also a digital volume at the moment on like all of our light rail system, but they're moving into the transportation sector the PUV which principally jeeps, taxis, buses even (inaudible) on cash bear glass and grab, right? They can use the use the phone QR code on the phone for horse without turnstile readers on each of those vehicles. So that's that division. In fact, we have a subsidiary, Tollways a subsidiary called [Biage] that they're doing two things. One is the migration from fossil fuels to e-vehicles. And number two is the payment system digital on their vehicles. That's also part of the job of digital.

[And then] any other questions? Last chance.

So there are no other further questions, we will now the turn the floor over to Mr. Pangilinan for his closing remarks.

(inaudible) spoke too much. Anyway, happy Easter. [Finished] three weeks or something.

End of April, end of March.

So do you have balance?

For that happy note, and that concludes today's briefing. As always, should you have any further questions or clarifications, please feel free to reach out to PLDT Investor Relations. Thank you for your participation and join us for some refreshments outside. Thank you.