PLDT Inc (PHI) 2020 Q3 法說會逐字稿

Good afternoon, and thank you for joining us today to discuss the company's financial and operating results for the 9 months of 2020. A copy of today's presentation is posted on our website. For those who've been able to do so -- not been able to do so, you can download the presentation from www.pldt.com under the Investor Relations section.

For today's meeting, we have with us our Chairman, Mr. Manny Pangilinan; Mr. Al Panlilio, our Chief Revenue Officer; Anabelle Lim Chua, Chief Financial Officer; Atty. Ray Espinosa, Senior Adviser to the President; as well as other members of the PLDT management team.

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

Thank you, Melissa, and good afternoon to everyone, and thank you for joining us today. Today, we would like to present our 9 months 2020 financial results. I will start off with a short presentation, then I will pass off to Anabelle for the financial highlights.

So as we all know, we are still in an environment when COVID is still upon us. So there are still people who are suffering. Unemployment is very high. And we understand the condition that we are still in today.

Having said that, next page, obviously, Internet connectivity has been very critical during this time. A piece of the foundation for us for the digital economy, we have been working very hard to actually start off a digital ecosystem that are needed by our [economy]. So we've been -- these 9 months, we've been very laser-focused in terms of coming out with customer-driven product and service innovations. We continue to invest in our network even after the lockdown. Initially during the lockdown, as you know, we had problems in our mobility, but now that after the lockdown, we're able to restart our network projects. So we are continuing with our nationwide fiber rollout. And as we also indicated during the first half report, we have embarked on ADSL to fiber migration.

During this time, we also launched commercially our 5G in certain sites. So we will continue to roll this out as we speak and also for the next few years. And at LTE, which is still a focus this year, close to 99% of cell site that are LTE-enabled already.

So we want to make sure we secure our network superiority. Today, we cover 96% for the wireless -- this wireless population coverage. We cover 96% population coverage for wireless. We still have -- we do have the most extensive fiber footprint in the country. We've added to the numbers that we presented during the first half presentation. So now after the third quarter, we are now at 395,000 kilometer of fiber cable slate, and we will continue to expand this. And this will reach 400,000 towards the end of the year, and we'll continue to roll out even first quarter next year.

We have passed -- homes passed is 8.3 million and 3.84 million ports. We also have the nation widest mobile data coverage with 9,892 cell sites, 56,799 base stations, 25 core and data centers and 3 cable landing stations. All these metrics will obviously continue to expand, cell site, base stations and also landing stations, which will grow to, I think, 5 by (inaudible) Okay. Next page, please.

So we measure ourselves against competition. This is a metric that we focus on so that we are able to provide for better cost experience to our customers. So we consistently outpaced local competition. We are even above, obviously, of Philippine average. We are at 19.45 based on Ookla report. And if in Metro Manila, with all technologies and all phones, you can actually get 26.64 mbps. But if you do have the right handset, the right chipsets or the right handset that you use in Metro Manila, you can even hit 41.77 mbps for our wireless strategy. So in terms of speed test of Ookla, again, we are highest through Smart compared to Globe. And then for our fixed line, we are also much better than competition. Next page.

So again, I mentioned this earlier, we did launch Smart 5G this year, and we will continue to roll this out, and this will be a major focus for us and really an ultrawide band platform that we have in 5G. And we will build our use cases as we roll out 5G.

So these are the major key drivers for the third quarter. For Individual, we launched GigaLife App, which is very strategic for us from a digital engagement point of view with customers. So we will continue to enhance this as we move forward, but I'm happy to say that we have launched this in the third quarter. We continue with our product launches and 5G commercial rollout, as mentioned earlier. For Home, now that Home has been changing behavior for our customers, where home is where work is, where studies and where play is, we have also enabled solutions for work at home and study at home for our Filipino families.

For Enterprise, focusing really on developing digital ecosystems. So we want to enable e-industries, for example, health or education, which is very critical in our road map. So the Enterprise will continue to provide -- create solutions for e-industries. And for International, really managing the long tail. They've done a good job trying to really manage this long tail.

So for -- on top of connectivity, we were very, very busy in a lot of programs and offers in the market. We obviously had the NBA content exclusive to Smart, where you could really live stream NBA if you were a Smart subscriber. As I said, we watch Giga -- we launched GigaLife. We have our weekly GigaFest activities. We launched Giga Study, Giga Games, GIGA Pro. Enterprise launched during the lockdown BEYOND FIBER, which is beyond connectivity solution for -- such as for MSMEs, 5G. As I mentioned, we're looking at -- we had a concert during the birthday of MVP in July, where actually PLDT Home offered the speed boost to certain customers.

And the top right shows an actual shot, a picture shot taken in Clark, where the PBA bubble is happening, and we're using Smart 5G. And we're really broadcasting for the first time on over 5G and maximizing a relationship to international partnership with Orange. That's why we're able to manage the long tail for our international business.

So happy to report for third quarter, our core revenues -- service revenues ended at PHP 43.7 billion. This is 11% higher than last year or PHP 4.2 billion in terms of revenue terms. This is the highest quarter ever for PLDT group, surpassing the PHP 41.5 billion first quarter of this year. And I think Anabelle will show later that it's really a steady growth in terms of revenue for the past 11 quarters, except for the second quarter, where basically, because of the lockdown, there were some softness in the business. Next page.

And broken into the 3 big pillars that we have, and all have shown strength -- resilient strength and growth. Individual grew by 15% to PHP 21 billion, an increase of PHP 2.7 billion from a year ago. Home, a very strong 16% growth. Really, this is a recovery or a big performance for Home this year, 16% growth, PHP 1.5 billion in peso terms versus the last year, ending the quarter, PHP 10.7 billion. They ended the second quarter at PHP 10 billion, and they increased it now to PHP 10.7 billion. And Enterprise, despite the issues, the difficulty that have a lot of customers getting out of business and having to restart their businesses, still grew a clip of 8% or PHP 800 million. But for all 3 segments, this is really contributing all-time high revenues. Next page.

And for year-to-date 9 months, we are at PHP 126 billion -- PHP 126.5 billion. It's also a 9% increase versus same period last year or PHP 10.4 billion. Individual ended at PHP 60.8 billion, a growth of 15% or PHP 8.1 billion versus the same period last year, 9 months. And Home grew at 10%, ending 9 months at PHP 30.3 billion and 10% and PHP 2.7 billion increase versus last year. And for Enterprise, ending the third quarter year-to-date at PHP 30.9 billion or 6% or PHP 1.7 billion versus same period last year. I mean just quickly just saying that a very soft second quarter, as you all know, but we increased quarter-on-quarter 6% to end at PHP 43.7 billion, again. Next.

And really just a major -- I guess a scorecard or there is a breakthrough for us. At the end of 9 months, we continue to have market leadership and service revenues. We've strengthened the position in fixed, especially that we have increased the capacity in terms of installation for our fiber service, and we will continue to enhance this as we speak. There's a surge in demand for Home broadband, so we are also increasing our capacity to be able to install for our customers.

We've gained Wireless market share, again, for 6 consecutive quarters now. We are now #1 in Wireless data traffic, #1 in data users. And the TNT brand is the biggest prepaid brand now in the country.

So just very briefly, doing all that -- all those activities and programs and launches, we also know that we have our responsibility to the community. So the mantra of our Chairman of no learner left behind. Education is very, very close to our hearts. So we are helping DepEd and other institutions in our programs with PLDT-Smart Foundation.

Next. And really being a network of good. PSF, again, is very active in terms of its relief operations or help that we are able to give our communities.

And lastly, next page. As you know, this is very -- still very new. We have had a major effort to restore all communities that have been hit by Typhoon Rolly, especially Albay, Catanduanes and Camarines Sur. We are not 100% restored yet, but between 70% to 80% in most locations. And our teams are there right now trying to bring back 100%, either working with the local electric co-ops to bring up the posts or put microwave and VSAT facilities in place. But what we have also done is we've offered a Libreng Tawag and Libreng Charging booths in communities that are needed, that are -- that require such services. So Libreng Tawag and Libreng Charging.

So at this point, that's my report. I'd like to pass on the floor to Anabelle Chua.

Thank you, Al. Let me go through the financial highlights for our 9 months that passed. As Al has highlighted earlier, we're very proud of the fact that we came in quite strong in, our third quarter, with Individual, Enterprise and Home businesses all registering all-time highs. So on a combined basis, these businesses are up 13% from same quarter last year and 6% higher than the second quarter. On an overall basis, PHP 43.7 billion, 10% up versus last year and 6% also up versus the second quarter.

Next slide. On the back of this 10% rise in revenues, we saw our EBITDA also up by 12% to hit PHP 22.7 billion, our EBITDA margin of 51% and our telco core income registering PHP 7.1 billion in the quarter or 14% ahead of the same period last year.

Moving on, we show here the results over the 3 quarters of 2020. And other than the slight dip in the second quarter, you'll see that we came in quite strong in the third relative to where we were in the previous quarters, but all quarters are ahead of the same period last year. So with 9% increase in Q1, 7% in Q2 and then a 10% increase in Q2 that resulted in overall 9% growth for the 9-month period.

When you look at it by business pillars, the Individual business had a bit of a moderate dip in the second quarter. But post-Easter, we did see our top-ups hit record highs and have been stronger month-on-month. So at PHP 21 billion, that's again an all-time high in terms of quarterly performance, leading to the PHP 60.8 billion, that's 15% ahead of prior year.

Enterprise, as Al mentioned, notwithstanding all the challenges in the external environment, we were able to serve the digital requirements of our various Enterprise customers. So the numbers have been increasing every quarter from PHP 10.1 billion going up to PHP 10.2 billion and now PHP 10.6 billion in the third quarter for an aggregate of PHP 30.9 billion, again 6% higher than prior year.

Homes, pretty encouraging. We saw a breakout in the third quarter at PHP 10.7 billion. So that's a 16% increase over the same time last year and PHP 700 million ahead of the previous quarter. So at PHP 30.3 billion, that's also a 10% rise over prior period.

Moving on. The 9% increase in the 9-month revenues again supported a 9% increase in EBITDA to PHP 66 billion. We were able to manage our cash OpEx such as it only rose by about 4%, and I'll talk about some of the issues around provisions later. Telco core income was PHP 21 billion, 8% ahead of last year, with some increases in depreciation and financing costs at the back of our higher investments in the CapEx.

Next chart. Here, we track our quarterly performance since the start of 2018. So the key takeaway here is that we have really seen consecutive growth every quarter since that time under than a slight dip in the second quarter. The other thing to note is that the growth, it has been accelerating in terms of the pickup from the prior period. So we still adjusted growth, but the acceleration improved, and now we are at this PHP 43.7 billion all-time high.

Next chart is the same trajectory. This time, we bring the revenues by data versus nondata revenues, and it's clearly data that has powered the growth for PLDT group over this time frame. Data at PHP 90.8 billion is 72% of our revenues now and accounts for an 18% rise. That's in the next chart, please.

When you look at where data grew, about half of our data is coming from mobile Internet, and that's up 31% year-on-year. About 76% now of our base from smartphones and have been actively using data, we saw a record high of 36.8 million active data users during the third quarter. From a traffic standpoint, the amount of mobile traffic use by our subscribers is practically doubled from what it was a year ago.

On Home broadband, that's the next largest segment in terms of the data service story, that's close to PHP 24 billion or 14% higher than last year. We all know that with the work-from-home and study-from-home development, the demand for home broadband is at an all-time high. We've seen the service applications practically doubled from what they were before. We pushed our installations up from about 40,000 average last year to now 70,000 approximately in the third quarter, but that's still not enough to serve all the demand that we see out there. So there's a concerted effort to continue to bring up the number of installations we're able to accomplish to more than 100,000 by next year.

Corporate data and data center, which are part of our Enterprise revenue segments, were up about 3% year-on-year. So the growth in the data was more than able to shield us from the declines that we see in SMS and Voice, which are now a smaller proportion of our total revenue pie.

Next chart, please. As explained earlier, the higher service revenues allowed us to see a 9% increase in EBITDA and covered -- more than covered the higher cash OpEx and provisions and subsidies during this time. And at the higher EBITDA, offset by some increases in depreciation and financing costs, led to the 8% increase that we saw in telco core income.

Next chart, please. This one is the EBITDA number, again, over the quarter starting the first quarter of 2018. So this year, we started off at PHP 21.6 billion in the first quarter, similar levels in the second quarter, and we saw a 5% rise by the time we hit the third quarter to PHP 22.7 billion. The average of this 3 quarters was at PHP 22 billion. So that's also clearly ahead of the PHP 20.8 billion quarterly average that we reported last year.

Next chart. Just as a commentary, there were a bit booking of higher provisions during the third quarter. So we booked additional PHP 3.5 billion -- sorry, PHP 3.5 billion in the first half, an additional PHP 2.9 billion in the third quarter for a total of about PHP 6.4 billion, a little over 5% of our total revenues. So this is in recognition that there are some challenges around the collections that we are experiencing as part of the relief that we gave to subscribers during the ECQ period. But what is noteworthy here is that starting in June, our collections actually have already exceeded the previous ECQ levels. On a year-to-date basis, we've collected about 86% of the billings during these 9 months and that we are pushing for this to rise to over 90% or, in fact, closer to 95% by the end of the fourth quarter. So we'll take a stop of the level of provisions in the fourth quarter, depending on how the collection efficiency levels will be by the time we hit the year-end.

Next chart please. So on the telco core income, I guess with the steady rise each quarter from PHP 6.9 to PHP 7 billion to PHP 7.1 billion this third quarter. The average is at PHP 7 billion versus PHP 6.8 billion average last year. So our goal initially was to at least match last year's telco core income. So we kind of are really confident that we should be able to do that, if not slightly surpass last year's performance.

Next chart. So just to complete the story, on the P&L for reported income, that's PHP 19.7 billion. After taking into account our share in Voyager, equity losses for us is at PHP 1.3 billion and certain other adjustments to our investments. I just wanted also to report that we have completed the sale of all our remaining 1.9 million rocket Internet shares ahead of the public delisting and better offer of the company. So we were able to generate an additional PHP 2 billion of extra cash proceeds that will help us fund our requirements this year.

The other thing to note is that the reported income is 23% ahead of 9 months last year. That's really because we had manpower reduction charges during the third quarter last year that we have no similar charge yet on a year-to-date basis, but we do have an ongoing effort, and there will be some market charges that we will be booking in the last quarter.

Next chart. So moving on to the balance sheet side with our net debt, about USD 3.9 billion and gross debt of USD 4.6 billion. We actually saw a slight improvement in our net debt-to-EBITDA ratio to 2.13x versus 2.19 in the half year on the back of the stronger EBITDA performance. We've been able to manage our liabilities such that more than 50% of the maturities are extended beyond 2025. Overall, cost of debt is about 4.69%, again, an improvement over the cost of 4.8% last year and in fact, even the 4.78% average in the first half.

Next chart is really to talk about our CapEx. We came in with a PHP 43.1 billion CapEx for the first 9 months, a bit of slowdown during the second quarter because of the lockdown challenges. But we do expect that for the year, we will hit at least PHP 70 billion at the level pretty similar to what we did last year. So that implies that about PHP 27 billion to PHP 30 billion of CapEx in the fourth quarter that we expect to pull. For the PHP 70 billion-or-so CapEx, PHP 52 billion of that is really dedicated to our network and IT investments. PHP 13 billion supports the business requirements, particularly the install and last mile and CPE requirements for generating additional sales and then about PHP 6 billion for data center and other requirements.

A lot of projects ongoing at the same time, both on the wireless and the fixed side. We continue to increase our LTE coverage and expand our capacity. We continue to expand our backhaul and transport capacities. We have ongoing work to add 37 terabits per second to our existing 55 terabits per second network capacity for backbone; building out more ports, about 500,000 ongoing build, supplement our 1.4 million port inventory; upgrades of DSL to fiber; and then additional sell-side buildout; as well as the start of our 5G rollout. All told, we can expect our CapEx to service revenue ratio to be about 40% to 41% this year compared to 45% CapEx on sales ratio last year.

Next chart. The spend in the CapEx translates to accomplishments that we are summarizing here in this chart, a bit of a report card of all the rollout accomplishments for both fixed and wireless side, 8.3 million homes passed, 14% up from year-end, 3.8 million ports. That's inclusive of 1.4 million available for sales. Our fiber footprint is unmatched by anyone in this country at 395,000 fiber kilometers. And as we speak, we are working on an expansion by another 81,000 kilometers for our fiber footprint.

On the Wireless side, LTE base stations, 28,700. And then 3G as well as being rolled out still. And the 5G, you can see here the beginnings of our 5G rollout. From a coverage perspective, we cover 96% of the country's population with our Wireless network. And what we see in terms of what people are doing, about 71% already of our users are on LTE, and then the users on 2G are down to below 20%. When you look at it from a pure Metro Manila perspective, numbers are even starter in terms of the 80% LTE adoption-ready and only 12% remaining on 2G and 8% on 3G.

In the next 3 charts, I just try to put together some of the results of external third-party surveys that report on the health and quality of our network performance. This first one is from Ookla by way of download speeds. As Al had showed this earlier. For both fixed and mobile, we clearly are the leader in terms of the delivery of speeds to the customers here in the country. For fixed, an average of about 30 mbps; for mobile, above 19 mbps, but that's an overall nationwide average also across 4G and 3G. When you zoom in on Metro Manila, the average speed is actually getting very close to 30 mbps, about 29. And then when you have the right handset, a subscriber can actually experience on our network about 42 mbps speed.

The next chart shows another result of OpenSignal, where we focus here on the LTE availability score and our video experience score. Just to highlight that we are doing better across all the regions in the country, and we are also outpacing competition.

The next one is another, I guess, what they call more scientific study that's done by Ookla. It is a 10 to measure the quality of service for our mobile network. The other 2 were really more crowd-sourcing best results, but this one is really done by experts. And we're pleased to note that we scored 750 in the third quarter, which puts us in the good category. That's clearly improvement over what we have been able to report over the past few quarters, and we've been working very hard with the experts here in terms of continuing to optimize and improve our mobile network performance. And we are not stopping there because our benchmark now is not just in country, but we're really looking at a performance that will match those of our ASEAN neighbors and eventually global telcos as well.

So with that, turning it over to our Chairman, Mr. Pangilinan, for a wrap-up of our 2020 outlook.

Thank you, Anabelle, and good afternoon to all of you, and thank you for joining us this afternoon. We provide you briefly our latest views for 2020, particularly the fourth quarter prospects.

Dealing with the revenues first, we expect the momentum to establish in the first 3 quarters to continue for the fourth quarter such that across the board, Wireless, Home and Enterprise, we will see continued growth. And it is likely that the fourth quarter revenues, if all the 3 revenue streams will be the high -- will produce another historic high for PLDT, so that for the full year, therefore, will be a historic high for the company.

In terms of telco core, flowing from that, EBITDA will rise and telco core will rise. We expect the full year telco core to be higher than the PHP 27.1 billion we reported last year. How much higher is a function of many variables, including our record of collections and how much provisioning Anabelle might wish to make for the fourth quarter.

Dividend payout, we maintained 60%. Maybe we'll look back if things really turn out to be very well. CapEx year-to-date, so the third quarter was about PHP 43 billion. We expect total year to land between PHP 70 billion to PHP 72 billion for the full year.

So that's basically it for -- to complete our 2020 review. I'll turn it over to Melissa for Q&A.

Okay. We're now ready to take your questions. (Operator Instructions) First set of questions come from Kervin Sisayan.

Can you comment on competition? We see Globe increasing marketing spend to push more SKUs in the third quarter. Is there any effect on PLDT?

Well, obviously, Globe will not be sleeping. They're offering packages in the market. We have also our own offers, and I think it just shows you that -- with a very strong third quarter. So we expect, of course, competition to be there, but we will just -- I guess we'll need to also offer our own packages in the market. So right now, I think we're cognizant that they're -- they want to -- they are promoting their own products, but we are also doing the same.

I think that -- if I may add to what Al said, I think that whilst we see 2021 data demand to be -- continue to be robust, the competitive landscape will change because Dito has announced that they will be commercially available -- the services will be commercially available by the end of the first quarter, maybe start in the second quarter. They'll definitely be around in 2021. Converge has finished its IPO. So probably slightly stronger in 2021 in terms of pushing the fixed broadband. And of course, Globe, as Al indicated, is not going to stay still, so they will be competitive or more competitive in 2021.

So it'd been an interesting year from a competitive standpoint, and part of the picture will be determined by how fast or how well we recover economically from this COVID. To be honest, we thought that the vaccine would have been approved by October or November. We have not seen that yet, albeit that maybe there might be 1 or 2 -- I'm talking about the states, U.S. pharmas or U.K. pharma companies. And I think the deployment will probably be not as early as we had expected, and therefore, that could determine the economic recovery -- the pace of the economic recovery of our country as well as other countries. So I assume so...

Just a follow-up question from Kervin. Do you have any thoughts on the buildout from Dito?

Yes. Of course, we're observing their statements and also what they're doing on ground. And I think they have been able to put out some sites. Their target is, as they state, 1,300 sites for the first quarter next year, which will not be enough to meet their own targets, namely 37% of population coverage in so far as it will be achieved. I think they've made progress. And I think that was to be expected, but it's far behind what you need to really be competitive. So we believe that they will be probably going live in the time frame they announced. They will not be able to meet their own targets, and it will be very localized competition. It will not get the competition on country level. This will take quite a while. So it's, I think, something we will be able to defend.

A question on Converge. Converge is seeing high growth in subs. Are we seeing subscribers going to Converge? And also in the press release, you mentioned that broadband installation was already 72,000 per month. But the actual increase in 69 subs is only 90,000 for the quarter. I just want to reconcile these numbers by net adds below versus installations.

Just maybe to address that. One, Converge has said that 90% of their connects are actually new subscribers. So it really just indicates for all of us that the potential for more household broadband penetration is really there for the picking.

Second, with respect to the number, the 72,000 is the gross additions. And then the 90,000 for the quarter is the net adds. If you recall, in the second quarter, because of the Bayanihan Act and the lockdowns and everything, we really did not strictly impose our churn policies. So there's a bit of a catch-up in terms of disconnects that we had to book and recognize during the third quarter.

Next set of questions are from John Te. First one is with respect to our data allocation for prepaid mobile in the last few months basically increasing despite diminished use in mobility. Do you think this is not dilutive to ARPU as it was previously? The rationale behind increasing data allocation for prepaid in the last few months...

I think initially when the quarantine happened, we did increase the data allocations to support the requirements of the market, but we've also made adjustments to our Fam loads for prepaid from wireless. So when you look at it over, actually, our yields in the third quarter improved over prior quarter.

Next question is (inaudible) 450,000 FTTH ports third quarter alone. PLDT added about 50,000 ports in the third quarter. When you said you are adding 500,000 ports, over what period will this be? And do you think the competitor's additions are a success?

No, I think -- first of all, I think one quarter doesn't make a network, it's just a snapshot. And we have, at the moment, about 1 million ports or 800,000 ports ready to sell. We will add another 500,000 ports within the next 3 to 4 months. And then for next year, we're currently in the planning stage, but we will definitely add substantially in order to meet the market demand.

Next set of questions are from (inaudible) of BTIC.

Congratulations on the very strong results. Three questions from my end. The first one is there's been impressive growth in the fixed wireless space. Would management share how we should look at upselling or upgrading the existing subscriber base both in terms of DSL to fiber and fixed wireless fix? Should we expect some uplift (inaudible) on most of the DSL subscribers have?

Yes. I guess on that question, yes, we did announce during the first half results that we were embarking on a migration from ADSL to fiber. That's already happening now. That's about 600,000 of those customers. And 1/3 of that, hopefully, will be completed within the year. So obviously, there's a upgrade on the ARPU when they move to DSL.

And also, aside from surge in demand, I think there is also a requirement by most customers to also upgrade their service because there are more people now using one pipe in the home, and maybe the 25 mbps is not sufficient so they upgrade to 50 and some of them are upgrading to 100. So there's also a requirement for them to increase their offerings.

Next question is, could you discuss which segment contributed to bulk of net adds for fixed line broadband year-to-date? Would it be subscribers that are churning from other networks, distinct fixed quarter subscribers who are migrating, first-time subscribers?

I think it's a mix of all because there is an unserved demand. There's surge in demand. So customers now want to upgrade to a better service, as I mentioned. Fixed wireless has been an offering that has also spiked for us during this period. But if they want the consistency of the either 25 mbps or 50 mbps, they do go up to a fiber connection. And of course, again, there are also a lot of first-time subscribers because, again, behaviors change and people now need broadband at home. So I guess it's -- all those 3 segments contribute to the growth that we're seeing today.

So it's (inaudible)

Both.

Fixed wireless.

Our main focus on the home broadband is really the fiber, right? The kind of fiber miles or kilometers we've been building over the years. And as fixed wireless is okay, it's -- we manage our numbers with respect to the adds on fixed wireless because we don't want to unduly decongest the wireless network because it works off the wireless network while the FTTH is a separate network. So of course, we -- the latter part of this year, we have allocated the higher number because we've seen that's a new market opportunity for us. But it's still a number that we manage. It's not that we don't go the full halt. I think the demand for us of our Home broadband is really the fiber, and we continue to do so.

Now that could change with the full deployment of 5G because that could give the wireless infrastructure a fairly wide degree of capacity, right? Something that Converge doesn't have. So you should bear that in mind.

Next question. What have you seen on the ground from the regulator and the tower companies in terms of common tower policy? Can you provide more color in terms of the trajectory of closing commercial agreements with the tower post and the rollout of common towers?

Regulation.

Tower policy.

Regulation and tower policy and the status of the negotiations with the tower companies.

I think on the common tower policy, we have actually complied with the common tower policy. The policy of government is to allow as many common tower players as possible and encouraging -- as well as encouraging all of the mobile operators to avail of the services of the common tower grade.

On our part, we have actually engaged with quite a lot of them already and have signed the firm contracts covering around 200 of these towers as Phase 1. There will be a more substantial number for Phase 2. And as we bring on more common tower providers, we are quite happy to share these towers obviously with Globe and Dito. Seems that has absolutely been our statement early on that when it comes to new builds of towers, we will be supportive of a common tower development, even as we have to develop our own. But we cannot, at this stage, simply rely on the ability of this new common tower providers as far as their local capabilities are concerned to build -- to entrust all of our tower requirements to them. But over time, we will be able to see that more and more, the tower companies will be engaged by us to put more and more of our equipment of their towers as they improve their capability.

Next question, how much is the MRP expense per quarter 4?

The program's ongoing. But I guess as a rough estimate, it will be over in the ballpark of PHP 2.6 billion in terms of one-off MRP premiums that we pay for early retirement.

Next question is, are you able to disclose a split between mobile and fixed tablets?

It's about 50-50, but as we build our networks very synergistically, it's very difficult to say up to the base station, actually, what is fixed or mobile. We use the fiber for any service. So Fiber-to-the-Basin and also serve the Fiber-to-the-Home and conserve fixed -- an Enterprise customer at the same time so and so forth. But as an annual guidance, the bond half goes into mobile, about half goes to fixed.

Can you share your expectations on 5G coverage? Where do you expect to see this by year-end 2020 and year-end 2021?

Yes. 2020, we will probably end with about 500 sites. That will be enough for some dense urban area coverage. It's not a large coverage yet. But for the next year, we are currently finalizing our plans, but we'll, for sure, significantly step up our efforts to roll out 5G.

Next question is, what percentage of your wired broadband customers the first timers versus churn or other trades?

Butch, would you be able to answer that question, Butch? A lot of them, I think, would be first timers because, again, there is a surge in demand during the time. So in fact, there is still a big unserved demand, as we speak to already. But mostly, I think it's first-time describers.

The next question is, may I ask the reason behind the strong mobile data revenue?

Yes. I guess we monitor a few metrics in this one. One is really our subscribers would reload, and we have increased that by 9% compared to the same period last year. So we increased subscriber with reload to the tune of 3.1 million subscribers. So more people now are using our service.

Second, it's really pushing them to LTE devices because as they go from 2G to 3G, there is an uplift in ARPU, almost double. So that's the reason why adoption for data and GIGA packages is very key for us because once they go towards the GIGA plans, that's really most probably double the ARPU if they were just 2G.

Next set of questions are from [Bernice Solco] of [ADTRAN]. Can you share any CapEx plans for 2021, both for total and specifically for Home broadband and fiber?

Well, I think maybe we can't answer that question today because we're still undergoing our budget process. But hopefully, towards the end of the year or early next, we'll be able to share that data with you, that information with you.

The initial class on CapEx were breathtaking.

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But I think -- yes, I guess just to add to what the Chairman said, I think we know that we have to continue to expand on our network. We have to make sure that our network is more superior. And really at the end of the day, we want to make sure we have the best customer experience.

So this competitive landscape, as we enter 2021 and onwards with more players, we'll also be a battle of resources, right, in terms of who has the bladder to invest in networks because that's a key consideration in terms of service coverage and cost experience, right? So that is also a determinant. Of course, there are other major factors like products and et cetera, not the marketing persons.

This is a question on provisions. Any expection of additional provisions and charges?

I think that's subject to our year-end review process. Principally will depend on, one, the collection levels that we're able to achieve by the end of the year. Second is really the general economic outlook, right? So we have to consider things like what is the expectation with unemployment, inflation, GDP growth, et cetera, as part of the whole exercise of estimating our expected credit losses.

Next one is, how much demand in terms of applications per month were there in October for wired Home broadband? And how many gross installs were there in October? If possible, may we know September? And does PLDT have a backlog for installation.

Backlog, quite a bit.

We have -- I mean that's why our -- we are ramping up on our installation capabilities and capacities. So there is -- our capabilities is below what market demand is. So there is a backlog, and we're trying to address them.

And a related question, how big is the untapped market for home fiber considering the emergence of Converge? Would you consider the untapped market in this segment to be still significant?

Yes.

Yes. I think it is. I think there are about 25 million homes.

25 million homes.

I think total fiber connection...

Total fixed broadband is 3.8 million for the whole market, but that includes the proper DSL, right? And then 3.4 million for fixed wireless, who have also the potential to be upgraded to fiber. So the country really only has about 7.2 million. But if you look at fiber narrowly, I think it's a big potential.

And the importance of fiber connection to home has increased for people. This means also the willingness to pay has increased, so more people will be able to buy -- or will want to buy fiber. So the market has grown through the pandemic.

Yes. I think one way to look at it more broadly is that there are anywhere between -- the numbers are not precise, 25 million to 27 million households for this county, right? So that's not necessarily the addressable market for FTTH or even fixed wireless. So it's a question of affordability, right, the price points. So we think that there is maybe 8 million to 10 million homes that cannot afford the current price points on FTTH. So that's broadly the market for fiber, then maybe it could go higher. Then you've got 5G to address the lower layer of affordability. So yes, it's potentially a big market. Like third quarter, we added just one of the revenue -- and just to pursue the point on fixed wireless, we added about 200,000.

200,000 and 190,000 on [Giga].

About 200,000 each for both fixed and fixed wireless. So we had a total 400,000. But in terms of the revenue impact for the quarter, the fixed -- the FTTH 200,000 is significantly more than the fixed wireless. But of course, still we won't turn it away, right, in fixed wireless revenues. But that's the arithmetic for now.

Next question is, has PLDT and Smart (inaudible) keep talents listing a new competitor that telco is seeing? What is their strategy to replace their talents that had been (inaudible)?

Are you referring to us? Looks like it.

I think we have been lucky so far.

Yes, yes. I'm sure they're talking to some of your people, but we haven't really seen any major, major departures.

Let's say, there were no departures, which we didn't wanted.

Next question from [Gerardo Naparal]. What are the biggest regulatory hurdles PLDT's experience in currency? And are there any -- are the various government measures, Bayanihan 1 and 2 tax reform, helping or hurting PLDT?

I think on the regulatory front, the recent law that was passed by our Congress, Bayanihan 2 Act, which -- and the laws on permitting have actually helped us significantly in securing permits base that was -- that's faster than it used to be, but there have been pockets of -- or areas where LGU permits are still slow. And we are addressing that by actually engaging with the national government authorities like the DICT and also working directly with the local government units concerned. So it actually becomes a more proactive, interactive process now on our part, given that the policy has been set by law and by the President himself.

One area that is important to us, obviously, is our ability to secure additional frequencies as we roll out 5G. Now that will be addressed to the policy of the ERC and how they -- of the NTC on how they want to allocate these frequencies, these available frequencies, given especially that in developments in the U.S. and in Europe, in particular, the particular bands -- frequency bands have been identified already for 5G. So we're quite keen to work with government and get our fair allocation of this rate of frequencies for 5Gs.

On tax reform, I think that would be good for us if the new tax reform process is passed. It will bring down the corporate income tax rate from the current level of 30% down to 25% -- 20%, 25% over time. So that would be good for us. I would think that should improve our bottom line.

Maybe the last 2 questions. Are you able to estimate what a cost differential would be for an integrated player such as yourself versus single business fixed broadband operator? What kind of CapEx and open advantage to do generally -- OpEx advantage?

It's, of course, not so easy to compare because, A, we don't know exactly the cost situation of that one. But I would say the following. The benefits of an integrated operator is that we can leverage, for example, our fiber network multiple times. We leverage for Fiber to the Home, where the cost is very skewed to this last mile, but we can also leverage at the same time for our enterprise businesses and in particular to connect their e-base stations and much more importantly, 5G. 5G without fiber will not work. And therefore, we have a high synergy between the various networks. And we have, actually, in the last couple of years, deployed the strategy, we call it [Follow the Fiber]. Wherever there is fiber, we can connect any business to the home, fiber to the enterprise and fiber to the base station.

And lastly, I think in a combined mode as we are, we are able to also invest into international connectivity like nobody else can. We currently have already 16 cable systems we are participating in. We are investing in more. There are 3 more upcoming. We have 3 cable landing stations, at least 2 more coming up in the next year. And I think that's something which a single fixed broadband operator cannot do.

In particular, when they have to grow outside of the big main post, it becomes very costly to lay all the fiber in the country. We could do that because we are using the fiber not only for the purpose of fiber to the home, we're also using it for mobile and for the fixed.

I guess to answer that, that's from a network perspective, right? But at the end of the day, I think as an integrated telco, we're able to offer for more products in the market that spans across wireless and fixed. So we have your mobile Internet. You have your pocket WiFi. You have your fixed wireless and your FTTH. So it just gives us -- I guess we can offer our cost depending on the segments and depending on affordability, various offers.

The next question is, can you share what the average lead time is from application to installation?

Well, can I tell you what the aspiration is? Well, our aspiration is 24 hours and maybe repairs of...

14.

14.

14 hours, right? But that's just aspiration. We're not there yet today. And I think this is an area we're really focused on, improving capacity. Because today, if there are facilities and you're -- it can happen almost immediately. But certain facility -- areas that we don't have the facilities obviously takes more time, plus the additional capacity that we're working on. So yes.

But the vast majority of the new applications we actually can connect in below 2 weeks if they are in an area where we have already a port available. Yes that's very often than the delaying factor that if a port is not available, we have to build.

But we have demand.

Yes, because of the high demand, and we have to go through the permission process and the restrictions which are there. So this is impacting at the time to react quite a bit.

I think somebody asked a question about talents, right? We have employed the talents the first instance to address the installs, right? I think, in fact, Ray lent -- you lent or give up a major officer of Meralco who was in the installed business of the Meralco wires. That's Bernard, and he's been doing a great job.

Great job.

In the installs of PLDT. Yet, there's still -- the demand is so strong, but we still have quite a bit of backlog. So additionals, we're going to employ more and more outsourced companies to rase the level of our capacity to install. And then the repairs, similar thing. We want people to address the repairs issue and the customer experience, right? The complaints, both on voice and on social media, we have recently hired a lady from Peru.

Peru.

Ms. Peru because she used to work with Telefónica and was in that principal line of responsibility with Telefónica in Latin America. Telefónica is a big presence in Latin America. So she used -- her last assignment was Telefónica in Colombia. So she just arrived a few weeks ago. So she's helping us out on the customer complaints, so forth and so on. So we're mindful of that.

The last question, could you share what are the drivers for the quarter, both improvement in mobile and fixed?

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In fact, I think I answered that earlier in terms of really pushing people to use more data in Giga platform and us having more subscribers with reload. So that continues to grow. And I guess if you look at it, I think for the 9 months, I think, I guess, you know the numbers of our competitor. You could see that our mobile business grew and took on all the growth of the industry and maybe the decline of our competitors. So our wireless business is very, very strong. And yes, maybe we are getting some growth subscribers that are trying our services.

Just a follow-up question. What are your plans for the future workplace? Do you foresee long-term need to set up work-from-home arrangements mixed with in-person office presence?

Well, the COVID has sort of affected our perspective of the workplace. So recall, we were moving in the direction of a campus type of head office on some safe and hectares of property somewhere in the South. But this COVID has affected that perspective. And we're looking at models that we can emulate, say, abroad, what have they done in light of this COVID. Do we need as much space? Personally, I still prefer a campus style of working environment, but do we need as many as 10 hectares because -- no, we figured that quite a number of our workforce are either out there in the field or can work from home. And I think the estimate is only about 40% of the 16,000 actually eat off space. The balance could eat office space, but it's a hoteling kind of revolving occupancy. So I think we have to look at that. And so I can't give a definitive answer, but yes. So we'd be very examining the options.

That is last question. As there are no more questions, we just want to inform everyone that the podcast of this briefing will be available in our website after the call. We now turn the floor over back to Mr. Pangilinan for his closing.

Well, thank you again for joining us this afternoon, and I guess we will not speak with each other until the full year results.

March.

Sometime in March.

March.

So in the meantime, on behalf of all of us, we wish all of you a very Merry Christmas. It's probably a subdued Christmas for the country and for the people. So a little sad, but anyway, those are sincere greetings to all of you. Thank you.

Thank you.

That concludes today's briefing. As always, should you have any further questions or clarifications, please reach out to PLDT Investor Relations. Thanks for your participation. Stay safe.

Thank you.

Thank you. Bye-bye.