PLDT Inc. (“PLDT”) (PSE: TEL) (NYSE: PHI) today announced
its unaudited financial and operating results for the full year 2017
with Consolidated Service Revenues (net of interconnection
costs) totaling P143.5 billion. Though 3% lower than the previous year,
service revenues stabilized in 2017, as the decline in quarterly wireless
revenues moderated in the course of the year. Unlike 2016, when service
revenues declined quarter on quarter, PLDT posted three quarters of
modest sequential increases in 2017, starting in the second.
The Home and Enterprise Business Groups led the way, increasing their
revenues to P33.0 billion and P34.1 billion, respectively, posting growth
rates of 13% and 11%, respectively. Their combined service revenues
accounted for 47% of total consolidated service revenues, surpassing
the 41% contribution of Wireless Consumer Group. Though revenues of
the Wireless Consumer Group went down 11% to P58.9 billion, the decline
levelled off and stabilized as the year progressed.
Consolidated EBITDA of P66.2 billion for 2017 was
higher by P5.0 billion or 8%, year- on-year, as reduced subsidies and
provisions offset lower service revenues, higher cost of services and
manpower reduction program (MRP) expenses. Excluding P1.6 billion in
MRP expenses, EBITDA rose 11% to P67.8 billion. Except for the first
quarter, EBITDA for the remaining quarters of 2017 registered year-on-year
Consolidated EBITDA margin rose to 44% from 39%
in 2016, as the fixed line and wireless businesses enhanced their returns.
Driven primarily by higher EBITDA, Recurring Core Income reached
P22.3 billion, 11% higher than 2016. Including gain from asset sales,
MRP expenses, accelerated depreciation, and EBITDA adjustments, Consolidated
Core Income amounted to P27.7 billion, 1% lower year-on-year.
Reported Net Income for 2017 declined by P6.6 billion
or 33% to P13.4 billion. This was mainly due to non-core capex-related
expenses of P16.7 billion in connection with our transformation initiatives,
including accelerated depreciation and loss due to a swap of network
elements in certain part of the country, resulting from PLDT’s
aggressive network upgrade aimed to achieve dramatic improvements in
Subject to the finalization of the Company’s audited financial
statements for 2017 expected by 27 March 2018, and in line with PLDT’s
dividend policy, 60% of 2017 core earnings of P27.7 billion will be
declared as dividends.
PLDT’s Net Debt and Net Debt to EBITDA
as of end December 2017 stood at US$2.8 billion and 2.10x, respectively.
Gross Debt totaled US$3.5 billion, of which only 8% was unhedged when
available US dollar cash and hedges allocated for debt are taken into
account. 92% of PLDT’s debt are fixed-rate loans. Maturities remain
well spread- out.
PLDT’s credit ratings remain investment-grade.
“Over the past year, we have made significant progress in solidifying
our lead in the Home and Enterprise businesses while stabilizing the
Individual Consumer business"
This is largely enabled by our heavy investments in our fixed and
mobile networks which in turn allows us to strengthen our data and digital
businesses, laying the ground for future growth. Though the trends are
encouraging, much remains to be done to place PLDT on a sustained growth
path,” said Manuel V. Pangilinan, Chairman and
CEO of PLDT Inc. and its wireless subsidiary Smart Communications, Inc.
Data and Digital power growth
Revenues from data, broadband and digital platforms continued to
power the growth of all business units – Home, Enterprise and
Wireless Consumer. Combined, these services grew 11% year-on-year to
P67.0 billion, and, their share of consolidated service revenues rose
from 41% to 47%.
Mobile Internet revenues increased 17% to P20.0 billion, as ownership
of smartphones grew to over 50% of our mobile subscriber base. Home
broadband and corporate data and data center revenues, on the other
hand, each grew by 16% to P20.4 billion and P19.6 billion, respectively
-- much faster than other industry players.
In 2017, data, broadband and digital platforms comprised 63% of Fixed
Line revenues and 36% of Wireless revenues, up from 60% and 31%, respectively,
“The way forward for us is clear: we shall be the trusted digital
partner of individual customers and enterprises alike. We shall deliver
world-class internet connectivity and compelling digital services and
solutions that can help people and companies improve their lives,”
said Ernesto R. Alberto, PLDT and Smart EVP and Chief
Fast-tracking network transformation
PLDT accelerated the transformation of its fixed and mobile networks
in 2017, further advancing its efforts to build the foundation for its
fast emerging digital businesses.
In 2017, PLDT increased the coverage of its fiber-powered fixed broadband
network by 1.2 million homes passed to over 4 million homes passed by
year-end. In the same period, it doubled its fixed broadband capacity
to over one million lines.
In this expansion program, PLDT is deploying both fiber-to-the-home
(FTTH) and hybrid fiber technologies such as VVDSL and G.fast that deliver
fiber-fast speeds over copper lines.
On mobile, Smart Communications more than doubled the number of LTE
base stations on its cellular network to over 8,700 and increased the
number of cell sites equipped with LTE base stations by roughly 60%
to over 4,300. Smart added more 3Gbase stations (up to about 9,850)
and also more cell sites equipped with 3G base stations to about 7,500.
Base stations refer to the cellular radio equipment that run on specific
frequencies such as 700 Mhz, 1800 Mhz, or 2100 Mhz while cell sites
are the towers or structures that house several of these base stations.
For this fast-tracked LTE and 3G roll-out, Smart is heavily using
the radio frequencies acquired from San Miguel Corporation. As of end-2017,
over 2,000 base stations were using these frequencies. That figure is
expected to jump to nearly 9,000 base stations by end-2018 or early
2019. At this point, these frequencies are estimated to be serving about
24 million Smart, Sun and TNT subscribers in different parts of the
As a result of this LTE roll out, Smart has clearly established its
leadership in LTE data speeds and latency, according to a series of
user-based surveys of the wireless coverage research firm OpenSignal
In the latest survey done in the fourth quarter of 2017, which measured
the performance of operators in major Asian markets, the average Smart
LTE download speed across the Philippines was 12.7 Mbps, up 38.5% from
the same period a year ago, and well ahead of its competitor’s
7.5 Mbps. Smart posted faster LTE speeds in all regions of the country.
The OpenSignal survey also showed that Smart LTE speeds ranked 28th,
while its competitor placed 40th out of 43 Asian operators ranked, including
operators from South Korea, Taiwan, Japan and Singapore.
Delivering world-class Internet
In 2018, PLDT is pursuing even more aggressively its network transformation,
not only extending the reach of its fiber-powered fixed and mobile networks,
but also further raising the capacities and resiliency of these systems.
PLDT will double its FTTH and hybrid fiber capacity to over 2.2 million
ports. By 2019, virtually all of PLDT’s 1.2 million copper-based
DSL subscribers will be migrated to fiber-fast internet. Meantime, PLDT
will expand its fiber broadband coverage to 5.1 million homes passed
On mobile, Smart plans to double the number of LTE base stations
to about 17,700 and raise the number of LTE-equipped cell sites to over
6,800. Moreover, Smart is also deploying LTE-Advanced (LTE-A) with carrier
aggregation, which combines the capacity of two up to four frequency
bands, thus delivering world-class data speeds.
Working with Huawei Technologies, Smart has started deploying four-component
(4CC) LTE-A carrier aggregation (which bundles four frequency bands)
first in Boracay, then Marikina City and now Quezon City. Internal tests
show that download speeds, using 4CC-capable handsets, averaged 64 Mbps
while peak speeds reached 240 Mbps.
Smart is also deploying another LTE-A based technology called 4x4
Multiple Input Multiple Output (MIMO) which raises the efficiency of
available radio frequencies by using multiple antennas for sending and
receiving radio signals.
Designed for use in densely populated areas, MIMO has achieved download
speeds of up to 400-500 Mbps on live network tests using MIMO capable
handsets like the Samsung Galaxy S8 and S8+. These LTE-A technologies
are being initially deployed comprehensively in Metro Manila, where
handsets and devices capable of tapping these enhanced services are
most widely available. In order to speed up this transformation, equipment
and facilities previously installed in Metro Manila were swapped with
Underlying this network transformation program is the relentless
expansion of PLDT’s fiber optic cable networks. The footprint
of these networks, which consist largely of PLDT’s domestic backbone
and distribution networks grew 45% from 120,000 kilometers (kms) in
end-2015 to 174,000 kms by end-2017. In 2018, another 33,000 kms of
fiber cable will be installed, bringing the total to about 210,000 kms
by end- 2018.
The total capacity of PLDT’s overseas fiber cable system will
jump 80% to 8.9 Terabits per second (Tbps) by end-2019 from 5.0 Tbps
by end-2017. Capacity will be further boosted to 11.35 Tbps in 2020
when the new Jupiter Cable Systems which will provide another direct
link to Japan and the United States is expected to be completed. This
is vital because the bulk of internet content accessed by Filipinos
still comes from overseas.
Historic Capex Commitment
PLDT is committing resources at historic levels to support its network
In 2017, capital expenditures (capex) amounted to P40.0 billion,
or 26% of consolidated service revenues. About 67% of this amount was
allotted for the mobile network while 33% went to the fixed line network
and business requirements.
For 2018, capex is expected to reach P58.0 billion, with 53% of the
total earmarked for the fixed network business requirements. This revised
allocation reflects PLDT’s more aggressive roll-out of its fiber
broadband service, which also supports the stepped-up deployment of
our mobile network. Increasingly, utilizing fiber to provide high-capacity
links for cellular base stations. Moreover, capex for 2019-2020 is expected
to remain at the same levels as 2018. This would bring total capex for
the five-year period since 2016, when PLDT started its network transformation
program in the earnest, to nearly P260.0 billion.
This elevated capex will also enable PLDT and Smart to overhaul the
IT systems and platforms that support their network management and business
operations. Multi-year agreements with leading global technology companies,
Huawei Technologies and Amdocs, have been signed to install and manage
state-of-the-art IT systems and platforms that will enable PLDT and
Smart to deliver more efficient, relevant and personalized services
to their customers.
Capex for 2018 will be funded by a combination of internally generated
funds, as well as proceeds from the sale of receivables arising from
the sale of our Beacon stake to Metro Pacific Investments Corporation
Serving the digital customer
PLDT’s massive network roll-out has provided an immediate boost
to the performance of the various business units.
For PLDT Home, the 13% growth in its revenues in 2017 was powered
in large part by the 12% growth in subscriptions during that period.
Given the strong demand for high- speed fiber services, market response
to PLDT’s deployment of additional fiber lines was quick and strong –
adding about 431,000 new customers to PLDT Home’s subscriber base.
This growth was distributed in various parts of the country, following
the roll-out of new fiber lines in various regions of the country.
To further improve customer experience of its fiber broadband, PLDT
has introduced its Whole Home WiFi service which utilizes signal enhancing
devices to provide strong data connections everywhere in the home.
Complementing its fiber deployment, PLDT is also tapping Smart’s
expanding LTE network to deliver high speed internet to homes currently
beyond the reach of its landline network. It has introduced Smart Bro
Prepaid LTE Home WiFi with devices equipped to utilize the 700 Mhz band
which provides better indoor coverage. This is designed to serve the
roughly 15 million households that are currently underserved.
Banking on its growing fiber network, PLDT has been addressing the
rising demand for various digital services. For example, PLDT Home introduced
in mid-2017 its Roku- powered TVolution box (which makes video streaming
content from various sources much easier) and by bundling Cignal TV
subscriptions with PLDT Fibr plans.
In December 2017, PLDT Home stepped up its game by introducing its
first set of bundled offers during its Christmas promo. Under these
offers, customers can sign up for two to three services – either
a PLDT Home Fibr plan, a Smart mobile phone subscription and/or a Cignal
TV subscription – with a discount of 10% to 15% off their combined
In yet another indicator of the increasingly converged approach of
its major business units, PLDT launched in February 2018 the Most Valuable
Partner (MVP) Rewards program which provides rewards points to customers
of PLDT, Smart, TNT and Sun for paying their bills on time or putting
load into their prepaid mobile phones.
All the points earned are converted to cash and placed in a virtual
PayMaya prepaid wallet that customers can use to pay for online purchases.
Members can also get their own physical MVP Rewards Visa card that they
can link to their PayMaya wallet, and use to pay when they shop or dine
in 37 million establishments worldwide.
“By pushing convergence further, we are now moving towards
developing a single view of the customer. In that way, we will be able
to serve our customers better by offering them the mix of services that
best suits their needs,” said Oscar A. Reyes, Jr.
PLDT SVP for Consumer Business Market Development.
Meanwhile, though revenues of the Individual Consumer Group declined
year-on-year by 11% to P58.9 billion in 2017, quarter on quarter results
stabilized in the course of the year at slightly under P15.0 billion
per quarter. Similarly, the subscriber count of Smart, TNT and Sun levelled
off at around 58 million in the last three quarters of 2017.
With its LTE and 3G services progressively improving, mobile data
revenues grew 5% year-on-year to P23.5 billion. Moreover, the contribution
of data to total revenue rose quarter on quarter from 35% in the fourth
quarter of 2016 to 42% in the fourth of 2017.
Both OpenSignal and internal service quality tests show that as Smart’s
network transformation program moves forward area by area, data speeds
and latency of its LTE service in those areas clearly and consistently
surpass those of the competition. As a result, its subscriber numbers,
the number of LTE handsets among its customers and data revenues in
those areas all get a boost.
Capitalizing on its superior LTE service, Smart has launched relevant
data packages addressing the growing appetite of customer for data services
such as video on the go.
In mid-2017, for example, Smart introduced Video Prime 99/Video Time
99, a prepaid data pack which featured a 2Gb data allocation and subscriptions
to top streaming sites iFlix and iWant TV. This was followed up in February
2018, when Smart launched its GigaX postpaid plans which offer a 10Gb
data allocation for video streaming on top of enhanced open data allotments
bundled with LTE mobile phones. As it turned out, Smart’s mobile
data traffic nearly doubled in 2017, powered in large part by video
While promoting enhanced data packages, Smart, TNT and Sun also partnered
with various smart phone manufacturers such as Oppo, MyPhone, Samsung,
Vivo and Starmobile to encourage adoption of LTE handsets and help customers
to upgrade their SIMs to LTE-capable SIMs. As a result, the penetration
of LTE handsets in customer base of PLDT’s three wireless brands
doubled in 2017.
Data is the focus as well of Smart’s new roaming services.
In December 2017, Smart launched its RoamFree mobile app which provides
customers free access to 21 useful partner apps like Uber, AirBNB, Google
Maps and TripAdvisor while travelling in 26 popular overseas destinations.
And to provide customers worry-free roaming, Smart launched Data Roaming
Manager, a web portal that lets users keep track of their data usage
while travelling abroad.
“Moving forward in 2018, we continue to level up even more.
We are continuing our aggressive network roll-out to bring world class
internet to more parts of the country. We are developing more compelling
digital services and solutions for both consumer and enterprise customers.
We are overhauling our operations so that we can serve our customers
in a more personalized way, and, do this quickly and efficiently.
“This year, PLDT celebrates its 90th anniversary. For this
milestone, our tagline is: ‘It’s you that counts.’
It’s all about serving each and every customer better,”
“Doing all this will require a massive, concerted and sustained
commitment – not only in terms of capital resources, but also
in management efforts to transform the organization and make it more
agile, innovative and customer-focused. These efforts are clearly the
way forward for PLDT – with or without a new player in the telecoms
industry,” he added.
“In this light, we expect to sustain the positive trend set
in 2017. For 2018, we expect our Recurring Core Income to rise anywhere
between P1.0 to P2.0 billion to about P23.0 to P24.0 billion, on the
back of anticipated growth in service revenues in 2018 by around 4%.
That will take us another step forward on the path to sustained growth
and profitability,” Pangilinan concluded.