PLDT, Inc. · PSE:TEL
PLDT — 9M2012 Earnings Presentation
44 slides from PLDT's earnings presentation, Nov 6, 2012
Slide 1: Investing in the Future: Nine Months 2012 Financial and Operating Results
INVESTING IN THE FUTURE Nine Months 2012 Financial and Operating Results 6 November 2012
Slide 2: PLDT Group: 9M12 vs 9M11 Financial Highlights
PLDT Group: 9M12 vs 9M11 Financial Highlights ( P hP i n bi l l i ons, e xc e pt 9M 2012 % Y-o-Y E BI TD A m a r gi n a nd C or e 9M 2011* Total ( U na udi t e d) EPS) PLD T* D IGITEL Total ( U na udi t e d) Service Revenues** 109.6 16.6 126.2 112.3 12% • Wireless 72.0 15.3 87.3 74.2 18% • Fixed Lin
Slide 3: PLDT Group: Core and Reported Net Income
PLDT Group: Core and Reported Net Income Core Net Income ¾ Core Net Income guidance for 2012 of P37bn (Php in billions) anticipated that the challenging operating conditions that arose in the second half of 2011 would carry into the first half of 2012, and would begin to improve in -2% the second ha
Slide 4: Subscriber Base
Subscriber Base ¾ C Combined bi d cellular ll l subscriber b ib baseb surged d to t 68.6mn 68 6 att the th Cellular Subscribers end of 9M2012, with 4.9mn new subscribers from end 2011 (in millions) Sun Cellular subscriber base crossed the 16mn mark with net adds of about 1.4mn +8% 68.6 Smart sub
Slide 5: PLDT Group: Service Revenues and EBITDA
PLDT Group: Service Revenues and EBITDA ¾ Consolidated service revenues for 9M12 of P126 P126.2bn 2bn were higher by Consolidated Service Revenues* 12% or P14.0bn year-on-year (Php in billions) DIGITEL contributed P16.6bn and accounted for 13% of total PLDT group service revenues Combined Smart,
Slide 6: Service revenues and outlook per segment
Service revenues and outlook per segment ¾ Growth in broadband service revenues remained robust with a 30% Broadband Service Revenues* year-on-year increase to P17.6bn at end September 2012, representing (Php in billions) 14% of total group service revenues Smart Broadband PLDT DSL Smart Mobile Inte
Slide 7: Service revenues and outlook per segment
Service revenues and outlook per segment ¾ For the 9M2012 9M2012, wireless service revenues were up by P13.1bn P13 1bn or Wireless Service Revenues* 18% to P87.3bn compared with 9M2011 (Php in billions) * ¾ As competitive challenges remain in the cellular space, our strategy involves the introductio
Slide 8: Capex Updates: PLDT's Network Advantage
Capex Updates: PLDT’s Network Advantage ¾ Capex for FY12 estimated at P38bn: P19.3bn at 9M12 Two-year accelerated investment program for the network already completed, with total spend in 2011 of P31.2bn and about P38.0bn expected for 2012, inclusive of Digitel capex and net of P8.0bn of capex avo
Slide 9: Updates on Foreign Ownership Issue
Updates on Foreign Ownership Issue ¾ In 2007, Wilson Gamboa filed a petition against several respondents/parties (M. V. Pangilinan, N. L. Nazareno, PSE President, SEC Chairman, Finance Secretary, et al) alleging that the sale of shares of Philippine Telecommunications Investment Corporation (PTIC, t
Slide 10: Updates on Foreign Ownership Issue
Updates on Foreign Ownership Issue ¾ On 9 October 2012, the Supreme Court denied with finality the Motions for Reconsideration ¾ Pursuant to the definition of capital as contained in the June 2011 Supreme Court decision, on 12 October 2012 2012, the PLDT Board approved the issuance to BTF Holdings H
Slide 11: PLDT Group Guidance
PLDT Group Guidance Core Net Income P37.0 billion for 2012 P38.0 billion for 2012 Capex and d decreasing d i for f 2013 onwardsd att below b l 20% off service i revenues Dividend Payout y Ratio: 70% of Core EPS Capital Management + “look back” approach Buyback of up to 2.3 million common shares 11 |
Slide 12: Details
DETAILS 12 | Investing in the future
Slide 13: Broadband
Broadband ¾ G Growth th in i broadband b db d servicei revenues remained i d robust b t with ith a 30% Broadband Service Revenues* year-on-year increase to P17.6bn at end September 2012, (Php in billions) representing 14% of total group service revenues Smart Broadband PLDT DSL Smart Mobile Internet
Slide 14: Wireless
Wireless ¾ At 9M12 9M12, wireless service revenues were up by P13 P13.1bn 1bn or 18% to Wireless Service Revenues* P87.3bn compared with 9M11 (Php in billions) Digitel contributed P15.3bn in wireless service revenues, consisting of * P8.4bn, P5.2bn, and P1.4bn in voice, cellular data and wireless
Slide 15: Fixed Line
Fixed Line Fixed Line Service Revenues* ¾ Fixed line service revenues were higher by P2.0bn 2 0 or 5% % at P45.5bn 4 in 9M12 from P43.5bn in 9M11 (Php in billions) PLDT fixed line service revenues at P43.0bn were P0.5bn or 1% lower year- on-year 9 PLDT data and other network revenues (including re
Slide 16: BPO
BPO BPO Service Revenues (Php in billions) ¾ BPO service revenues, which accounted for 5% of total PLDT group service revenues, grew by 16% or P1.0bn year-on-year to P7.3bn at end September 2012 KPS revenues rose by 16% or P0.7bn to P4.9bn with the peso +13% pp appreciation p partly y muting g the
Slide 17: Meralco
Meralco Energy Sales and Revenues ¾ Meralco’s consolidated service revenues at the end of September 2012 increased by 14% year-on-year to P214.7bn resulting from: (in ‘000 GWh and Php in Billions) Increase in electricity volumes sold by 8%, despite severe weather Revenues disturbances, reflecting
Slide 18: Free Cash Flow and Capex
Free Cash Flow and Capex ¾ FCF for the first nine months of 2012, inclusive of P4.3bn from Free Cash Flow Digitel, amounted to P29.8bn, or P6.7bn lower year-on-year (Php in billions) resulting from: 9M11 9M12 Higher capex by P4.7bn 55.0 (14.5) 54.8 (19.3) Increase in net interest paid by P0.3bn
Slide 19: Debt Profile
Debt Profile Debt Balance ¾ Net debt at end September 2012 amounted to US$2.1bn, (US$ in billions) with net debt/EBITDA of 1.1x Increase in debt balance due to issuance of P8.8bn corporate notes and drawings from term loan facilities to finance capex requirements and maturing obligations Additio
Slide 20: PLDT/Smart/Digitel/Sun Synergy Updates
PLDT/SMART/DIGITEL/SUN SYNERGY UPDATES ¾ Marketing initiatives Wireless: increase price points and usage, improve yields 9 Greater availability of attractive buckets or capped offers to reduce preference for unlimited packages (e. g., TriNet bucket offers that allow calling among Smart, TNT and Su
Slide 21: Recent Developments
Recent Developments ¾ PCEV sold part of its preferred shares in Beacon Electric for P3.6bn Recognition of deferred gain of P2.0bn booked in 2Q12 PCEV still owns 50% of Beacon Electric common and preferred shares ¾ ePLDT PLDT entered t d into i t an agreementt tot sell ll its it 27% stake t k iin
Slide 22: Forward-looking statements
Exceptt for E f historical hi t i l fifinancial i l and d operating ti d data t andd other th iinformation f ti iin respectt off hi historical t i l matters, tt the statements contained herein are “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as a
Slide 23: Appendix
A Appendix di 23 | Investing in the future
Slide 24: Subscriber Data
Subscriber Data 9M12 vs FY11 9M12 vs 9M11 Net adds Sept- 12 Jun- 12 Mar-12 Dec-11 Sep-11 Jun-11 Mar-11 Amount % Amount % 1Q12 2Q12 3Q12 CELLULAR Smart 25,636,712 26,929,737 27,470,678 27,123,622 26,606,008 26,509,537 26,165,500 (1,486,910) -5% (969,296) -4% 347,056 (540,941) (1,293,025) Prepaid 24,9
Slide 25: 9M 2012: Consolidated Financial Highlights
9M 2012: Consolidated Financial Highlights (1) 9M2012 9M2011 Wireless Fixed Line Consolidated Consolidated % Change (1) (1) BPO Others (PhP in millions) SMART DIGITEL Total PLDT DIGITEL Total (Unaudited) (Unaudited) Service Revenues 72,020 , 15,281 , 87,301 , 42,991 , 2,514 , 45,505 , 7,270 , - 126,
Slide 26: Reconciliation of Core and Reported Net Income
Reconciliation of Core and Reported Net Income 9M2012(1) 9M2011 Difference (PhP in billions) Reported net income 28.7 30.6 (1.9) Core net income 28.0 30.6 (2.6) 0.7 - 0.7 Accounted A t d ffor by: b Forex gains, net 2.4 0.1 2.3 Gains (losses) on derivatives (1.3) 0.9 (2.2) Others - (0.4) 0.4 Adjustme
Slide 27: Consolidated Service Revenues
Consolidated Service Revenues (PhP in i billions) billi ) 9M2012(1) 9M2011(2) % Change g Voice 56.3 52.3 8% Data and BPO 69.9 59.9 17% ** 126.2 112.3 12% ((1)) Including Digitel (2) 9M 2011 service revenues have been restated to reflect the change in the presentation of outbound revenues 27 | Invest
Slide 28: Revenues by Segment
Revenues by Segment 9M2012 (2) 9M2011 Wireless Fixed Line Consolidated Consolidated % Change (1) (1) BPO (PhP in millions) SMART DIGITEL Total PLDT DIGITEL Total (Unaudited) (Unaudited) Service Revenues Wireless 72,020 15,281 87,301 Cellular 65,821 13,851 79,672 79,672 68,097 17% Broadband 5,005 1,4
Slide 29: Wireless Net ARPU
Wireless Net ARPU 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Smart Postpaid 1,666 1,627 1,614 1,646 1,557 1,576 1,430 1,480 1,279 1,251 1,262 Smart Prepaid 204 197 181 189 180 179 166 166 155 150 145 Talk 'N N Text 122 123 118 123 113 111 103 109 104 103 95 Red Mobile Prepaid 9 4 5 19 28
Slide 30: Expenses
Expenses 9M2012 9M2011 (1) Wireless Fixed Line Consolidated Consolidated % Change BPO Others (PhP in millions) SMART(1) DIGITEL Total PLDT (1) DIGITEL Total (Unaudited) (Unaudited) Operating expenses Compensation and employee benefits 44,725 725 11,173 173 55,898 898 99,947 947 615 10,562 10 562 44,
Slide 31: Other Income (Expenses)
Other Income (Expenses) 9M2012 9M2011 (1) Wireless Fixed Line Consolidated Consolidated % Change (1) (1) BPO Others (PHP in millions) SMART DIGITEL Total PLDT DIGITEL Total (Unaudited) (Unaudited) Gains (losses) on derivative financial instruments, net (1) (53) (54) (3,397) 2,140 (1,257) 28 - (1,283
Slide 32: EBITDA
EBITDA 9M2012 9M2011 (1) Wireless Fixed Line Consolidated Consolidated % Change BPO Others (PhP in millions) SMART(1) DIGITEL Total PLDT (1) DIGITEL Total (Unaudited) (Unaudited) Income before tax 27,368 , 980 28,348 , 1,420 , 2,381 , 3,801 , 1,029 , 4,144 , 37,322 , 40,326 , -7% Add (deduct): Depre
Slide 33: Historical Consolidated EBITDA Margin (restated)
Historical Consolidated EBITDA Margin (restated) 2009 2010 2011 2012 (2) (3) (3) (3) (PhP in millions) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q (1) Consolidated Gross Service Revenues Fixed line 12,232 12,384 12,816 12,778 12,973 11,616 12,336 12,539 12,021 12,243 12,116 12,939 13,030 12,522 12,
Slide 34: Historical Wireless EBITDA Margin (restated)
Historical Wireless EBITDA Margin (restated) 2009 2010 2011 2012 (2) (3) (3) (3) (PhP in millions) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q (1) Wireless Gross Service Revenues Cellular services 24,596 24,984 23,609 24,956 24,139 24,568 22,996 23,818 23,101 23,150 21,846 25,548 26,540 26,865 26,2
Slide 35: Historical Fixed line EBITDA Margin (restated)
Historical Fixed line EBITDA Margin (restated) 2009 2010 2011 2012 (2) (3) (3) (3) (PhP in millions) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q (1) Fixed Line Gross Service Revenues Local exchange 4,024 3,821 3,894 3,942 3,930 3,839 3,803 3,770 3,862 3,896 3,894 4,082 4,177 4,119 4,092 Internation
Slide 36: Historical BPO EBITDA Margin (restated)
Historical BPO EBITDA Margin (restated) 2009 2010 2011 2012 (PhP in millions) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q (1) BPO Gross Service Revenues Customer relationship management 913 770 791 845 774 752 626 671 670 712 726 759 777 812 826 Knowledge processing solutions 1,232 1,287 1,318 1,37
Slide 37: Core Net Income
Core Net Income 9M2012 9M2011 (1) Wireless Fixed Line Consolidated Consolidated % Change (1) BPO Others (PhP in millions) SMART DIGITEL Total PLDT (1) DIGITEL Total (Unaudited) (Unaudited) R t d nett income Reported i 19 681 19,681 824 20 505 20,505 975 2 323 2,323 3 298 3,298 770 4 141 4,141 28 714
Slide 38: Earnings Per Share
Earnings Per Share 9M2012 9M2011 (Unaudited) (Unaudited) Basic Diluted Basic Diluted Net income (loss) attributable to equity holders of PLDT 28,714 28 714 28,714 28 714 30,618 30 618 30,618 30 618 Dividends on preferred shares (37) (37) (343) (37) Net income for the period attributable to common eq
Slide 39: Cash Flows
Cash Flows 9M2012(1) 9M2011 (Unaudited) Consolidated % Change Wireless Fixed Line BPO Others Consolidated (Unaudited) (PhP in millions) Net cash from operations 35,621 17,713 1,676 (46) 54,822 54,987 - Add(Deduct): Capital expenditures (11,565) (7,404) (325) - (19,294) (14,548) 33% Other investing a
Slide 40: Balance Sheet
Balance Sheet Consolidated (1) (1) September 30, 2012 December 31, 2011 (PhP in millions) (Unaudited) (Audited) Total Assets 402 247 402,247 400 004 400,004 Nominal Value of Total Debt 128,252 119,411 in US$ $3,073 $2,719 Less: Unamortized Debt Discount 1,477 2,136 Total Debt 126,775 117,275 Cash an
Slide 41: Debt Profile
Debt Profile (1) (1) (US$ in millions) 2006 2007 2008 2009 2010 2011 9M2012 Debt Balance 1,756 1,585 1,625 2,210 2,113 2,719 3,073 Cash and short-term investments 514 745 847 908 852 1,061 939 Net Debt 1,242 840 778 1,302 1,261 1,658 2,134 (1) Including Digitel Debt Maturities as of September 30, 20
Slide 42: Interest-bearing Liabilities
Interest-bearing Liabilities September 30, 2012 December 31, (Unaudited) 2011 Change Unamortized (Audited) Carrying Value Face Value (US$ in millions) Debt Discount Face Value Debt PLDT $1,625 $2 $1,627 $1,271 $356 Smart $898 $34 $932 $890 $42 2014 Debt $250 $30 $280 $280 $0 Others $648 $4 $652 $610
Slide 43: Foreign Exchange Risk
Foreign Exchange Risk Forex Impact on Core Income Forex Impact of B/S Revaluation Forex Impact on Derivatives PLDT Group Digitel TOTAL PLDT Groupp Digitel TOTAL Forex sensitivity for every P1 change (in US$ Millions) Forex sensitivity for every P1 change on B/S Revaluation (in US$ Millions) P1 movem
Slide 44: Digitel
DIGITEL For the nine months ended September 30, 2012 Impact at Wireless Fixed Line Conso Digitel Interco In million pesos PLDT REVENUES 15,659 2,514 18,173 (1,190) 16,983 Service 15 281 15,281 22,514 514 17,795 17 795 (1 190) (1,190) 16,605 16 605 Non-Service 378 - 378 - 378 EXPENSES 15,049 2,455 17