PLDT(US:PHI)2025-05-15 10:28PART I – FINANCIAL INFORMATION Item 1. Consolidated Financial Statements The report includes unaudited consolidated financial statements for Q1 2025 and audited statements as of December 31, 2024 - The report includes unaudited consolidated financial statements for the three months ended March 31, 2025 and 2024, and audited statements as at December 31, 202418 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's analysis of Q1 2025 financial performance, including revenue, net income, and key indicators Financial Highlights and Key Performance Indicators Q1 2025 highlights: 2% revenue growth, 8% net income decline, 2% EBITDA growth, and stable 52% EBITDA margin Q1 2025 Consolidated Financial Highlights (vs Q1 2024) | Metric | Q1 2025 (million Php) | Q1 2024 (million Php) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | 55,277 | 54,224 | 2% | | Net Income | 9,064 | 9,893 | (8%) | | Core Income | 8,893 | 8,931 | 0% | | Telco Core Income | 8,776 | 9,320 | (6%) | | EBITDA | 27,865 | 27,315 | 2% | | EBITDA Margin | 52% | 52% | 0% | Key Operational Data (as of March 31, 2025 vs March 31, 2024) | Subscriber Type | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Mobile Subscribers | 58,608,463 | 58,962,966 | (1%) | | - Prepaid | 56,300,981 | 56,785,718 | (1%) | | - Postpaid | 2,307,482 | 2,177,248 | 6% | | Broadband Subscribers | 3,945,937 | 3,711,094 | 6% | | - Fixed Line Broadband | 3,507,947 | 3,255,012 | 8% | | - Fixed Wireless Broadband | 437,990 | 456,082 | (4%) | - Net cash from operating activities increased by 3% to Php24,545 million, while payments for property and equipment decreased by 14% to Php16,142 million25 Performance Indicators Non-GAAP performance indicators like EBITDA, Core Income, and Telco Core Income are defined for assessing financial performance - EBITDA: Measured as net income excluding items like depreciation, financing costs, and taxes. It is used by management to assess business unit performance and is a common metric for comparison in the telecommunications sector28 - Core Income: Defined as net income attributable to equity holders, adjusted for non-recurring items such as foreign exchange gains/losses, derivative gains/losses, and asset impairments29 - Telco Core Income: Further refines Core Income by adjusting for the performance of digital platform interests like Maya Innovations Holdings (MIH) and Kayana Solutions. This metric is a key basis for determining shareholder dividend payouts30 Management's Financial Review Reconciliation of Q1 2025 consolidated net income to non-GAAP metrics: EBITDA, Core Income, and Telco Core Income Reconciliation of Net Income to EBITDA (Q1 2025 vs Q1 2024) | (in million Php) | 2025 | 2024 | | :--- | :--- | :--- | | Consolidated net income | 9,064 | 9,893 | | Add: Depreciation and amortization | 13,001 | 11,642 | | Add: Financing costs – net | 4,336 | 3,377 | | Add: Provision for income tax | 2,740 | 3,299 | | Other adjustments | (1,376) | (296) | | Consolidated EBITDA | 27,865 | 27,315 | Reconciliation of Net Income to Core Income and Telco Core Income (Q1 2025) | (in million Php) | 2025 | | :--- | :--- | | Consolidated net income | 9,064 | | Adjustments (FX gains, derivatives, etc.) | (171) | | Consolidated core income | 8,893 | | Adjustments (Share in MIH/Kayana losses) | (117) | | Telco core income | 8,776 | Results of Operations Q1 2025 consolidated revenues grew 2%, but net income fell 8% due to higher expenses and segment declines Segment Performance Summary (Q1 2025 vs Q1 2024) | Segment | Revenues Change | Net Income Change | EBITDA Change | | :--- | :--- | :--- | :--- | | Wireless | (2%) | (24%) | 7% | | Fixed Line | 5% | (24%) | 5% | | Consolidated | 2% | (8%) | 2% | Liquidity and Capital Resources As of March 31, 2025, the company maintains solid liquidity, with increased operating cash flow and stable debt ratios Consolidated Cash Flows (Q1 2025 vs Q1 2024) | Cash Flow Activity (in million Php) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from operating activities | 24,545 | 23,767 | | Net cash used in investing activities | (15,851) | (16,707) | | Net cash used in financing activities | (4,918) | (10,568) | - Total interest-bearing financial liabilities stood at Php283,066 million as of March 31, 2025, a slight 1% increase from year-end 2024113122 - The company declared a regular cash dividend of Php47 per common share in Q1 2025, totaling Php10,155 million129 - PLDT confirms compliance with all debt covenants as of March 31, 2025125 PART II – OTHER INFORMATION Other Information Updates on significant corporate activities, including PGIH's increased stake in Multisys and ongoing legal matters - On April 2, 2025, PLDT's subsidiary PGIH acquired an additional 5% interest in Multisys for Php257.5 million, increasing its total equity interest to 50.74%156 - The report refers to specific notes for updates on key ongoing matters, including the Sale and Leaseback of Telecom Towers (Notes 9 & 10), the payment demand on Dito (Note 26), the DOLE Compliance Order (Note 26), and the petition against the Philippine Competition Commission (Note 11)157 ANNEXES Aging of Accounts Receivable As of March 31, 2025, gross accounts receivable were Php49,413 million, with 48% over 91 days past due Consolidated Accounts Receivable Aging as of March 31, 2025 | Category (in million Php) | Total | Current | 31-60 Days | 61-90 Days | Over 91 Days | | :--- | :--- | :--- | :--- | :--- | :--- | | Corporate subscribers | 21,200 | 7,313 | 3,146 | 973 | 9,768 | | Retail subscribers | 16,715 | 6,261 | 978 | 281 | 9,195 | | Total Gross Receivables | 49,413 | 19,588 | 4,478 | 1,467 | 23,880 | | Less: Allowance for credit losses | 18,051 | | | | | | Total Net Receivables | 31,362 | | | | | Financial Soundness Indicators PLDT's key financial soundness indicators remained stable as of March 31, 2025, with minor improvements in liquidity and debt ratios Key Financial Ratios | Ratio | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Current Ratio | 0.36:1.0 | 0.34:1.0 | | Net Debt to Equity Ratio | 2.34:1.0 | 2.37:1.0 | | Net Debt to EBITDA Ratio | 2.48:1.0 | 2.52:1.0 | | Interest Coverage Ratio | 3.65:1.0 | 3.96:1.0 | | Return on Equity | 27% | 29% | | EBITDA Margin | 52% | 52% | Consolidated Financial Statements Consolidated Statements of Financial Position As of March 31, 2025, total assets were Php626,668 million, total liabilities Php509,872 million, and total equity remained stable Consolidated Balance Sheet Highlights (in million Php) | Account | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | 626,668 | 623,275 | | Property and equipment | 318,342 | 318,069 | | Cash and cash equivalents | 13,759 | 10,011 | | Total Liabilities | 509,872 | 506,540 | | Interest-bearing financial liabilities | 283,066 | 281,586 | | Total Equity | 116,796 | 116,735 | Consolidated Income Statements For Q1 2025, total revenues increased 2% to Php55,277 million, but net income decreased 8% to Php9,064 million Consolidated Income Statement Summary (in million Php) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | 55,277 | 54,224 | | Service revenues | 53,421 | 52,195 | | Total Expenses | 40,549 | 38,621 | | Income Before Income Tax | 11,804 | 13,192 | | Net Income | 9,064 | 9,893 | | Basic EPS (Php) | 41.71 | 45.40 | Consolidated Statements of Cash Flows Q1 2025 saw net cash from operating activities increase 3%, investing activities decrease 5%, and financing activities decrease 53% Consolidated Cash Flow Summary (in million Php) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 24,545 | 23,767 | | Net Cash used in Investing Activities | (15,851) | (16,707) | | - Purchase of property and equipment | (15,534) | (17,980) | | Net Cash used in Financing Activities | (4,918) | (10,568) | | Net Increase (Decrease) in Cash | 3,748 | (2,120) | Notes to Consolidated Financial Statements Note 4. Operating Segment Information The company operates three segments: Wireless, Fixed Line, and Others, with Fixed Line leading Q1 2025 revenue and profit Segment Results for Q1 2025 (in million Php) | Segment | Total Revenues | Net Income / Segment Profit | | :--- | :--- | :--- | | Wireless | 26,117 | 2,249 | | Fixed Line | 33,467 | 7,934 | | Others | 0 | 113 | | Inter-segment Transactions | (4,307) | (1,232) | | Consolidated | 55,277 | 9,064 | Note 9. Property and Equipment This note details PPE composition and movement, with a net book value of Php318,342 million, and updates on telecom tower sales - The net book value of property and equipment was Php318,342 million as of March 31, 2025529 Cumulative Sale of Telecom Towers (as of March 31, 2025) | Metric | Amount | | :--- | :--- | | Number of Towers Sold | 6,726 | | Cash Consideration | Php87,319 million | | Gain on Sale and Leaseback | Php34,172 million | - Remaining telecom towers with a net book value of Php4,547 million are classified as 'Assets held-for-sale'537 Note 11. Investments in Associates and Joint Ventures As of March 31, 2025, investments in associates and joint ventures totaled Php52,854 million, with an update on the PCC legal dispute Carrying Value of Key Investments (as of March 31, 2025) | Investment | Carrying Value (million Php) | | :--- | :--- | | VTI, Bow Arken and Brightshare (JV) | 33,653 | | MediaQuest PDRs (Associate) | 9,186 | | MIH (Maya) (Associate) | 6,875 | - On April 5, 2024, PCEV invested an additional US$15.3 million (Php857 million) in MIH (Maya), increasing its ownership to 37.66%558 - The legal petition against the Philippine Competition Commission (PCC) regarding the 2016 acquisition of SMC's telecom assets remains pending before the Supreme Court575592 Note 20. Interest-bearing Financial Liabilities As of March 31, 2025, total interest-bearing financial liabilities were Php283,066 million, with new Green and Social Loan facilities Total Long-Term Debt (as of March 31, 2025) | Category | Amount (million Php) | | :--- | :--- | | Long-term debt (non-current) | 262,901 | | Long-term debt (current portion) | 20,165 | | Total | 283,066 | - The company secured a Php1 billion Green Loan and a Php4 billion Green Loan in March and May 2024, respectively, to fund its fiber network modernization and expansion681 - A Php2 billion Social Loan was secured in October 2024 to fund network expansion in Geographically Isolated and Disadvantaged Areas (GIDAs)682 - PLDT was in compliance with all of its debt covenants as at March 31, 2025692 Note 26. Provisions and Contingencies This note outlines ongoing legal proceedings, including a DOLE order, DITO dispute, and ETPI arbitration - The Supreme Court affirmed a Court of Appeals decision to remand a DOLE order regarding the regularization of 7,344 contractor workers. The case was sent back to the DOLE Regional Office for further proceedings to determine which workers performing installation, repair, and maintenance services should be regularized. PLDT filed a Motion for Partial Reconsideration, which is pending776783786 - Regarding DITO's complaints to the NTC and PCC, Smart and DITO have executed a memorandum of agreement on bypass activities, and Smart has provided additional interconnection capacity. The matter is still under investigation by the PCC796798 - A long-standing arbitration with Eastern Telecommunications Philippines, Inc. (ETPI) over various claims and counterclaims totaling approximately Php2.9 billion and Php2.8 billion, respectively, remains suspended pending dismissal as part of a broader agreement with Globe774775 Note 27. Financial Assets and Liabilities This note details financial instruments and risk management policies for liquidity, foreign currency, and interest rate risks - The company manages foreign currency risk as a substantial portion of its capital expenditures and debt is foreign currency-denominated. As of March 31, 2025, 14% of total consolidated debt was in U.S. Dollars831835 - After accounting for hedging instruments and U.S. Dollar cash balances, the unhedged portion of consolidated debt was approximately 5% as of March 31, 2025835 - The company manages interest rate risk through a mix of fixed and variable rate debt. As of March 31, 2025, approximately 60% of consolidated debt was at variable rates841848 Maturity Profile of Financial Liabilities (Undiscounted) as of March 31, 2025 | (in million Php) | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt (Principal & Interest) | 383,244 | 16,789 | 93,921 | 73,603 | 198,931 | | Lease obligations | 77,244 | 16,614 | 20,103 | 15,709 | 24,818 | | Trade and other obligations | 135,361 | 133,258 | 276 | 21 | 1,806 | | Total | 595,849 | 166,661 | 114,300 | 89,333 | 225,555 |