PLDT(US:PHI)2024-03-27 00:43Financial Performance - Adjusted EBITDA is monitored by management for each business unit separately, and it is presented as a key performance indicator to assist investors in comparing PLDT's performance with other companies in the technology, media, and telecommunications sector [38]. - Core income for PLDT is defined as net income attributable to equity holders, excluding certain non-recurring items, and is used for resource allocation and performance assessment [39]. - Telco core income is adjusted for specific losses and is a basis for determining dividend payouts to shareholders [40]. - The company reported total revenues of Php210,953 million (approximately US$3,807 million) and a net income attributable to equity holders of Php26,614 million (approximately US$480 million) for the year ended December 31, 2023 [150]. - Total dividends declared for 2023 amount to Php 20,526 million, with a per share dividend of Php 95 [44]. Market Competition - The company faces increased competition in the telecommunications sector, which may impact market share and profitability due to tariff reductions and customer churn [49]. - The mobile telecommunications industry is experiencing intense price competition, particularly in data services, as competitors invest heavily in fiber broadband [50]. - Regulatory changes, such as the removal of the 40% foreign ownership restriction, may lead to increased competition in the telecommunications market [51]. - The amendment to the Public Service Act in 2022 removed the 40% foreign ownership restriction, increasing competition from foreign investors [84]. Technology and Innovation - The company is adopting AI technology, including a smart voice AI solution for payment collections, but faces risks related to accuracy and regulatory compliance [58]. - The telecommunications industry may face increased competition and legal risks due to evolving AI technologies and regulatory frameworks [58]. - PLDT continues to identify new growth areas in the digital space, including fintech and other adjacent businesses [176]. Operational Challenges - The company has significant cash flow uses, including capital expenditures and interest payments, which are not reflected in Adjusted EBITDA [38]. - Limitations in the frequency spectrum available to PLDT Group could negatively impact service quality and customer satisfaction, affecting competitiveness [90]. - The company faces challenges in timely installation and maintenance of telecommunications facilities, which could adversely affect market share and service quality [95]. - Climate change poses risks to PLDT Group's operations, potentially increasing the frequency of natural disasters that could damage infrastructure and disrupt supply chains [102]. - The company’s cybersecurity measures may become less effective over time, increasing the risk of successful cyber attacks that could lead to financial and reputational damage [101]. Financial Risks - Approximately 16% of PLDT Group's total consolidated debts were denominated in U.S. dollars as of December 31, 2023, exposing the company to foreign exchange risks [109]. - A depreciation of the Philippine peso against the U.S. dollar could increase U.S. dollar-denominated debt obligations, capital expenditures, and operating expenses in Philippine peso terms, potentially leading to significant foreign exchange losses [110]. - PLDT's existing debt instruments contain covenants requiring the maintenance of certain financial ratios, which could be negatively impacted by poor operating performance and peso depreciation [111]. - The company may need to dedicate a substantial portion of cash flow to debt payments, reducing availability for working capital and capital expenditures [112]. - If unable to meet debt obligations, PLDT may need to restructure or refinance its debt, seek additional equity capital, or sell assets, which could adversely affect its financial condition [114]. Subscriber and Service Metrics - As of December 31, 2023, the company served 65.3 million users across mobile, fixed line, and data services [144]. - The total mobile subscriber base decreased to 57,827,126 as of December 31, 2023, down from 66,304,761 in 2022, reflecting a market share of approximately 46% [181]. - As of December 31, 2023, approximately 67% of mobile subscribers are active data users, indicating strong demand for mobile data services [171]. - Revenues from mobile data services accounted for 87% of the wireless segment revenues as of December 31, 2023 [171]. - Fixed line business service revenues in 2023 were 88% attributable to fiber, voice, and miscellaneous services, highlighting the growth in fiber services [171]. Investments and Strategic Initiatives - The company secured a Php1.0 billion Green Loan Facility from HSBC Philippines to fund the modernization and expansion of its fiber network [154]. - The company invested Php210 million for a 60% equity interest in Limitless Growth Ventures Inc., aimed at enhancing digitalization efforts within the MVP Group [156]. - The company proposed an investment of approximately Php2,116 million for a 34.9% equity interest in Radius Telecom, Inc. to strengthen its market position [160]. - The company engaged in a sale and leaseback of telecom towers to improve operational efficiency and support the Philippine Department of Information and Communications Technology's goals [166]. - ePLDT's VITRO data centers maintain a 65% market capacity share, catering to various industries including banking and finance, and is expanding to strengthen market leadership [231]. Regulatory and Compliance Issues - Regulatory approvals and licenses are critical for operations, with potential risks of revocation or delays impacting business continuity [67]. - The company is subject to extensive laws and regulations, including service rates and antitrust laws, which could adversely affect financial performance [77]. - PLDT Group is required to maintain a SIM register under the SIM Registration Act, increasing the risk of data breaches and compliance costs related to data privacy laws [87]. - The implementation of House Bill 9021 may require significant operational adjustments for PLDT Group, potentially incurring substantial costs to comply with new service quality monitoring requirements [85]. - Regulatory changes in mobile payment services could increase operational costs and limit the types of products PLDT Group can offer, affecting its competitive position in the market [86]. Workforce and Labor Relations - PLDT's unionized workforce, representing 52% of employees, may lead to increased operating expenses and potential work stoppages [121]. - The company is involved in various legal proceedings that could impact cash flows and financial condition, with potential costs based on estimates developed with legal counsel [128]. - High fraud rates related to device financing and subscriptions could significantly increase operating costs and adversely affect financial results [129].