PLDT - Q2 2023
August 3, 2023
Transcript
Speaker 8
Okay, good afternoon, thank you for joining us today to discuss the company's financial and operating results for the first half of 2023. A copy of today's presentation is posted on our website. For those who've not been able to do so, you may download the presentation from the Investor Relations section of our website at www.pldt.com. Kindly note that this briefing is being recorded. A podcast of this event will be available on our website after the call. QR codes for the presentation, the MD&A, the financial statements, as well as the podcast, are on the screen and in the confirmation notices emailed to you. For today's presentation, we have with us our Chairman, Mr. Manny Pangilinan; Mr. Alfredo Panlilio, our President and CEO; Mr.
Danny Yu, our Chief Financial Officer and Chief Risk Officer; Attorney Marilyn Aquino, our Corporate Secretary and Chief Legal Counsel; Shailesh Baidwan, President of Maya Philippines and co-founder of Maya Bank, 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.
Alfredo Panlilio (President and CEO)
Thank you, Lisa. Good afternoon, Chairman. Good afternoon, good afternoon, our analyst friends here today, here in the hotel and online. Thank you for being here. Happy to report the first semester performance of PLDT Smart. You know, I just want to start by saying that, I guess all the efforts that we've been doing as a company, very proud to say on this chart that we've reaffirmed our top position for brand value and sustainability, perception value. That's critical because brand is always critical in the way we run business, and trusting... It shows me a big trust in the brand and in the company that, that, that, that we have.
Most valuable brand at $2.6 billion, that's up 2% actually from last year, as done by Brand Finance, and the number 1 highest sustainability perception value with all the sustainability initiatives that we have been doing all this time. Again, I think, core to our business, I'm happy to report that we have been awarded as the. Basically, we are the undisputed fastest integrated network. Both Smart and PLDT were recognized by Ookla. This happened about two weeks ago, three weeks ago, here. They came over here. They did say that fixed broadband has been a leader for five years in this country. That's a feat I think that has not been done by any entity for sure in the Philippines, but I think even globally.
A feat that we achieved was Smart was rewarded with the best mobile network for 3 consecutive semesters, and I think it's also a feat according to Ookla, so very proud of that. As we, as we went through the year, you know, we were able to reinforce even more our core infrastructure. Homes passed now is up to up by 6%. We have 17.2 million homes that we passed, and we continue to obviously expand our fiber footprint up 4% compared to last year. Next page, please. Because of all this, I think it is still a solid performance for the first half. Obviously, we can do better on, on, on revenues, only growing at 1%, but I think we have a healthy bottom line.
We have core PHP 17.6 billion, 3% up versus last year. EBITDA PHP 52.1 billion, which is not only a semester high, but also a quarterly high in terms of EBITDA. We're able to improve also our margin from 52%-53% EBITDA margin. Our pillars remain to be focused on strengthening the businesses, the three pillars, also driving steady growth, individual, trying to simplify strength in key segments and services. I think what has happened in individuals, we're able to reverse the negative trend for individual, and has been showing growth quarter-on-quarter, second quarter higher than the first quarter.
The data revenue as of the first semester is up by 4%, traffic is up 15%. Home continues to lead in the market despite the challenges, up 3% on fixed revenue, which includes all the legacy revenues. If you just take a look at fiber, it's still growing at a double-digit clip at 11%. For enterprise, elevating companies by enabling transformation, and that's the focus for both enterprise and SMEs. Healthy growth, both on data center colocation and cloud, I think we will continue to push this as we speak, as this has been the focus the past few months. We also obviously embed ESG in our company's DNA. We have a lot of initiatives across environment, social, governance initiatives.
For example, in environment, we have an e-waste program where we're disposing off old cell phones with lithium batteries, and I think proper disposal is what we intend to do and to make sure that we're able to do that responsibly. Also with social, a lot of diversity, inclusive advocacies that we cut across. Of course, our PLDT Smart Foundation continues to be active in across pillars of education. Obviously, disaster response always has been key, not only for PSF, but for the entire MVP Group. Special projects, in particular, for example, in this case, Philippine Navy. All the other programs like School in the Bag and the like are actually still going on.
Just recently, next page, please, again, PLDT and the MVP Group was involved in the response to the victims of Typhoon Egay. We sent relief packs. In fact, today, there's a medical mission that's already working in, or has already gone to or is already in Ilocos Norte, Not only Ilocos Norte, but also Bulacan and Pampanga, as these are, you know, a lot of victims of the recent rains.
Just, just to say that, before I pass on the mic to Danny, just to say that, we are pushing to still remain strong at 95, and, we, we, we will plot out, some, some growth initiatives, the next few months to ensure that we become resilient and also remain resilient until, hopefully, we can also, like, you know, we're, we're planning out for 100 years in, in 5 years now. Danny?
Danny Yu (CFO and CRO)
Good afternoon. I'll be presenting the financial and operating highlights for the first semester of 2023. Service revenues for the first semester of 2023 rose by revenues grew by 3%. Fiber revenues, which account for 85% of the total home revenues, rose 11%. The home broadband market remains underpenetrated, with unserved demand more at the lower market segments, thus more sensitive to price and inflation. Home ARPU is respectable at PHP 1,488. Fiber net adds for the first six months of the year stood at 123,000. PLDT's competitive advantages remain to be our superior network, strong brand equity, a portfolio of products at different price points using wired, fixed, and wireless technologies. Next, please.
Data and ICT remain key drivers of our enterprise business, which was up by 2% to PHP 23.2 billion from the same period last year. Corporate data rose 7% from higher fiber, managed IT and iGate revenues. PLDT ICT recorded 13% improvement in revenues, mainly from data center and cloud services. PLDT Global, on the other hand, grew 31% from IPLCs, data center, cross-connect, and carrier hubbing. Opportunities for growth in enterprise will come from hyperscale data center business and increased focus on digital transformation by corporates, SMEs, and government. Next page, please. The capacity utilization of our existing 10 data centers stands at 71% versus practical capacity of 80%. Our 11th data center in Santa Rosa, Laguna, is expected to go live in the first semester of next year. Next.
Revenues for our individual business remain stable year-on-year, with the second quarter registering a 3% rise versus the first quarter. This was supported by a 2% increase in prepaid and a 7% increase in postpaid. Mobile data revenues were higher by 4% at PHP 34.5 billion year-on-year, with active data users rising by 2%. Compared with the full year 2022, data usage per sub and data traffic continued to register improvements of 14% and 15%, respectively. After the deadline for SIM Registration on July 25 and the 5-day extension, 52.5 million Smart and TNT subscribers had registered, representing about 99% of our active subscriber base and representing about 96% of revenues.
To make up for the potential revenue shortfall, we will accelerate our efforts to optimize revenues and continue to make available great value promo offers, supported by network expansion and superior customer experience. We expect the positive momentum in the first half to be sustained in the second half of the year. In the first half of 2023, 83% of consolidated service revenues were from data and broadband. By service type, mobile data grew 2% year-on-year, while home broadband and corporate data rose by 5% and 7% respectively. ICT revenues were 13% higher, which included an 11% rise in data service revenues. Consolidated EBITDA for the first semester hit an all-time high of PHP 52.1 billion, up 3% or PHP 1.6 billion compared with the same period last year.
This was a result of the PHP 900 million increase in revenues and a PHP 800 million reduction in OpEx. Telco core for the first six months of the year rose 3% to PHP 17.6 billion from last year. Higher EBITDA and lower depreciation fully offset increases in financing costs and income tax provision. On reported basis, PLDT income rose 10% to PHP 18.6 billion, higher by PHP 1.1 billion year-on-year. This was mainly from the gain of tower sales, Forex and derivative gains, partly offset by MRP expenses. Last year, the company recorded a PHP 7.8 billion gain from prescription of preferred shares redemption liability, MRP expenses of PHP 4.6 billion. Note that our share in Voyager losses stood at PHP 1.2 billion, lower than last year's PHP 1.6 billion. Next.
Today, the board of directors approved the payout of an interim cash dividend of PHP 49 per share, representing a 60% payout of all of our first half telco core income per share of PHP 81. Record date is August 17, with a payout date set for September 1. PLDT's balance sheet remains strong, with net debt-to-EBITDA of 2.48x as of June. We expect to reduce with the receipt of tower sales proceeds in the second half of the year. Gross debt amounted to PHP 270.3 billion, of which 15% are dollar-denominated and 5% unhedged. Interest costs for the first semester stood at 4.32%, while the average life of debt is 6.7 years.
Total CapEx for the first semester amounted to PHP 40.8 billion, consisting of network and IT CapEx of PHP 34 billion and business CapEx of PHP 4.2 billion. Included in the CapEx spend are investment in capacity to drive revenue growth and support continuing rise in network traffic, as well as the construction of our 11th data center, among other projects. In line with our objective of bringing down CapEx and aiming for positive free cash flow, CapEx intensity for the first 6 months of 2023 has moderated to 41% from last year's 48%. In addition, the CapEx of PHP 40.8 billion is PHP 11.3 billion lower than EBITDA for the period of PHP 52.1 billion. The next page shows the usual network highlights.
On the fixed network, we passed 17.2 million homes and cover 18,000 barangays, representing 43% of the total barangays in the Philippines. Total fiber ports stood at 6.1 million, excluding VDSL of around 1 million. Utilization of these ports remain high as we carefully rationalize the rollout of new ports. PLDT's total fiber footprint remains unparalleled, with a total of over 1.1 million kilometers. The population coverage of our 3G, 4G, 5G wireless network stands at 97%. About 83% of the total handsets on the network are LTE. The last page shows the number of unique 5G devices and 5G traffic increasing from end of 2022. As part of our network optimization to realize operational CapEx and spectrum efficiencies, we reduced the number of our 5G base stations from the end of 2022.
Nevertheless, 5G speeds remain faster than the competition based on Ookla speed tests. I will now turn you over to our chairman for the guidance.
Shailesh Baidwan (President)
Thank you, Danny. Good afternoon, everyone. We launched Maya Bank about 12 months back and put it at the heart of our payment ecosystem, and we've had fantastic response to the launch of the bank. I'll share some of the statistics on that, along with, of course, recognition that we have got amongst not just the peers in Philippines, but globally. The launch of Maya Bank and deepening of financial services has, of course, helped us in the consumer business, where by virtue of having a single unified app, we are seeing the performance in terms of customers using us for multiple use cases, and the app continues to be rated the best finance app. On the other side of the payments, where we power enterprises to accept Visa, Mastercard, BancNet, QRPH, that business continues to grow in strength day by day.
Today, we process more than 50% of all Visa, Mastercard, QRPH transactions in the Philippines. On the next slide, as I mentioned, our plan always was to launch an all-in-one digital banking solution, whether you're a consumer or whether you're an SME. On the consumer side of the house, we've already introduced saving products like the personal goals and Maya Saving, high engagement banking. We launched Maya Credit. We will be introducing our Buy Now, Pay Later, which is already in test mode. On the SME side, I'll talk in a minute, where on the back of providing, enabling them to accept payments from all kinds of digital means, we are now adding on other services to allow them to settle that money into a business deposit, and on the back of that, provide working capital loans.
Of course, all of this underpinned by a payment network. On the next slide, if I can just give some color on the digital banking progress that we have made at Maya. The numbers as of first half, we have over 2.3 million depositors who have placed PHP 25 billion worth of deposit with us, and we've been able to disperse over PHP 10 billion worth of loans to our customers. If you look at the statistics as published by the BSP as of end of first quarter, as of end March, the charts below, the green is Maya's share as a percentage of the total share amongst the 6 digital banks. I share 61% of total accounts, 71% of the total depositors, and 46% of the balances.
Of course, we were the last one to receive the digital bank, and the pretty much first one out of the door. This pie is expanding rapidly as the other banks continue to grow and launch new products. Our push, of course, will continue to make sure we keep a leadership position in this space with new innovative products. As I mentioned on the consumer side of the house, that was our first port of call, where we're off to the races by providing services. Our next area where we are pushing, on the next slide, please, is on the SME side of the house. We've launched a bundle for this extremely large and important segment, and deeply underserved segment in the Philippines, our 1-2-3 Grow bundle.
What that allows you is to accept all forms of payments, so you can digitize your payments, which is number 1. On the back of that, you can connect that to your Maya business deposit account, where you earn interest rate. You can pay salaries of your employees, you can pay your suppliers through that bank account, and as we see the transactions at your end, over a course of 90 days, we can start lending you working capital on the back of that. This is our next thrust area, even as we made good progress on the consumer side and continue to push, our next area port of call is really growing our SME business. With that, I will hand you over to the chairman on the guidance.
Manuel V. Pangilinan (Chairman)
I guess this is the outlook, I'll just read through this. In terms of services, revenue growth, the outlook is low double single digit growth for the full year. EBITDA is quite similar, low single digit growth for the full year. Telco core is a range of PHP 33.5 billion-PHP 34 billion, anticipated for the full year. CapEx between PHP 80 billion-PHP 85 billion. Let's focus on deleveraging. I think you saw the net debt-to-EBITDA ratio as of June 30th being 2.48. We should anticipate that that should drop to around 2.3 by year-end, in part because of healthier EBITDA for the year and proceeds from the tower sales for balance of the year. Thank you.
Speaker 8
We're now ready to take your questions. For those online, you may type your questions in the Q&A box in the upper right side of the screen. You may also click the Raise Hand option and wait for me to call your name before you unmute your microphone. You may also send your questions via email to [email protected]. Don't forget to indicate your name and company name, so we can get back to you for any additional information you may need. Allow me to take questions from the floor first, before we go to those online. Anyone? Just raise your hand. No questions. Let's go to the questions that we received online. There's a question from CLSA, Derek. There are three questions, so we'll start with the first one.
What pulled down the growth in enterprise revenues when ICT revenues rose 13% year-over-year? I guess that question goes out to Mitch.
Thank you, Melissa. Our we actually grew 13% in the first half, but that was pulled down by the decline of legacy services, like our voice services and discontinued services. Like, for example, the Department of Education load that we provide to all the teachers nationwide, and due to the face-to-face learning, they stop already the service. All in all, we still grew by PHP 600 million in the first half, bringing our revenues to PHP 23.2 billion.
The next question from Derek is: Can you give us updates on the Sky Cable acquisition? Attorney Mapa.
Shailesh Baidwan (President)
We're still awaiting the approval of the PCC for the transaction, so I think there's a scheduled meeting sometime next week, so that we can settle other any outstanding issues with the PCC. We've submitted a lot of documents that they requested. We'll... That's the only thing basically that's outstanding, I believe, at this point in time.
Speaker 8
The next question and the last question from Derek: For Maya, the loan book has tripled year to date. What are the NIMs like now, and is there a new timeline for profitability?
Shailesh Baidwan (President)
Sorry, what was the first part, Melissa?
Speaker 8
For Maya, the loan book has more than tripled year to date. What are the NIMs like now, and is there a new timeline for profitability? The NIMs?
Shailesh Baidwan (President)
Yeah. At this stage, you know, we are very pleased with the way the loan book is performing. As you know, this was first, we started with our existing customers, for whom we had rich data on their transaction history and using our internally developed AI credit scoring models. We've been dispersing them loans, and we're seeing over 80% of them coming back month on month for repeat.... The NIMs, I won't be able to share the exact numbers, but the extremely low and factor margins are very, very healthy on the loan book. The idea is to keep expanding and adding newer products. Our first product is a short-term line of credit. We are adding now on top of that, installment loans and expanding to other segments like the SME.
As regards the profitability, absolutely, the whole plan of introducing products like the loans products, these are high margin products. They help us to deepen the customer relationship. We see that the usage of the loan customer is not just on the loan side, but then they use us for all the payments and other use cases. We make a lot more ARPU per customer once they start taking loans from us. The idea is, as we expand the loan book, to help us create higher margin products to push towards profitability. Already all our businesses are segment EBITDA positive. Now, our push is towards group EBITDA profitability, which we are aiming for the second half of 2024.
Speaker 8
Any questions from the floor before we may take more from the online participants? If there are none, the next set of questions are from Rainier Yu of Abacus Securities. Were there any reversals in asset impairment in the second quarter, and what is the nature of it?
Danny Yu (CFO and CRO)
There's none.
Speaker 8
The second question: Given the slight sequential decline in quarter two service revenues, where do you expect the bottom line growth to come from moving forward? Given the slight sequential decline in second quarter service revenues, where do you expect bottom line growth to come from moving forward?
Alfredo Panlilio (President and CEO)
Well, I think, the targets really for us is higher in the second half, as we expect a lot of the long cycle contracts, for example, or contracts with Enterprise, we expect that to happen in the second half. We're also seeing positive trend in wireless that has grown from a first quarter to second quarter by 3%. We could think we are, I believe that will, that growth will continue in the second half. I think, for home, showing 11% growth in fiber, that was remain to be the focus on revenues for home.
Just a bit of catch up for home on installation as we are able to roll out more ports in Greenfield, and that's also supposed to happen in the second half.
Speaker 8
There's a, there's a raised hand from JP of JP Morgan. You may unmute your mic.
Speaker 4
Am I audible?
Speaker 8
Hi.
Speaker 4
Hi, am I audible?
Speaker 8
Yeah, we can hear you.
Speaker 4
My first question is on the increase in finance costs year on year of around 20%. What is really driving this?
Danny Yu (CFO and CRO)
Actually, on the accretion of lease liabilities arising from our sales.
Speaker 4
Okay, got it. The other thing is, are there any one-off costs that are impacting the EBITDA? Also if you could share the accelerated depreciation that's recorded in second quarter.
Speaker 8
Could you repeat your question? You were saying, was there any one-off costs impacting EBITDA after that?
Speaker 4
Yeah, the second part was, is there any accelerated depreciation that is recorded in the second quarter?
Danny Yu (CFO and CRO)
For the second quarter, there's none. There's no accelerated depreciation for the second quarter. What was your first question again? Sorry, I didn't get it.
Speaker 8
Any one-off?
Speaker 4
Yeah.
Danny Yu (CFO and CRO)
Well, the, the only non-recurring items I think I mentioned earlier is the gain on sale of Stratosphere, that's around PHP 3 billion, then, partly offset by the MRP cost of around PHP 1.8 billion. There was also a gain on Forex hedging and derivatives of around PHP 1.2 billion. That's for the first semester.
Speaker 4
Okay, would the gain on sale of Stratosphere impact the EBITDA?
Danny Yu (CFO and CRO)
Yes, in a sense that, with Stratosphere, there will be a reduction in depreciation, right? There's also an increase in financing costs arising from the accretion of these liabilities. Is that your question?
Speaker 4
No, I actually meant if anything that is, impacting the operating expenses.
Speaker 8
Whether Stratosphere impacts operating expenses, the sale of towers impacts operating expenses. Is that your question?
Speaker 4
Yes.
Danny Yu (CFO and CRO)
Yeah.
Speaker 8
Do you have any other follow-up questions?
Speaker 4
No, that's it. Thank you.
Speaker 8
Thank you. Hussaini, you have your hand raised.
Shailesh Baidwan (President)
Yeah. Okay, hi, good afternoon, and thanks for the call. Thanks for the opportunity. Several questions from me. First is on guidance. Now, as the revenue-- Sorry, the EBITDA growth guidance is lowered from mid to low single digit. Just wanted to understand what is driving then the lift in, core telco, you know, net income guidance?
Speaker 5
The second question is on the end, on the mobile side. I see that the guidance for the mobile in the second half is, or the outlook in second half is better than the first half. What is driving that? Are we seeing any price increase efforts in the market? How are your competitors, especially the new player, responding to that? On the enterprise side, it's, I read in the press release, PLDT is going for the, going for the 12th data center. Just wanted to understand that, are we already seeing customer traction for the 11th data center? Are there any plans to monetize data center in the coming years? Thank you.
Speaker 8
The first question's on the EBIT guidance from mid to low.
Danny Yu (CFO and CRO)
We're, we're expecting better revenues in the second semester, combined with, reduction of, operating expenses. That will drive the EBITDA for the full year of 2023.
Speaker 8
Francis, on the mobile, the second question is the, the second half outlook looking better than what it was in the first?
Okay. For the second, second half, there are a few factors that we're looking at. That's why we're more optimistic. The first one, during the first half, because of SIM Registration, we have seen our churn rates reduce by around as much as 35%, so we expect that to continue in the second half, second semester. We've also seen our ARPU grow by at least 7.5%, also because we're getting more quality subscribers because of SIM Registration. We did a lot of revenue optimization initiatives to maximize the revenue of our subscribers. We expect that to continue in the second semester. Third point, we're going to further invest on and improving our network experience. That's going to happen, that's assuming in the second semester. We expect some revenue definitely to come from that one.
Lastly, I think there's an opportunity now to further drive activation, because not only did we lose or we have unregistered subs, more so from our competition. There's a big sea of remnant unregistered subs in the next few months. Finally, if I may add, from a macro perspective, the inflation is also the outlook. The forecast of inflation is much better as compared to the same period last year, and even better than the first semester. Those are the key pieces why we're more confident in the second half.
Speaker 5
Okay, thanks. Thanks, Francis. Maybe if I can just have one follow-up over here. Based on all the points you enumerated, is the growth in second half will be driven by market share, or do you are of the view that the overall industry will grow at a healthy pace?
Speaker 8
I think a lot of it will be driven by maximizing the revenue per subscriber from our end. Because of SIM Registration, I think driving, stealing sub share, will be more challenging from both parties, from both players. I think the key to driving the further growth-- Well, let's say we're not gonna steal share, because I guess I think that's where the network experience would come in. At the end of the day, consumers choose the better telco, the better network experience. I think a huge part of the growth now, unlike before, where we rely a lot on driving activation, would be driving retention and driving the ARPU of our current subscribers.
Husseini, are you okay with that? We'll go to the data center question.
Speaker 5
Yeah. Yeah, sure. This is very helpful. Yeah.
Speaker 8
Thank you.
Thank you.
Hi, Husseini, thank you for the question. With regards to data center 11, which is the 1st true hyperscaler data center in the country, we are on schedule, we're on track. We expect customers to be able to move in by the 1st quarter, with the full facility readiness by the 2nd quarter of 2024. There's been a lot of interest. We've actually entertained some customers to come in and do a due diligence already on the site. And we are entertaining these as we speak.
With regards to data center 12, you know, we, we want to build ahead of demand, and we're in the process now of going through a very rigid site selection process, to ensure that the 12th data center that we're planning to build fits all of the requirements for both hyperscalers and enterprise customers that we intend to target. Thank you.
There was a question on the monetization of our data center.
Alfredo Panlilio (President and CEO)
Yeah, just, just... I, I guess I can, I can take that. As you said, on, on the data center, when you say, in terms of monetization of all the data center, we are exploring, looking for a partner, to, to be, you know, to, to, to, to bring in into PLDT data center business only. Maybe three, three factors. One is, we believe if we can bring a partner, we can actually drive top line even more, if we can be part of the platform of this partner that, that we're looking at. Second, is to really improve also operations in terms of, you know, they're, they're more used to, operating hyperscaler data centers, and that's something we can learn from, be more efficient, be more cost-effective. And lastly, of course, capital.
As we continue to build out 12, or 12, and maybe in the future, 13 and 14. That's something that I think we, we are able-- you know, we want to have a partner come in and, and address those 3, those 3 factors for us.
Speaker 5
Sure, thanks. I, I also have more questions, and I'll get back to you. Thank you very much.
Alfredo Panlilio (President and CEO)
Thank you.
Speaker 8
Thanks, Hussaini. Are there any questions from people who are here? There's a hand raised.
Speaker 7
Hi, I'm Zorin from Securities Bank. Do you expect any one-offs in the third quarter regarding, this typhoon or this weather? That's all from me.
Speaker 8
One-offs due to the typhoon?
Alfredo Panlilio (President and CEO)
We actually don't see any yet. I don't think it's gonna be as bad as Odette last year, so there might be a few areas affected, but I think restoration is not as difficult as the one in Odette. Jeremiah, do you want to add something?
Speaker 8
Just, just to add to that, Al, Al is actually spot on in terms of the number of households that have been impacted. Today, we currently have about 16,000 households that we're still in the middle of actually restoring services to. When you look at the size and the scale of that versus Odette or other calamities that we've had in the past, it's significantly lower. This is something that we will do as a matter of, I guess, a, a regular operation. We don't necessarily see any large one-off costs associated with it.
Danny Yu (CFO and CRO)
I just want to clarify something, though, because earlier there was apparently a question whether there was or there are one-offs items on the EBITDA. My answer is no, there is none, because any one-off or non-recurring gain is shown after Telco core income, before reported net income. Thank you.
Speaker 8
Any other questions on the floor? Please. Mr. Mike in the middle. Thank you.
Speaker 6
Hi, Steven here from China Bank Securities. I just wanted to ask if you could provide more color on the lower depreciation charges for the first half. For my second question, is PLDT planning to venture into prepaid fiber, similar to what competitor has been doing? Thank you.
Speaker 8
Why was there lower depreciation in the first half?
Danny Yu (CFO and CRO)
Last year, we had an accelerated depreciation of certain assets, such as, like, 3G, VDSL, transport equipment. About PHP 51 billion were written off in 2022, so that had an impact on our depreciation this year.
Speaker 8
The prepaid fiber.
Prepaid. Sure. Just in terms of prepaid fiber, so we are looking at all of our options, and prepaid fiber includes one of them when it comes down to our fiber monetization strategy. As you know, we actually have a slightly different strategy to what our competition is doing. We currently sit at about the 60% port utilization level, very, very different to what our competition is doing, much significantly lower. So one of the things we're doing in looking at prepaid is actually being very, very targeted in our approach to ensure that we're using the prepaid offering as something for to better utilize in a specific area. To ensure that we don't necessarily drive further commoditization of the sector, and that we are able to actually extract as much value from the existing assets we've already put out there.
Thanks, Jeremiah. Any other questions on the floor? We'll entertain questions that were emailed. This one is from Arthur Pineda of Citi. What is driving the reduction in revenue and EBITDA guidance for the year? I guess it was similar to what Hussaini asked, that the initial guidance for the year set out at mid levels, and then our updated guidance is on low single digit.
Alfredo Panlilio (President and CEO)
Yeah, the guidance for growth of revenue and EBITDA is similar to the first semester. Isn't it?
Danny Yu (CFO and CRO)
The bottom line is higher.
Speaker 8
The second question from Arthur: Fiber broadband net adds remain relatively soft. How do you see this as changing into the second half? Are you seeing your competitors gain from prepaid fiber?
Okay. thanks for the question, it was Arthur, I think it was, right?
Yes, it was.
Our focus in the first half has really been around sweating our assets. We have 6.1 million ports, and we've been very much focused in monetizing as much of that as we possibly can. That's seen us take two approaches. Number one is switching. Really looking at how do we, you know, have compelling switching plans for our customers so that they, you know, move over from our competition. The second one is also looking at prepaid fiber. We are looking at prepaid fiber as an alternative and a way for us to be able to help drive, you know, improvement in net adds moving forward. In terms of, are we seeing any impact from competition with regards to prepaid fiber?
Competition has also been very, very selective with their prepaid fiber offering. It's not something that they've been offering, nationally. From what we've seen on the ground, they've been very, very selective in the areas that they do offer prepaid as well, and they've been very, very targeted.
Manuel V. Pangilinan (Chairman)
... prominently targeted at areas where they have capacity. They have, admittedly, they have actually a lot more capacity than PLDT, because they're currently sitting on average about 20%, and we are sitting at about the 60% level. Whilst we will be venturing into the prepaid space, we are just looking very selectively at these particular areas.
Speaker 8
Thank you. The next question from Arthur: Voyager's loss has narrowed further quarter and quarter. I guess, it's similar to the earlier question. What are your expectations on the timing for profitability, and what milestones need to be achieved?
Shailesh Baidwan (President)
As I mentioned, all the businesses are now segment EBITDA positive, so we are now trying to make sure that the whole company is at EBITDA positive, which, as I mentioned, the second half of 2024. We will get there as we continue to launch and scale up new products with high margin, especially products like lending, as we expand into other segments. At this stage, the loan book is growing, but, you know, as we can see, the deposits have grown very fast. The good news is these customers are transacting, so they're giving us a lot of rich data on them, which helps us in our credit scoring model, in turn, to start lending to them. That's one part.
The second is by helping to grow the deposit base, it continues to provide us with a very healthy cost of fund base, on which as we grow the lending book over the period of the next 12 months, that helps us the balance sheet that we need. That is the plan in the second half of 2024.
Speaker 8
Thanks, SP. His final question: How should we look at the manpower-related charges, reduction charges into the second half? This has actually declined quarter and quarter. Is this done and dusted, or are there still more in the second half of 2023?
Alfredo Panlilio (President and CEO)
I'll have Gina, our head of people group.
Speaker 8
We don't expect for the second for the balance of year, any additional. What we're doing is really focusing on the upskilling and reskilling of our workforce, primarily in areas that are relevant now, and very much aligned to the business needs. So far, if ever we have, it will not be as significant as previous year.
Thanks, CPO. There's one on the queue from Jojo Gonzalez of Pep. Any further update to the CapEx overrun? Has the total sum been pared down further from what was indicated in the first quarter? How much of the first half CapEx is from the overrun?
What we're going to do is to just announce to you when everything has been completed, because we need to reflect in our financials, any additional settlements that we enter into. Until then, we prefer not to say anything more.
Thanks, Attorney Aquino. Any last questions from the floor? There are none on the queue. Last chance. If there are no further questions, we will now turn the floor back to Mr. Pangilinan for his closing remarks.
Manuel V. Pangilinan (Chairman)
Thank you. Thank you for joining us for this briefing. we'd like to invite you for the FIBA World Cup, starting August 25. Am I correct? First game, Gilas, is against the Dominican Republic at 8:00 P.M. Broadcast live, nationwide and globally. Look forward to one or two Philippine victories, we hope. Thank you, and we look forward to seeing you again on the third quarter briefing.
Speaker 8
That concludes today's briefing. As always, should you have any further questions or clarifications, please reach out to PLDT Investor Relations. Thank you for your participation. Stay safe.