PLDT - Earnings Call - Q4 2024

Transcript

Jinggay Nograles (Head of Investor Relations)

Good afternoon, everybody. Thank you for joining us today. I'm Jinggay Nograles. I'm the Head of Investor Relations here at PLDT, and it's my pleasure to welcome you all to our full-year financial and operating results briefing. Joining us today to share insights into PLDT's performance and strategic direction are Butch Jimenez. He is the PLDT Chief Operating Officer. Joining us right now is Smart Communications Chief Operating Officer, Boy Martirez. We also have here PLDT Chief Financial Officer, Mr. Danny Yu, and our Chairman and CEO, Manuel V. Pangilinan, will be joining us later during the presentation. Before we begin, I'd like to remind everyone that we will have a Q&A session after the presentations. For those who are joining us virtually, you may submit your questions via the MS Teams chat in the Q&A panel.

To start, I'd like to invite our Chief Financial Officer, Mr. Danny Yu, to walk us through PLDT's financial performance for 2024. Danny.

Danny Yu (CFO)

Good afternoon, everyone, and thank you for joining us today. Allow me to walk you through PLDT's 2024 financial and operating performance. Amid a dynamic and competitive landscape, we delivered consistent top-line growth and stable margins. Let's start with the financial highlights. Our service revenue grew 2% year-on-year to PHP 194.7 billion, driven by fiber, mobile data, and enterprise ICT. On a gross basis, revenue rose by 3% to PHP 208.4 billion. EBITDA expanded by 4% to PHP 108.5 billion on the back of revenue expansion and operating efficiency. Our EBITDA margin remained strong at 52%, underscoring our ability to sustain profitability even as we continue investing in network leadership and innovation. Telco core income grew by 2% to PHP 35.1 billion, reinforcing earnings stability and financial resilience. Our focus remains on expanding revenues, managing costs, and improving cash flow generation in 2025.

PLDT's service revenue growth reflects consistent demand across key business segments: mobile data, fiber, and corporate data and ICT, which now account for 88% of total revenues, continued to expand, offsetting legacy revenue declines. Excluding legacy services, total revenues grew by 5%, emphasizing our shift towards data-driven and digital services. Moreover, our growing segments more than offset the drags from legacy services, with individual mobile data up by 5%, home fiber by 6%, and corporate data and ICT services by 5%. We also expect legacy revenues' drag to moderate, supported by customer migration to these segments. Total revenues for individual segments rose by 2% to PHP 83.5 billion, led by mobile data, which rose by 5% year-on-year and a strong 7% in the fourth quarter. Mobile data now accounts for 89% of segment revenues.

Key metrics have also increased: blended RPU move up 9%, average monthly mobile data usage per user grew 5%, while active data user reached 41.3 million. To stay ahead in a competitive market, we are driving higher data monetization, deepening customer engagement, and delivering an enhanced user experience. We are leveraging on 5G expansion to optimize revenue generation and increase RPU, continued expansion and upgrades for our network and IT infra, as well as AI-driven marketing strategies. With our extensive network and digital innovations, we are well-positioned to capture further opportunities in the mobile data space. PLDT Home continues to strengthen its leadership, with total home revenues hitting PHP 60.7 billion. Fiber-only revenues grew PHP 3 billion, or 6% to PHP 56 billion, and now accounts for 92% of the segment revenues. We continue to set the industry benchmark with a churn rate of just 1.7%, reflecting strong customer loyalty.

Meanwhile, PLDT's RPU of PHP 1,488 remains at a premium to the rest of the industry. A key driver of our success has been the higher adoption of premium plans, with over 75% of new activations opting for plans above PHP 1,299. Helping this is our ability to differentiate ourselves from competition through our bundled plans, which account for about 40% of new activations. We're extending our fiber reach strategically, deploying additional ports while exploring new growth areas, including prepaid fiber offerings in select locations. In 2024, we expanded our reach to 2,500 additional barangays. Our strategy remained clear: strengthen retention through improved customer experience, maintain RPU, and expand our fiber footprint. Enterprise revenues grew 3% to PHP 48.4 billion, with ICT services continuing to be the fastest-growing segment, up 15% to PHP 35 billion.

Key growth areas include managed IT services, which grew 48%, cloud solutions up 30%, and data center colocation, which rose by 22%. In addition, Vitro continues to lead the industry, with Vitro Santa Rosa as the country's first and only AI-ready data center. Recently energized, it has already secured anchor tenants. Our focus is to expand our enterprise digital ecosystem, accelerate cloud adoption, and reinforce PLDT's leadership in the ICT space. PLDT delivered PHP 108.5 billion in EBITDA, a 4% increase year-on-year, demonstrating steady revenue growth alongside effective cost management. OPEX, including subsidy and provisions, declined by PHP 1 billion to PHP 86.1 billion, reinforcing operational efficiencies. Our EBITDA margin remains strong at 52%. PLDT Telco core income increased by 2% to PHP 35.1 billion. Core income expanded 5% to PHP 34.2 billion, supported by lower losses from Maya Innovations, which posted its first profitable month in December 2024.

Maya Bank, on the other hand, has been profitable since September 2024. This demonstrates the positive trajectory of our fintech investments and their growing potential in contributing to our bottom line. Reported income surged 21% to PHP 32.3 billion, up PHP 5.7 billion year-on-year, owing to higher core income, derivative gains, and lower asset impairment. Tower sales continued, with 356 additional sites sold in 2024 and additional towers earmarked for sale in 2025, reinforcing our asset monetization strategy. We continue to optimize investments, steadily reducing CAPEX intensity while maintaining network improvement. 2024 CAPEX totaled PHP 78.2 billion, with CAPEX intensity further declining to 38%.

Our CapEx guidance for 2025 is between PHP 68 billion and PHP 73 billion, with investments in the following key priority areas: new cell sites plus LTE and 5G upgrade, home fiber ports, increased focus on AI and network, AI-ready data center, submarine cable investment, upgrades, and modernization of network and IT to improve our quality of service. While we work on decreasing CapEx, we are committed to deliver greater outcomes through strengthened negotiation and efficient use of capital. PLDT remains in a strong financial position. Our net debt to EBITDA currently stands at 2.52 times, and we're working to bring this level down to 2.0 times in the midterm. In addition, we strive to deliver positive free cash flow by next year. Debt maturities are well spread out, with 50% maturing beyond 2030, ensuring manageable refinancing requirements over the coming years.

Our debt portfolio is well balanced, with 14% dollar-denominated debt, of which 95% is hedged, thereby reducing forex risk. Interest costs remain competitive, with a healthy mix of 41% fixed rate and 59% floating rate. Average debt maturity stands at 6.6 years. We're also pleased to report that we have retained our investment-grade ratings from S&P and Moody's, reinforcing our prudent debt management strategy. For 2024, total dividends amount to PHP 97 per share, reflecting a 60% regular dividend payout aligned with our policy. A final dividend of PHP 47 per share was declared today. PLDT continues to focus on deleveraging to generate positive free cash flows. As of yesterday, PLDT's 12-month trailing dividend yield stands at 7%, positioning us as one of the most attractive dividend plays in the market. Now for Maya. I'll be presenting its 2024 operating highlights, showcasing its strong growth and market leadership in fintech.

Maya remains the number one digital bank in the Philippines by deposit balance and customer base. It also continues to lead in merchant acquiring, holding the largest market share in card acquiring and QRPH transactions. As of December 2024, Maya Bank's customer base grew significantly, up 71% year-on-year to 5.4 million bank customers, while lending expanded to 1.6 million borrowers, doubling from the previous year. Deposits rose 59% to PHP 39 billion, and cumulative loans disbursed reached PHP 92 billion, with PHP 68 billion issued in 2024 alone. Most notably, Maya achieved positive net income in December 2024, marking a major milestone for its financial sustainability. These accomplishments demonstrate Maya's strength in providing seamless digital banking and financial services, further solidifying its dominance. Next. Next page, please. Next page, please. Maya's financial performance is backed by significant growth in deposit and increasing loan-to-deposit ratio.

Over the past two years, deposits more than doubled from PHP 14.7 billion in 2022 to PHP 39.3 billion in 2024, while the loan-to-deposit ratio increased from 5% to 42%, highlighting efficient capital deployment and growing credit demand. On the lending front, Maya has experienced exponential growth. Cumulative loan disbursement now totaled PHP 92 billion, while outstanding loans have reached PHP 16.7 billion as of December 24. Maya's disciplined risk management continues to set it apart, with an NPL ratio of only 3.5%, significantly below the 7.1% industry average, demonstrating strong underwriting and a high-quality loan portfolio. Beyond deposits and lending, Maya has continued to expand its product offering, launching new solutions for both consumers and businesses. In the consumer segment, the company successfully introduced its first credit card product, the Maya Landers Cashback Credit Card, issuing over 100,000 cards within just five months of its commercial launch.

This expansion enhances Maya's engagement with its growing customer base and strengthens its position in offering credit to the customers. For enterprises, Maya has introduced bill payments for merchants in Maya Business Deposits. It also rolled out custom loan terms for Maya Business Advance, offering flexibility to business needs. These initiatives reinforce Maya's commitment to innovation and financial inclusion, providing seamless digital solutions that empower businesses and individuals alike. With its continued focus on growth, Maya is well-positioned to expand its fintech ecosystem and drive further financial empowerment in the Philippines. PLDT has made significant progress in the area of sustainability, which we define as ensuring long-term profitability by doing business responsibly. Our S&P Corporate Sustainability Assessment score rose 14 points to 72, the highest among Philippine corporates.

As a result, PLDT was the only Philippine company included in the 2025 S&P Global Sustainability Yearbook, joining 780 companies out of 7,700 assessed worldwide. PLDT was also recognized as an industry mover in global telecommunications for its strong sustainability performance. Child protection remains a key sustainability focus. Under the Global Child Forum benchmark, PLDT ranks second globally among over 1,000 companies and was the highest-ranked telco, reinforcing our commitment to protecting vulnerable users of our connectivity. We enter 2025 with each business primed for expansion. We're harnessing innovations and digital transformation to unlock new opportunities and deliver greater value. We continue to invest strategically, strengthening our network infrastructure, expanding 5G, and leveraging AI-driven marketing and enterprise solutions to sustain growth.

Our business remains resilient, with steady revenue growth and stable EBITDA. We remain focused on cost efficiency while ensuring CAPEX is directed towards high-impact areas. With that, let's now discuss the key growth initiatives for each business unit.

Jinggay Nograles (Head of Investor Relations)

Thank you, Danny. All right, so now to provide further context on our operational performance and key business unit developments, we will hear from our business unit heads. So first, Mr. Boy Martirez, Chief Operating Officer of Smart, will discuss developments on our wireless business. Then after him, Jeremiah de la Cruz, SVP and Head of our home business, will provide an update on his segment. And lastly, Jojo Gendrano, SVP and Head of enterprise, will walk us through the latest in our enterprise segment, including our updates on our data center and ICT initiatives. Boy, over to you.

Boy Martirez (COO)

Thank you, Jeremiah. A pleasant good afternoon to all our partners from the investment analyst community. Today, I'm going to be talking about unlocking wireless growth, particularly on our 5G, and I will also be touching on AI and a smarter way to monetize data. I will speak on two major points. The first one is about scaling our 5G adoption and therefore monetization. The second part will be about AI. On the first part, I will be touching on our rollout, particularly what we call 5G cities, and how, together with combining it with affordable phones, 5G phones, will result in expanding mass adoption. The second point that I will pick up along this first set of issues is about monetization. Okay, and then I will talk about the 5G migration and, of course, the 5G devices.

So on the first part, on 5G cities, our philosophy is to basically not roll out on the basis of just pure reach because that will require a lot of CAPEX. A more sensible thinking around this is to ensure that we roll out on the basis of a home workplace seamlessness. Now, maybe that may not give you enough reach, but it will give you a more meaningful way of providing a 5G experience for all the people who would adopt 5G. So alongside that, it's a combination of putting 5G devices. That kind of rollout, plus the 5G devices, is, I think, in our view, the best way that will provide you the adoption that we want, that we are desiring of. The second point to talk about 5G and monetization is also the issue of experience-based monetization. Now, what do we mean by that?

Experience-based monetization is something that can only be delivered by innovation. Innovation because it is actually the touchpoints by which we're able to tell the customers, "Here is our offer. Here is our offer at the right place, at the right time for you," so that that way we engage them better. When we engage customers better with innovations like this, we are able to achieve the monetization that we so desire. The third point is about migration path from 2G to 3G, 3G to 4G, and 4G to 5G. Now, and that hopefully will create the ARPU lift.

We have shown to ourselves, and we have demonstrated to ourselves that when we did this in a way that we established it in BGC, the twin introduction of our back-to-back introduction of 5G in BGC, which we were able to achieve a 20% ARPU lift across at least 500,000 subscribers that were in that particular incident. So this, for us, is a very good demonstration of the model itself. And using AI, we would like to be able to scale this up moving forward. 5G devices in a smart network. The 5G devices in a smart network in the year under review actually grew by 67% versus a year ago. And that is significant for us. Our aspiration is to grow it even better moving forward.

So all of these together points out that we would be able to scale 5G adoption and monetization in the way that we would like it to be. Let me go to the second part of my discussion, which is being an AI-native organization. AI to us is very, very important. AI to us is that leading-edge technology that will enable us to achieve what we want, to achieve our goals. But we have never lost track of the fact that the more important thing and the more overriding thing for us is customer centricity. We have to deliver what the customers aspire for, and the technology is the one that will enable us to get it. A lot of telcos have fallen into the trap of falling in love with technology. We have not. We have seen technology only as an enabler.

We have never lost track of the fact that our more overriding concern is to give Filipinos the best global service there is, and that still is our true north. To talk about it, we have embedded AI in our network. You will see that AI; we have a SON. We have SON in our AI, a self-optimizing network. The strength of the SON is basically the fact that we're able to get load sharing in our network. We have also activated data analytics, which has now morphed into AI-driven analytics. With that, we're able to have a better and a more meaningful approach in obtaining an increase in revenue and a decrease in cost.

Our advertising has become more meaningful in the sense that instead of advertising in a broad way, like what it was before, the old school way, now we're able to geo-target, to be able to deliver a particular message across a specific target segment who really needs a specific offer. And that is a use case for us. It's an AI use case. We have also put in analytics into every aspect of our organization. So all of these network hyper-personalization and all of these initiatives have actually helped us already in 2025, and we will do more in 2024, and we will do more in 2025. I'm going to be open for questions.

Jinggay Nograles (Head of Investor Relations)

Thank you, Boy. And then we have Jeremiah next for our home segment.

Jeremiah de la Cruz (SVP and Head of Home Business)

Good afternoon, everyone. I'd just like to touch on two things for home, and it's really around innovation.

At the end of November 2024, PLDT leveraged our advantage as an integrated telco by launching a service for the home that uses both our fiber as well as our mobile network. First in the world, it provides connectivity to the home utilizing PLDT's extensive XGS-PON network as well as our mobile network. What it does is it ensures that our customers are able to actually have connectivity in the home when they want it, how they want it, and making sure that that reliability actually remains for them. This is the very first service. This very first timely service has been made as an integrated service, so seamlessly bringing those two technologies together so that the customers don't have to worry about which technology or which service that they're actually using. In addition, PLDT has actually taken innovations not just externally, but actually internally as well.

I just wanted to build on what Boy was saying, which is actually around AI and embracing AI. We've actually embraced AI within PLDT Home in two main areas at this point in time. It really is the tip of the iceberg. So we've embraced AI in its application with regards to collections. So historically, collections is something that is done by people actually picking the phone up, calling, and it can be actually quite a tedious exercise, and sometimes you have a mixed bag of lollies with regards to the results. Very exciting that we've been able to deploy AI to help us in this particular area, and we have seen very, very promising results. Not only has it actually yielded the same performance, if not better, but has actually enabled us to reach out to the different languages, the different dialects within the Philippines.

Using AI to be able to reach out to the different and using native language as well to reach out to them in a language that better resonates and has actually helped us yield better results. We've extended that capability to also our cross-sell and up-sell. Right? We've actually started to use AI as well to be able to reach out to our customers, to talk to them about other services, other offerings that we have available in a timely fashion. In the past, we've actually been limited by the number of manpower, the number of hours that we have available in the day. Moving forward with AI, we now have the flexibility and the elasticity to be able to reach out to them at the time that best suits them and is, I guess, most appropriate for them as well.

So for PLDT Home, our innovation is really two-pronged. It's new innovations with regards to new technology and the things that we launch with always on, making new services available for our customers, but also innovation internally where we're taking and embracing new technology like AI and making our operations much, much more efficient and more relevant for our customers.

Jinggay Nograles (Head of Investor Relations)

Thank you, Jeremiah, and lastly, we have Mr. Jojo Gendrano who will be talking about our enterprise business as well as our data center initiative.

Jojo Gendrano (SVP and Head of Enterprise)

Thank you very much and good afternoon. Our enterprise business remains committed to help our customers through innovation. So we're excited to provide value through the capabilities of our network and, of course, our people. For large-scale operations in remote areas needing resilient infrastructure, 5G mobile private networks are being designed for select customers, particularly in mining and ports.

In dense locations, 5G slicing through 5G standalone enables a differentiated network for use cases like public safety and security, smart meters, and smart cities. We have a robust, a very robust partnership ecosystem with known brands in 5G that we continue to collaborate with together with our customers to deliver solutions that matter. On the next front, we're also excited to announce that we are the first Philippine operator to achieve GSMA Open Gateway certification for the number verification API. So what does this mean? In using APIs to expose the capabilities of our network, mobile applications are able to silently and securely authenticate a user or a transaction without the need for a one-time PIN. We are already working with the banking ecosystem, including aggregators in this area, which is called network APIs, is likely one of the major topics in Mobile World Congress next week in Barcelona.

And we are excited about the potential for the new revenues and to add value to our customers. And it's just the start. So number verification is one of the multiple APIs that the industry through the GSMA have developed, and we will be launching more in the next few months. Next slide, please. Also, Vitro Santa Rosa is now live, as evident by the picture on the slide and our backdrop, right? Located in an optimal facility for hyperscale data centers. It was energized last year with an anchor tenant and other businesses already using our state-of-the-art facility. Next slide, please. We are committed to continue to lead in the data center space, leading in both capacity and flexibility with our unmatched 11 carrier-neutral and resilient by design locations all over the country, trusted by both hyperscalers and enterprises.

We are currently the only AI-ready hyperscale DC in the Philippines. Vitro Santa Rosa is able to support the immense compute demands needed to run AI with IP cabinets planned to support up to 100 kilowatts per rack. This is necessary for us to provide GPUs as a service to meet the increasing demands for AI. As we expand our footprint, sustainability remains a priority. We are committed to running our data centers on at least 40% renewable energy by 2030. We are ISO 14001 and 50001 certified, reinforcing our dedication to environmental responsibility. Beyond sustainability, our data centers have been critical in national infrastructure, supporting mission-critical applications such as the Comelec election infrastructure and the GSIS disaster recovery systems, further strengthening trust in PLDT's and ePLDT's capabilities.

With AI, cloud, and hyperscaler demand driving a major shift in data center requirements, PLDT and ePLDT are strategically positioned as the leading AI-ready, hyperscale-capable data center provider in the Philippines. Our robust infrastructure, connectivity, leadership, and commitment to sustainability makes us the ideal partner for global and local enterprises seeking secure, high-performance data solutions. We remain committed to scaling ahead of demand to support the country's digital transformation and establish the Philippines as a key data center hub in Asia Pacific. Thank you.

Jinggay Nograles (Head of Investor Relations)

Thank you, gentlemen. And I'd like to acknowledge the presence of our President and CEO, Manuel V. Pangilinan, as well as our Corporate Secretary, Attorney Maca. All right. So with that, I'd like to move on to Q&A. I'd like to emphasize that while 2024 was a year of resilience and execution, we remain focused on our long-term growth priorities.

Our network leadership and digital transformation efforts will continue to be at the core of our strategy as we drive sustainable value creation for our stakeholders. Now, we'd like to open the floor to your questions. And for those joining us on site, please go ahead and raise your hand. We'll provide a microphone for you. Please state your name as well as your company affiliation, and you can go ahead and ask your question. For those joining us online, please submit your questions via the Q&A panel. You may also raise your hand, and we can unmute you as well. Thank you.

While we wait for some questions, I did get a few questions emailed to me prior. So this first question is regarding the Conectadong Pinoy Act. Someone posed the question that some industry stakeholders have opposed the bill due to national security and digital fraud concerns. What is PLDT's stand on this bill, and how do you see this impacting competition, especially from foreign players?

Ma. Magdalene A. Tan (First VP and Chief Governance Officer)

Conectadong Pinoy mainly focuses on open access. Even without the bill, we're already providing open access to some data transmission providers, including Converge and the like, so our only request is that the bill basically treat everyone without discrimination and equally, and so we are supportive of the government's effort to provide open access, and our hope is the law, when it is actually passed, will be crafted such that there are reasonable restrictions and protection to those who own the assets. And what else? We also would like to be treated equally with the data transmission providers because currently, around 78% of our business is already data transmission, so in that sense, any protection being provided to the data transmission providers should also be provided to us.

I think that's basically our position. We are going to work with the government on this law, and we are going to also work with the government and the regulators in respect of the promulgation of rules and regulations in the event the law is passed.

Jinggay Nograles (Head of Investor Relations)

Thank you, Attorney Maca. Any questions from the floor? All right. I'll move on to some of the other questions that were sent to me beforehand. This is for the home segment. PLDT Home has maintained an industry-leading churn rate of 1.7% in stable RPU. What are some key initiatives driving customer retention? How sustainable are these trends? And can you talk in more detail about your push for prepaid fiber?

Thank you for the question. I think it's very obvious that in the market, there is actually quite a lot of price competition happening.

Jeremiah de la Cruz (SVP and Head of Home Business)

You can actually see that with the advent of lower price points as well as prepaid offerings. PLDT Home is committed to making sure that we have relevant offers for the different segments in the marketplace. We've been very, very focused in making sure that we have a competitive offer at all of the different segments, whether that's the entry level, mid, as well as the high end. Some of the initiatives that we've been embarking on at PLDT Home is making sure that we've actually given the best proposition and package available for all of our customers. That includes actually increasing the speeds on certain price plans, making sure that customers are aware of new offerings. All of these initiatives combined have actually helped us sustain our RPU.

If you look at the level of competition and the level of commoditization over the last few years, if you go back to 2020, for PHP 1,599, you would only get 50 megabits per second. Today, you're looking at 300 megabits per second. Right? So there actually is quite a lot of commoditization happening in the marketplace. And PLDT, being the incumbent, has had actually the most amount of price pressure applied to us. We've been able to sustain our RPU simply because we've continued to provide value for our customers. So making sure that they actually have the right plan, the relevant plan, and continuing to enrich the offerings that we have available for them and sustaining that price point. Now, that includes not just increasing speeds, but making sure that we also provide additional services for them.

In fact, today, a vast majority of our customers now availing of a PLDT Home subscription does so with two other additional inclusions beyond just data connectivity. They do that with the benefits of having Cignal instantly within their package. Right? And additionally, we also provide some prepaid mobile offering. So many of our customers actually now enjoy, included in their PLDT Home subscription, five Smart prepaid SIMs that they're actually available and enjoy the benefits of a calling circle amongst themselves. So that's something that's been very, very important and key to us in being able to deliver and maintain our RPU at the level that it has. Now, what's really important as well for our customers to ensure that we maintain our churn levels is service. I think we all hear about it constantly: service, service, service. It is absolutely critical.

We've been spending more and more time and more and more efforts in actually improving that service. I'm not going to stand here in front of you and say we've actually cracked it and we're there yet. It's a journey. In fact, that journey, we've made significant strides to improving our service, and we've seen the speed of restoration dramatically decrease. Sorry, increase, but the amount of time that you've been waiting has actually decreased. Right? We're seeing that translate to not just faster times for our customers, but we're seeing that with our churn rate. If you look at our churn rate, it is industry-leading. We're at 1.7%. Our nearest competitor stands at 2.1%. Ultimately, our customers are going to vote with their feet. If they're unhappy with your service, they're going to decide to find another alternative service. We're seeing that. We see that.

That's why we're absolutely committed and driving to actually improving our service even further. In fact, our 2025 outlook, we will be spending more money in our network and actually maintenance of our service, of our network, so not just rolling out. In fact, from a network side of things, we're not just focused on rolling out and creating new areas, but we're also focusing on making sure that we upgrade and maintain our existing network as well. Now, with regards to the question on prepaid, prepaid is part of our overall offering, but our focus has been squarely on postpaid at this point in time. We have had prepaid, and it is available. We don't disclose the numbers, but I wanted to be transparent with you. We do have prepaid customers on our network, and we do make it available.

We're in a different situation to our competitors simply because if you look at the number of ports that we have available and the number of customers we have on our network, it is significantly higher. So we have to also be careful that when we offer prepaid, that it's not necessarily impacting negatively our postpaid customers and actually doesn't have a massive dilution with regards to our RPU as well as our profitability. You will see us doing more and more in the prepaid space, absolutely. But we'll be very, very selective about it, and we'll be very, very purposeful in how we do it so that we don't see a dilution in our not just RPU, actually, not necessarily RPU in the prepaid space, but we don't see a dilution with regards to profitability.

Jinggay Nograles (Head of Investor Relations)

Thank you, Jeremiah. Let me just go through the Q&A box here. I think we have some questions in. All right. From Ziwei Fu of Macquarie, "Can we discuss your mobile business? How did PLDT drive a higher RPU quarter and quarter for 4Q whilst your peers saw decline? How do you see consumers being able to take higher RPUs once price competition eases?"

Boy Martirez (COO)

That's a question for mobile. Let me tackle that. Fourth quarter saw us in a situation where we were able to build data. And then it's a question of monetizing it. We monetize it on the basis of the fact that we have upscaled our sales and marketing infrastructure. We've rolled out our 5G network in a work-home-play regime that we talked about a while ago, and plus the fact that we have 5G phones with us. So all of that confluence to having been able to achieve what we were able to achieve in the fourth quarter.

I cannot speak for my competitors, but probably it looks like we did better. So I hope I answered.

Jinggay Nograles (Head of Investor Relations)

Yes. Thank you, Boy. All right. We have another question here on the Q&A box from Brian Lim. "May I get your thoughts on why revenues of fiber broadband may be falling behind industry growth? How's the expected unit economics for Always On package, given that it's just PHP 299 a month?"

Jeremiah de la Cruz (SVP and Head of Home Business)

I'll start off with the question on the speed of the market. So we saw some challenges at the beginning of 2024. We actually had to make some adjustments with regards to some of the go-to-market activities we had, as well as accelerate the rollout. As I think you would all remember, 2023 was a challenging year with regards to the network rollout for us. So we wanted to accelerate that network rollout.

So with a combination of some of the adjustments we've made, as well as the rollout, we've actually seen the second half of 2024 perform much better. If you look at our net ads, we saw a 190% increase in the number of net ads that we had in the second half, which is actually helping to contribute an improvement in our overall fiber growth, as well as our home performance. If you dig into the performance of home in 2024, you'll see that there was actually quite flat in the first half, but we saw an increase coming through in the third, as well as the fourth quarter. In fact, the trajectory is continuing through, and we'll expect that to continue on, especially as we've seen the net ads increase quite substantially in the third, as well as the fourth quarter.

Now, we're going to continue to support that. We have a rollout that's planned as well and focusing on delivering in the first half. So we'll continue to support that with additional rollout. And we'll start to see that the overall growth of home, as well as our fiber business, actually not just continue to lift, but actually be much, much higher than where it is today. Now, with the second question was, I think the economics with regards to our Always On solution. I can't go into the detail of the product economics, but what I can share with you is the innovation actually uses two of our networks, right? So our XGS-PON, our fixed and fiber network, and the second one is our mobile network. The customers are looking for the fastest and the best connection possible.

And that really is, for the home and most use cases, is really around using the fiber network, right? So most of the time, when a customer is using an Always On service, they will be using our fiber network. In the event that there's service interruption, and that can happen for a number of reasons, whether that's the weather, whether it's nature, whether it's an accident, or there's some digging that actually happens down your street, there may be instances where that connectivity has been interrupted. And that's where we're able to leverage the fact that PLDT is an integrated network, and we also have one of the widest and fastest mobile networks in the country. We're able to leverage our mobile network in continuing to deliver a service into the home. So they don't have to worry about, "Hang on, I've had a service interruption.

I now need to change SSIDs. I now need to change networks. I need to think of an alternative method." No. The Always On service makes sure that we actually continue to deliver a service into your home no matter what, right? So in terms of unit economics, really, I can't go into the detail of the unit economics, but what I can share is it does leverage the strength of PLDT and Smart because we are an integrated network. We're able to leverage those two networks that we've invested quite significantly in over the years.

Jinggay Nograles (Head of Investor Relations)

Thank you. We have a question here about our legacy drags. "How much longer will legacy businesses be a drag to top-line growth? Any initiatives being done to migrate or sunset these businesses and migrate customers?" I think that's a question for both our wireless segment, or actually all our segments, actually. I don't know who wants to take it first.

Butch Jimenez (COO)

Well, on the network side, when it comes to our legacy services, right, especially on the fixed line, we are accelerating the migration of all our copper subscribers to fiber. In fact, you're going to see a very strong reduction in our copper subscribers, even just in the month of January alone. We have a mandate to significantly finish the migration by mid-year or third quarter of next year. And so that's a target that we're going to be going after. And so we will see that drag of legacy services continue to decline, and hopefully, by next year, we'll be completely wiped out. But acceleration of migration will happen this year and will almost be completed.

Boy Martirez (COO)

On that, our target is to sunset basically the lower-generation technologies and do it within this year. Helping that would be basically the availability of handsets, particularly on 4G and 5G, by which we would be able to migrate our existing subscribers on these lower-generation technologies to higher-generation, where hopefully, decisively, there will be better RPU and better revenue. And I think that that helps into the situation of the industry as well.

Jinggay Nograles (Head of Investor Relations)

Thank you, Boy. And thank you, Blums. All right. I have another question here. Let me just. From Brian Lim of Guild Securities. "Can you clarify the 11% increase in fixed line from 2023 to 2024? Is this a result of the 40% bundled packages, I guess, for the fiber acquisitions? If not, can you expound on this a bit?" So I guess, why is Boy's growing? Yeah. So I think it's the growth in fixed line, Boy's. So it seems to be growing from 2023 to 2024. Is it because it's part of the bundled fiber product? Yeah.

Jeremiah de la Cruz (SVP and Head of Home Business)

The component of voice that may be growing. And I think you've already hit the nail in the head there. It's really a cost allocation that we have as we sell more and more bundled products. And as broadband products, as we sort of shared, was about 40% of our customers are availing of a bundled product, whether that's bundled with Signal as well as with voice and also mobile. There is a small component of that that's actually allocated. So we'll be looking at that's really that's the driver. But what's most important for us is then looking at the difference between copper as well as our fiber business because voicing itself is not necessarily a bad thing, right? Voicing itself is not necessarily a bad thing, providing it's actually conducted or served over our fiber network.

Moving forward, it will be our fiber network that will remain with us for the next 10, 20, 30 years, right? It's really what will be sunset is copper, right? So that's why we're really, really focused in on moving our customers, as Butch had mentioned, migrating as many of our customers over from our copper network to our fiber network. We are seeing, naturally, we see, and we talk about the decline of voice because we are seeing customers move away from voice-centric services to data-centric services, and that's predominantly broadband, especially with Voice over IP, right? We will see that. But within fiber itself, that movement between the two is really just a cost allocation amongst the different product lines.

Jinggay Nograles (Head of Investor Relations)

Thank you, Jeremiah. Okay. I have a raised hand here from John De of UBS. Let me unmute you, John. One moment. All right, John, you are unmuted. Go ahead and pose your question, please.

John De (Analyst)

Hi, Jinggay. Thank you for the opportunity. Three questions for me. First is any preliminary guidance for 2025 from the chairman. Second is on mobile. While it was very strong, we did see some subscriber losses on prepaid in the fourth quarter. Any specific reason or any color on that? Third, on broadband, again, a strong result, but the momentum, the net add momentum slowed from about 100K in the third quarter to about 40K in the fourth quarter. Any seasonality or any particular reason why? That's it for me.Thanks.

Jinggay Nograles (Head of Investor Relations)

Yes, we can start with the guidance.

Manuel V. Pangilinan (Chairman and CEO)

Well, at this point, I don't think we are comfortable about giving any specific guidance for income for 2025. We do know that we do have targets. We do have budget numbers, and they're showing increases in revenues and in profitability for 2025.

But we'd like to be better prepared, I think, or better certain, more certain about how our numbers would spin out, especially core profitability for the full year 2025. We've seen some softness in the market, not only telcos but also in the power business and so forth. And we're not quite sure why that is so at this stage. So I think it's best to be prudent, and perhaps after the first quarter, when you have a better reading of the economic situation in this country, then we can provide some guidance as to the full year view of core income for PLDT.

Jinggay Nograles (Head of Investor Relations)

Thank you, Mr. Chairman. I think the next question was regarding our mobile subscriber base and the decline in the fourth quarter. So we saw some subscriber losses on prepaid in the fourth quarter. Any specific reason why that occurred?

Boy Martirez (COO)

To that question, that was just a result of a cleanup on subscribers. That's a year-end cleanup, as our CFO was saying.

Jinggay Nograles (Head of Investor Relations)

All right. I think third is the broadband. Jeremiah.

Jeremiah de la Cruz (SVP and Head of Home Business)

Thanks. Actually, very similar to what Boy mentioned. We do seasonally do some cleanups with regards to subscriber numbers. And so you'll see that show a seasonally low figure. We are seeing, though. I can share with you that our gross additions over that period, as well as our migrations, actually remain steady. Typically, we do see some challenges in the fourth quarter simply because of the Christmas period. As you know, people's accessibility is just not the same. So you see a lot of December actually take a hit. However, I can share with you that we did see our gross additions continue to grow in the fourth quarter.

In fact, that has continued through Q2 of 2025. We're anticipating a much, much stronger 2025, carrying that momentum in from the second half of last year and building on the third quarter of last year as well.

Jinggay Nograles (Head of Investor Relations)

Thank you. Thank you, John. All right. We have time for a few more questions here. This is on GPU as a Service. Can you speak more about that product offering? What has demand been like now that it has been launched? Any enterprises open to this type of service?

Jojo Gendrano (SVP and Head of Enterprise)

Sure. Thank you very much for that question. Our GPU as a Service offering in ePLDT is still in its fairly early stages. We have a modest farm in Vitro Santa Rosa that actually has active workloads and active use cases on those GPUs.

Too early to say on the specific pricing model once we get to full launch, but this is an area that we intend to be very aggressive in. And the pricing that we have to come up will have to be competitive. We've been in discussions with a lot of enterprises. We see a lot of demand coming, and it's important to continue to work together with them, not just on providing the GPUs, but also sitting down with them and really working together with them on the use cases. On top of that, we also see a lot of activity from other GPU as a Service providers that want to come into the Philippines. They are welcome, and we are welcome to host them in Vitro Santa Rosa. Thank you.

Jinggay Nograles (Head of Investor Relations)

All right. We have about a minute left in the briefing. Any questions from the floor? Derek?

Derek (Analyst)

Hi. This is Derek from CLSA. I have several questions. First, on the fintech side, I saw a Bloomberg headline earlier. PLDT would like to purchase the KKR stake in Maya. How do you intend to finance this buyout, if ever? And is it strictly going to be through PLDT? That's number one. Number two, on the asset sales, is there a possibility for PLDT to monetize non-tower or non-data center assets? I'm talking about the legacy assets you have in line with the question earlier about the legacy migration. That's all.

Manuel V. Pangilinan (Chairman and CEO)

Well, I think there's no certainty yet that KKR is a seller. I think we do know the situation. We do know that they have engaged two American banks to scan the market and get an idea of what the value of Maya might be as a whole.

And in the next few weeks or so, they have undertaken to give us an indication of what that valuation is going to be. And probably themselves assess whether the value they get from the market is within their price range and whether we ourselves would be prepared to buy certain shares from them. We did say that we are not a seller unless they come back with a humongous price, in which case we may consider selling together with them, right? But if the values are within our own range, then we might consider buying. But together with First Pacific, PLDT owns slightly less than 40%. So we need to buy only about 11% for us to achieve control of the company of the Maya group.

So of course, if they come back with $10 billion, we probably will sell and get $4 billion and get rid of all of our debts. That's music to your ears, Danny, right? And that we don't have to explain about our gearing and all that sort of thing. Yeah. So we don't know. So let's wait for a month or two and see what those values are. That would be interesting. We are not altogether optimistic that they'll get the values that they want, I think, given the market and the situation elsewhere in the world. Yeah.

Butch Jimenez (COO)

Let me take the second question regarding monetization of our legacy assets. We are really focused on being able to take a look at the legacy assets that we have and starting to monetize them. And we are going to initiate, first and foremost, the copper monetization.

In fact, in the next couple of weeks, we're already going to do operational POCs. It's not that easy to just rip out the copper and sell it, right? There may be copper facilities that are linked to subscribers. So it's a very operational endeavor. And we've engaged Deutsche Telekom and Detecon, who has done copper monetization and copper mining through many telcos all over the world, to take us through all the processes and make sure that when we do start ripping out these copper facilities of ours, we're not affecting other subscribers, right? So we are doing POCs in four of our exchanges just to study how difficult it is. If you look at the copper facilities, the aerial copper facilities, you'll already see how many telcos are intertwined with each other. So it's not as easy to just rip that out and sell it.

Secondly, one of the things that we're studying is the value chain. You can rip out the copper and sell it as scrap, and there's a price to that. But if you start processing it, the price actually goes higher. There's also the wisdom of warehousing because, as you know, commodity prices of copper go up and down. We are projecting copper prices for 2025. That seems like it's going to start escalating, going up. So you may want to warehouse and sell when the price is high and not just sell whenever. So all these things we are studying, and we are going to be initiating this for PLDT. It's really being able to monetize trash, right? It's something that we don't use and something that we can sell and is very valuable.

But the beauty of the legacy monetization is that while copper is a big one, there are other legacy infrastructure that we have that we can sell. When we migrate 3G, you know those 3G cell sites, those things can be sold to maybe third-world countries that still want to use 3G. So we are looking at this whole ecosystem of being able to monetize these legacy assets. And definitely, you're going to see that movement in 2025.

Jinggay Nograles (Head of Investor Relations)

Thank you, Butch. Mark, go ahead.

Just to follow on the legacy assets. You mentioned a while ago you're trying to monetize, right? But if it's trash, as you mentioned, how much money can you earn? I mean, we're moving past that already, right? So maybe give me a ballpark number, how much those copper lines are [crosstalk] I thought you can divulge it.

Danny Yu (CFO)

Yeah, right at this point, we can't. But it is a lot. Copper wires that we have that we have pulled out. Okay. Sorry. I mean, but it's in the billions of pesos [crosstalk]. So you were asking me that, but we were verboten to indicate. But we pulled quite a bit of copper wires. And if Meralco wants to buy it, we'll give it to them, right? I don't think so far power doesn't run on fiber. Yeah. So that's one. Of course, you asked us how we can finance the acquisition, say, of 10 or 11% of Maya. That's one. We sell our copper. That's more than enough, I think, to buy the 10%. Of course, it depends what the values are. Number two, the board just reclassified certain of our properties as properties for sale that are not currently in use or excess to our requirements.

Number three, we could sell down our data center. Correct? So I think we'll have more than adequate ammunition to buy at least 10% of Maya. I don't want to trade the value of the data centers for Maya. Maybe that will work. Maybe that will not work from a value standpoint. But certainly, the copper wires will go, and the excess properties will also go in the course of this year.

Jinggay Nograles (Head of Investor Relations)

We're a little bit over time, but we still have quite a number of questions. So the queue maybe I'll take a few more. This one is on Maya from Ziwei. We have Ayush on the line as well, who's the CIO of Maya. So maybe you can take this question, Ayush. It says, "Congratulations on Maya turning around to profitability. Can we discuss how such a strong turnaround was achieved in the fourth quarter? What business helped to drive this turnaround? And how should we expect that segment and loan growth to perform in 2025?"

Jeremiah de la Cruz (SVP and Head of Home Business)

Thanks, Jinggay. And thanks for that question. Good afternoon, everyone. I think we have seen a broad strength in the business across the board. Both the payments and the banking business have done well. Our strategy of offering a consolidated financial services through our platforms, both for businesses and for consumers, has worked very well. We have seen a higher cross-sell rates of different products on our platforms. And it's really just sort of launching products that the market needs and being able to scale those products in a profitable manner. That has sort of worked in our favor.

And we have done that while maintaining a laser focus on our cost and our ability to service our customers at a fairly fixed sort of cost to serve, which has been a strength of ours, given that we own a lot of our tech infrastructure, our front end, our back end. And so with scale, the profitability has been there.

Jinggay Nograles (Head of Investor Relations)

Thank you, Ayush. All right. I think that's all the time we have for today. For those whose questions we were not able to answer, I'll try to get back to you as soon as possible. I've collated the questions here. But that concludes today's briefing. So thank you again for your time and for your support. And we look forward to our next update with you guys on May. Have a great afternoon, everyone. Thank you.