PLDT Inc. Q2 FY2020 Earnings Call

Good afternoon, and thank you for joining us today to discuss the Company's Financial and Operating Results for the First Half of 2020. 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 www.pldt.com under the Investor Relations section. For today's presentation, we have with us Mr. Manny Pangilinan, Chairman and CEO; Mr. Al Panlilio, Chief Revenue Officer; Ms. Anabelle Lim Chua, Chief Financial Officer; Atty. Ray Espinosa, Special Adviser, Senior Adviser to the President; and other members of the PLDT management team. In terms of sequence, we'll start off with Al Panlilio, followed by Anabelle Chua for the financials and a wrap-up in guidance from our Chairman. I now hand over the floor to Mr. Panlilio for the presentation.

Thank you, Melissa. Please turn to the next page. I want to start by expressing my gratitude for your participation in this call today. It’s an honor to be part of an industry that enables people to adapt to the new normal by keeping them connected. This year has been quite challenging, as you’re all aware. At the beginning of the year, before the pandemic, we had the eruption of Taal Volcano which impacted our operations in Batangas, Cavite, and Tagaytay. Subsequently, the pandemic struck in late March and continued through April. Our commitment has been to ensure that everyone remains connected, particularly during the COVID-19 crisis in the Philippines and globally. Moving to the next page, I believe we have demonstrated that PLDT Smart is the only integrated telecom provider in the Philippines, able to deliver essential services throughout this pandemic. We have been crucial in keeping our customers connected, whether they are at home, working or studying, shopping online, running errands with their mobile phones, or managing online bill payments and taxes. The surge in data usage is significant, and we continue to be relevant to our customers by offering a comprehensive suite of services. Now, as we proceed to the next page, I want to highlight our status as an integrated telecom provider. We serve various segments, starting with mobile Internet where we have approximately 69 million users, and our goal is to provide mobile Internet access to every Filipino through our LTE and 5G networks. Our mobile broadband, including pocket Wi-Fi devices, operates on LTE, and we are seeing an increasing demand for 5G technology, particularly among students and teachers in this evolving landscape, with around 1.1 million users benefitting from these services. We also provide fixed wireless solutions via our mobile network, with LTE and 5G for home use, but primarily as a supplement to our fiber offering, which remains our leading product for both residential and enterprise customers. Fiber allows us to offer unlimited plans, positioning PLDT Smart as a leader in technology integration to cater to all market segments. We intend to invest significantly in the expansion of our integrated fixed and wireless network. Turning to the second quarter, our revenue reached PHP41.3 billion, reflecting a robust performance and sustained momentum despite the pandemic's challenges. Although we saw a slight decrease from the all-time high of PHP41.5 billion in the first quarter, we still experienced a year-over-year growth of 7%, which translates to an increase of PHP2.6 billion compared to last year. This growth was driven by three segments: the individual wireless business grew 12%, equivalent to PHP2.1 billion, reaching PHP19.6 billion in total; the home segment increased 8% or PHP800 million to PHP10 billion; and despite facing challenges, the enterprise segment still managed to grow by 7%, amounting to PHP600 million. In the first half, our revenue totaled PHP82.8 billion, showing an 8% increase year-on-year, which is PHP6.2 billion more than last year. We are optimistic as we head into the second half. Analyzing our first half performance, the individual segment rose by 16% to PHP39.8 billion, up by PHP5.4 billion from the same period last year. The home segment finished at PHP19.6 billion, a 7% increase with PHP1.2 billion in additional revenue. For the enterprise segment, despite the pandemic's impact on its customers, it still achieved a 5% growth, totaling PHP20.3 billion, or an increase of PHP900 million. Moving to the next page, I would like to share some highlights regarding our network performance. We have received recognition as the fastest mobile and fixed network in the Philippines, according to third-party mobile data analytics companies like Ookla and OpenSignal, excelling in download and upload speeds, video experience, and latency. Next, please note that we launched our 5G services last Thursday, July 30, in five specific areas. We are committed to expanding this technology, though the availability of 5G-certified phones is currently limited. Currently, only Huawei offers compatible devices, but Samsung will soon provide pre-order options for 5G phones, and additional brands like realme and Vivo are expected to launch 5G-capable models as well. We remain dedicated to maintaining our network superiority, focusing on expanding both our fixed and mobile networks to meet the growing demand for data. We also aim to increase the number of LTE smartphone users among our subscribers. Smart has boosted the number of 4G LTE stations to about 27,000, achieving 95% population coverage. Additionally, PLDT boasts the widest fiber infrastructure in the Philippines, with nearly 360 kilometers of fiber, a figure that has increased by 11% since 2019. We will continue developing our network, recognizing this as a key competitive advantage. On to the next page, we've initiated efforts to enhance customer experience, starting an extensive fiber migration for our ADSL customers. This 18-month nationwide program aims to improve customer satisfaction and coverage. Next page, please. Our enterprise business recently introduced an offering called BEYOND FIBER, which goes beyond connectivity to provide curated digital solutions, including collaboration tools and e-commerce services. We strive to assist businesses in recovering from the lockdown, particularly BPO companies needing work-from-home solutions to remain operational. As we move on, we are committed not only to enhancing fiber connectivity but also to providing exclusive local content. We have established several relevant partnerships to serve our customers better. Next page, please. Our partnerships include long-standing collaborations with YouTube, Facebook, and Netflix, as well as upcoming agreements with Viu and HBO GO. We have local content available on iWant and GMA, and recently we secured an exclusive deal to cover NBA games through a partnership among TV5, Cignal, and Smart, allowing our prepaid Smart and Talk 'N Text customers to livestream NBA games for free. As mentioned previously, the new normal presents opportunities for us to expand our vertical solutions to transform various industries, such as e-commerce, e-learning, e-health, and cybersecurity. PLDT Smart plays a vital role in the Philippines' digital transformation, and we see this not only as a business opportunity but as a civic responsibility to provide solutions and connectivity for all Filipinos. Next page. Our CapEx strategy over the last five years has greatly improved our network and customer experience, with total expenditures of PHP260 billion. Initially, we planned to allocate PHP83 billion in 2020, which we later adjusted to PHP63 billion due to lockdown impacts. However, we have since increased our 2020 CapEx projections to PHP70 billion as we can resume previously halted network activities. This represents a CapEx to revenue ratio of about 40%, allowing us to further enhance our network and customer experience. In the second half, we will prioritize three key areas: improving network quality, strengthening our digital content, and championing customer experience. Next page. A pivotal initiative for us this year is our commitment to developing e-learning ecosystems in partnership with the Department of Education. Our Chairman believes in the mantra of "no learner left behind." We are collaborating with DepEd to provide a blended learning approach that involves modular online, TV, and radio-based learning methodologies to support the 32 million students and 1.2 million teachers returning to school. During the pandemic, the MVP Group has contributed significantly to COVID-19 responses through the Tulong Kapatid initiative, providing support for local government units, hospitals, and quarantine facilities, as well as free access to essential government services. Together with other MVP Group companies, we partnered with the Philippine Arena as a major COVID-19 facility. Our commitment to supporting the government and our fellow Filipinos during these challenging times remains steadfast. In conclusion, our focus is on growing our business by helping our customers build their lives and ensuring we remain relevant to their needs. This will guide us in the second half, while we will also concentrate on delivering performance, becoming more customer-centric, and evolving into a digitally powered organization. Thank you very much.

Thank you, Al. So welcome, everyone, to our first half 2020 results briefing. Let me start off by saying that despite the severe and unexpected disruptions caused by the COVID-19 pandemic, PLDT maintained our growth momentum from 2019 to the first half of 2020. As a result, we saw quite healthy financial results during the period. As Al had already highlighted, our service revenues rose 8% to PHP82.8 billion in the first half, and this is a new high in terms of semester revenues. The 2Q revenues were better than initially expected, coming in at PHP41.3 billion, which was lower than the first quarter but represented a 7% increase from prior year. The Consumer Individual business, which felt the most impact from the quarantine restrictions, had 2Q revenue lower than the first quarter. Nonetheless, it saw a continued strong growth of wireless data usage, which is solid on our 2Q revenues for the Individual segment coming in higher by 12% year-on-year. For Enterprise and Home businesses, 2Q revenues for both of these customer groups increased from their first quarter levels despite the challenges presented by the pandemic. When you look at them together, the Consumer and Enterprise business groups combined grew by 10% year-on-year in the first half of the year to PHP79.6 billion. On the other hand, our international and carrier business posted PHP3.1 billion of revenues, which was down by 30% from the prior year, which included the impact of the removal of mobile interconnect revenues starting January of this year. So without this, international revenues are down at a lower rate of 10%, mainly due to the drop in international roaming revenues. Next slide, please. With the 8% increase in service revenues, equivalent to PHP6.2 billion, we were able to cover the increase in our OpEx of PHP2.9 billion, resulting in our EBITDA growing by 8% to PHP43.2 billion in the first half. Our EBITDA margin remained at a healthy 52%. Our depreciation expense and financing costs were higher year-on-year due to the investments we made in our network rollout and expansion programs. We're also pleased to highlight that under these unusual times, we achieved a PHP13.9 billion first half telco core income, which is higher by 5% from the previous year. Our statutory reported net income grew slightly by 1% to PHP12.3 billion. Moving on to the next slide. When you look at our service revenues over the last 3.5 years, you'll see that the revenues continued to climb quarter-on-quarter, notwithstanding the impact of COVID-19 and the government's implementation of community quarantine. Our first quarter and second quarter service revenues this year still represent historic highs for the company. Q1 revenues were up 9% year-on-year, while Q2 was up 7% ahead of the same period. Next slide, please. Showing the same numbers, but broken between data and non-data revenues. You can see clearly that data was the main driver of our top-line growth over the years despite the downward movement in our legacy revenues from SMS and international voice. Now for this semester, data revenue grew 18% or PHP9 billion. Next slide, please. When you look at the 8% revenue growth in the first half, this reflects the growing importance of data, particularly during a period where data access has become critical for our customers staying and working from home. In the first half, our data revenues of PHP59 billion accounted for 71% of our total revenues and increased 18% year-on-year. Mobile internet revenues rose by 34% versus a year ago to PHP29.3 billion. Data usage continued to be strong, driven by demand for our mobile video services, social media, and mobile games delivered to our customers through various GIGA load packages. Our mobile traffic usage was 1.4 exabytes, which is more than double the traffic from the prior year. Volume broadband also posted an 11% increase in revenues due to demand from home connectivity bolstered by the lockdown. While we faced challenges with installations during March and April, we were able to ramp up our installations of fiber and fixed wireless broadband connections in May and June to even higher than pre-ECQ levels now. Corporate data and data center revenues were higher by 3% at the combined PHP12.5 billion of revenues, and we foresee emerging opportunities to serve the enterprise market in the new normal. Moving on to the next slide, please. We demonstrate here how our EBITDA and telco core income has changed from the previous year. Our EBITDA increased by 8% or PHP3.3 billion from PHP40 billion to PHP43.2 billion in the first half as the increase in our service revenues of PHP6.2 billion fully absorbed the rising cash OpEx and subsidies of approximately PHP2 billion along with an increase in provisions of around PHP900 million. The EBITDA margin was a healthy 52%. Our first-half telco core income at PHP13.9 billion is PHP700 million or 5% ahead from last year, driven by higher EBITDA, partly offset by increased depreciation and financing costs from higher CapEx. Next slide, please. Here, we present our quarterly EBITDA numbers, where you see that our 2Q EBITDA was stable versus the first quarter, notwithstanding the dip in revenues Q-on-Q. Viewed against the quarterly results over the last 2 years, our PHP21.6 billion EBITDA in the first quarter and the second quarter are the highest for the quarter other than the fourth quarter of 2019. The PHP21.6 billion average is also higher than the average quarterly EBITDA of PHP20.8 billion registered last year. Next slide, please. This is on telco core income. Our telco core income of PHP7 billion in 2Q is about PHP0.1 billion higher than in 1Q. The average quarterly result is also ahead of our 2019 quarterly average telco core income of PHP6.8 billion. In light of the uncertainty surrounding the impact of COVID-19, we have not provided earnings guidance for the year, but we are certainly aiming for 2020 telco to be stable versus 2019 at approximately PHP27 billion. Next slide. This morning, the PLDT Board deferred an interim dividend of PHP38 per share for payment on September 4. The dividend aligns with our policy to pay out 60% of our telco core earnings. If you calculate it based on the end-of-day share price of PLDT, the dividend yield for PLDT holders is about 6%. Next slide shows our statutory reported income results. Reported income was PHP12.3 billion, 1% better than the prior year. After considering our equity share in the results of Voyager, the revaluation losses on our investments in Rocket Internet shares versus a revaluation gain last year, and an impairment charge relating to our investment in iflix of about PHP0.6 billion. In the second quarter, all shareholders of Voyager committed to infuse PHP120 million into Voyager, with PHP65 million of this commitment increased in May. We continue to hold a positive outlook for Voyager, particularly with the significant increase seen during this period for digital financial services. Moving on to some balance sheet metrics. PLDT's net debt as of the end of June amounted to USD 3.8 million, while the net debt-to-EBITDA ratio stood at 2.19x. The gross debt amounted to USD 4.75 million, which included the $600 million new bond issued by PLDT, which consisted of a $300 million long 10-year issue at a 2.5% coupon and another USD 300 million 30-year issue at 3.45%. With these tenures, we managed to extend our debt maturities so that 50% of our debt will now mature beyond 2025. While we have increased the mix of our dollar debt to approximately 19%, our unhedged debt as of the end of June was limited to 4.4%, given our dollar cash position. Going forward, as we refinance our peso debt from the dollar bond proceeds, we will continue managing our FX exposure with hedges, aiming to keep the hedged portion between 10% to 15%. Fixed rate loans accounted for 85% of our total, and our average interest cost was at 4.78%. Moving on to the next slide. Our CapEx in the first 6 months came in at PHP31.4 billion. Originally, while our CapEx guidance was PHP83 billion, we now expect our spend for the year to be up to PHP70 billion, which aligns with our 2019 CapEx level despite the challenges and restrictions during the quarantine period. We adjusted our plans following the lockdown and gradually scaled up our CapEx view. We continue to prioritize projects that uphold our service quality to support our customers in the public for their businesses and social activities under these new conditions. I must say that our network held up well with a surge in data traffic of about 25% during this time. The shift of data traffic from offices to homes, with a rapid move to work-from-home setups. In April 2020, we reallocated 2G-assigned frequencies in the 1,800 megahertz band from 2G to 4G LTE, which allowed us to increase the mobile data capacity of Smart's network. We've also expanded our international links to support the higher demand for Internet connectivity. Next slide, please. As we have shown, PLDT Smart continued our efforts to expand and modernize our fixed and mobile networks despite the pandemic conditions. Here are some select highlights from our network. As of the end of June, PLDT increased the coverage of our fixed network to pass 7.8 billion homes, which is an 8% increase from the end of 2019. We now have the capacity of 3.7 million fixed broadband ports available to serve those working or studying from home. During this period, the total footprint of PLDT's fiber optic network expanded by 11% to about 358,700 kilometers of fiber gained. For the wireless side, Smart further enhanced our mobile data coverage by adding 2,500 new 4G LTE-based stations, raising the total to about 27,100. For 3G, we added another 1,200 to get to 15,000 3G-based stations as of the end of June. When you combine our 4G and 3G, we are able to serve more than 95% of the country's population with mobile. If you include 2G in the mix, we actually serve 96% of the country's population. Next slide, please. We saw mobile traffic explode compared to previous periods. Our mobile data payload rose to 1,368 petabytes in the first half of 2020, which is double the traffic from the first half of 2019. In 2Q alone, mobile traffic was 25% higher than the traffic in the first quarter, so we expect the demand for data services to remain high with the growing dependence on online services and the expected more extensive adoption of digital solutions for our customers under the new normal. As traffic grows, our network has remained resilient. The superiority of our network was validated by third-party reports released by OpenSignal and Ookla. Based on OpenSignal's report, Smart remains ahead of the competition in terms of video experience, upload/download speeds, voice app experience, and 4G availability. Ookla also scored PLDT at the top for download and upload speeds for fixed services and Smart for wireless in the country. On this part, let me turn this over to Mr. Pangilinan for the latest outlook for 2020.

Thank you, Anabelle, and thank you all for joining us this afternoon. I'd like to first say that our outlook for the remainder of the year, for the second half of 2020, is guarded and a bit cautious. Given what we've seen today, the economy contracting by 16.5% in the second quarter. We are also witnessing the second wave of the virus, which seems to be significantly worse than the first wave. We are concerned about the health of our people and the economic impact on the enterprise sector and on the ability of individuals to— in terms of disposable income and purchasing power to acquire our telco services, particularly in the second half. That said, PLDT and Smart have managed to perform reasonably well in the second quarter despite being in the middle of the pandemic, and our mission is to continue with that upward momentum and maintain that for the second half of this year. So that's on the revenue side. As Anabelle indicated earlier, we are guiding our telco core to a similar level as 2019, if not better. Our dividend payout is at 60% of telco core. And CapEx, we're guiding to a higher number than the previous guidance at the onset of the pandemic—from PHP63 billion to PHP70 billion, which aligns with last year's CapEx level. So, we're guardedly optimistic for the second half, but overall, we expect the performance to be quite good for 2020.

The first question from Arthur Pineda is about how the trends in July compare to the levels in May and June. Is there evidence of sustained improvements, or did we experience a surge in demand that was met during May and June?

We still see a good level. It is similar to the June levels, at least on top-ups. So we still continue to see that. We felt that in terms of seasonality, normally June is softer because people are preparing for payments of school tuition fees. However, in June, we experienced improvements leading into July, but we expect— we started August very strongly. So I think the momentum on the top-ups is still there. Now on fixed, our installation capacity has also improved; July is better than June, and definitely, August will also surpass July in terms of installation capacity. So we continue to see positive trends.

If I could add to what Al said, actually, our top-ups for July are at levels very similar to June, right, Al? So there's been no slowdown in terms of the level of top-ups on the wireless side. The top-ups for the fixed wireless side of our business have been increasing, and that trend continued through July. Even the first few days of August have shown higher figures. For the home broadband side, as Al indicated, the fiber installations increased for July. And we are ramping up fixed wireless installations for July as well. Our goal for the rest of the year is to maintain this positive trend.

Also from Arthur Pineda, what percentage of broadband subscribers are on fiber and what are on copper? Is there any ARPU differential if a subscriber migrates from fiber to DSL?

About 2/3 of the subscribers are on fiber, and the rest is on copper. We announced the program to migrate about 600,000 customers who are still on the old legacy ADSL technology within the next 18 months to fiber. This program has already started and will continue through the next year. This will be at no extra cost for our subscribers—a free upgrade.

Typically, fiber subscribers have slightly higher ARPUs than ADSL copper, but not too much—about PHP200.

As you likely know, the ARPU on fixed is approximately 3 times that of wireless. Therefore, we are quite optimistic about home broadband revenues for the second half, which we believe will be much better than in the first half.

This next question. A competing fixed broadband operator seems to be outpacing the incumbents when it comes to fixed broadband net adds. What is driving this when incumbents have superior homes passed? What can be done to better protect market share?

Could you clarify further?

I think it's referring to...

It’s not a new operator; it's a newcomer, right?

Obviously, what we're doing is to improve our capabilities. We can only enhance what we can do, right? As I mentioned earlier, we're ramping up our installation capacity, and that has been part of our target each month. So, we'll continue to increase that to levels much higher than where we are today. At the same time, we are ensuring that our service and customer experience are much better.

Additionally, we can mention that July represented an all-time high in installations. It's significantly higher than the months before. We are pleased with our progress but are not satisfied. We plan to push installation numbers even higher this year. So we will soon be in a better position to install many more ports per month than we did in the past.

There's a related question from Diane of Nomura. How do you plan to increase the utilization of the existing fiber ports, given it has been an issue for some time? Some peers are doing much better in increasing the utilization of existing ports.

Actually, utilization has gone up during this year by 10 percentage points already. We have a clear target for the end of this year regarding utilization. Going forward, I don't anticipate it will be a problem anymore.

From the business perspective, I've seen a program that will increase utilization by 12% by year-end. We will definitely focus on utilizing the infrastructure that we already have.

We have many more ports than anybody else—fixed ports.

Next question from Arthur: can you talk about the bad debts? How should we see this trending in the second half?

Arthur, that's something we need to monitor closely. I think two key items to consider: First, as you know, we granted our postpaid subscribers a 6-month installment payment period that is starting to amortize. We need to track the collection success for these customers under the installment plan closely. The second vital factor is the macroeconomic situation. Under PFRS 9, which considers expected credit losses, this is very sensitive to GDP indicators and inflation. If GDP continues to be negative, that will necessitate providing for eventual losses. In the second quarter, we already increased our provisions by PHP1.4 billion compared to the first quarter, but this is an area that we will have to review closely during the third quarter.

Next question from Diane of Nomura. Can you share some insights on competition so far in both mobile and broadband? Any comments on the emerging fixed-line player, Converge, which is also accelerating their fiber network rollout?

I think our performance speaks for itself in this competitive environment. You have all the data with you to analyze the situation. We are pleased with our performance despite the challenges posed by the pandemic. More importantly, we have been able to serve our customers during this very challenging period.

Regarding Converge, we respect them as competition. We do not underestimate them, but you should also see that they are confined to Luzon. They announced a big initiative to roll out fiber for backbone and to connect other islands, which is a multiyear program. From that perspective, we are actually significantly ahead because we connect almost all of the islands here in the Philippines and connect to more countries than anybody else, besides our existing capacity. We have a strong foundation, and with our efforts to improve installation efficiency, we will be strong enough going forward to compete and maintain our leading market share.

A related question from John Te of PEP. Compared to an emerging competitor whose strategy is microtrenching and is able to grow its footprint quickly, how does PLDT's rollout strategy differ? What are your advantages from a rollout perspective?

First and foremost, we also use microtrenching, but it has its limitations. The main limitation is that it's a shallow digging on the street and can easily be disrupted. One of our biggest challenges in our fiber network is the number of fiber cuts we face daily. Therefore, for critical connections, we go underground, digging 1.5 meters deep or deeper. Microtrenching is typically only 10 to 20 centimeters deep, which can easily be affected by any surface pressure, even a truck rolling over it can impact its integrity. While it is quicker than deeper digging, it significantly compromises the reliability of the network. However, we and our subcontractors have microtrenching machines and use them where appropriate.

Also from John Te. PLDT lost fewer customers than Globe for the second quarter straight. Do you think there are risks from competition on the mobile front? Do you think that competition has shifted to fixed broadband lately?

No, I think people will still use mobile phones, and we've seen an increase, contrary to the other company that you are referring to. I believe we actually increased our base. Our data users have risen significantly in the second quarter, as mentioned in Anabelle's report.

Lastly, regarding refarming, can you remind us which bands are now assigned to 4G? How much capacity do you think you will have when these are freed up?

The refarming we implemented was 1,800 megahertz. In fact, we added 5 megahertz of 1,800 megahertz to approximately 3,400 sites in the Philippines. While 5 megahertz may not seem like much, when combined with the rest of the 1,800, it actually yields per site a relief of 10% to 15% extra capacity. Currently, depending on the locations, we utilize 700, 850, 1,800, 2,100, 2,300, and 2,600 for LTE. We have many sites where we have installed all bands to meet the capacity constraints. We are also exploring more refarming going forward, either from 2G or from 3G.

This is the last question we have. Which regions do you find your customers are most concentrated in? Are there any areas where you see coverage gaps? Where do you plan to expand, and how does that position you relative to your competitors?

The traffic has shifted from CBDs to suburban and rural areas where people's homes are. There’s no general rule—we already cover 95% of the population. This predominantly means areas are covered. The main issue is the constraints on capacity; however, we did not put as much infrastructure in the past, which we have already fixed. If you look at our speeds, confirmed by speed tests, we are now higher in July than we were previously. We are managing quite well in terms of capacity. Additionally, there are areas throughout the country where we have added substantial capacity, for example, in North Luzon and South Luzon and some regions in Mindanao. We are ahead compared to the competition, though it’s not enough because we want to reach all our customers over time.

That's all the questions we have. There's one from Savi of BPI. Could you share what you observed in terms of consumer behavior for mobile during the second quarter regarding basket size? Would you say that the trends seen during the ECQ in March were sustained? Could you also provide insights into the Enterprise segment? You noted that performance was flat; could you share details about what drove the growth? Was it due to new accounts in areas like e-learning and telemedicine, or did current accounts show resilience?

I'll ask Jane to answer the basket size query. Maybe Jovy can take the Enterprise question. Jane?

Yes, we've actually seen significant improvements in critical business drivers, one being basket size. Our average top-up basket size is higher on a year-on-year basis, and for July and August, we see it even higher than the first few months of the year. The highest basket sizes were observed around May when many people were at home. However, we are seeing movement now. Compared to the first quarter of the year, there is a significant increase, and more customers are loading up as well—which is notable because we have more subscribers reloading with higher top-up basket sizes, leading to elevated average top-up per customer.

Jovy, for what’s happening in Enterprise?

For Enterprise, we see a level of resilience among our Enterprise customers. If you segment large enterprises from SMEs, the latter feels hit more severely, with many temporarily closing operations. That being said, we've released an SME stimulus package to help smaller customers rebuild their operations, offering them 3 months of free connectivity. We have observed a tick-up in that area. On the large enterprise side, the growth was mainly driven by their need to keep employees connected. We enabled numerous work-from-home connectivity solutions, particularly among BPO companies that operated during the pandemic. For the second half, we anticipate this trend will continue; many enterprises are moving towards digital assets now. We are here to assist them in not just redirecting but reinventing their businesses to adapt to the new normal, providing enabling technology.

Thank you, Jane. Thank you, Jovy.

The last question. Of the PHP48 billion budget allocated for network and IT CapEx, how much will be used for mobile and how much of these for fixed?

Certainly. The PHP48 billion does not include last mile installations. That is, the installation of fiber to homes is an added budget. So the PHP48 billion covers the mobile network, core network, and transport network—this is a highly integrated network. Therefore, it’s not straightforward anymore as we did all the migration to specify this as fixed or mobile exclusively. But about half will go into rollout of cell sites and capacity upgrades, while the other half will go to transmission networks, core networks, etc. But that is just an estimate and not highly precise. Our target remains to build a highly synergistic network because with fiber, we can connect Enterprise customers, fiber to homes, and base stations. That synergy has become a significant advantage as we advance.

That concludes our briefing. As always, should you have any further questions or clarifications, please feel free to reach out to the PLDT Investor Relations. Thank you all for your participation, and stay safe.