• viewpoint

Reviving growth, embracing change

by Manuel V. Pangilinan | Jul 19, 2017
Remarks at the 2017 PLDT Annual Stockholders Meeting at the Makati Shangri-la Hotel Ballroom on June 13, 2017

20170719viewpoint_mvp


Good afternoon, and a warm welcome to our shareholders and guests.   On behalf of your board of directors, your board of advisers and your senior management, thank you for joining us today.

This afternoon, we will first review highlights of our financial and operating results for 2016, and those of the first quarter of 2017.  Thereafter, we will take a look at what your company is doing to move forward — covering key business and organizational issues, and the buildout of our data network.

FY 2016 and 1Q 2017 results 
The year just passed, 2016, was not, to use the words of the British monarch, “a year in which we should look back with undiluted pleasure.”

Hard decisions and unpleasant decisions had to be made in the course of 2016.  Digital transformation is not for the faint-hearted, the impatient, or those with low tolerance to pain.  Thankfully, the organization responded well to the distressing truths, and to what’s needed to execute our digital transformation, and bring your company to the digital age.

Consolidated service revenues, EBITDA, EBITDA margin, and recurring core income for 2016 declined.

Our most challenged business unit was wireless, which saw revenues fall 9%, due mainly to a decrease in subscriber numbers, combined with a modest decline in our average revenue per user.  Wireless also saw a significant cost increases in subsidies and provisions in response to intensifying competition.

20170719viewpoint_asm1

On the bright side, revenues of our Home and Enterprise businesses rose by 10% and 9%, respectively.  Our fixed line businesses have actually seen a wonderful renaissance compared to what it was 18 years ago, when it was distressed as with most other telcos elsewhere in the world. But in the past five or so years, fixed line has supplied consistent, solid sources of growth, and the reason is quite simple — both Home and Enterprise have transitioned early enough to data and to digital.  In 2016, broadband and digital accounted for over 60% of both Home and Enterprise revenues.  

2016 also saw heavy CAPEX for our fixed and mobile networks, which put pressure on our bottom line as well.  Taking all of this, we have had to reset our target in recurring core income for 2017 at P21.5 billion — the number could be higher, depending on asset sales which will happen most likely in the course of the year. This compares to the equivalent 2016 number of P20.2 billion.  It is from this new base of P21.5 billion that we aim to raise profitability in the coming years. 

Prospects for 2017
We should all be glad 2016 is past. 

Moving forward, it is clear that our fixed line businesses will provide the main runway on which your company can take off for growth:

First, the fixed line part of the telco industry here will grow by around 8% per annum in the next three years, whilst wireless will be limited to only about 2%.  At PLDT Home, only four million out of the addressable market of 10 million Filipino households’ demand for broadband are currently served.  For PLDT Enterprise, the growing appetite of companies, institutions, and government for connectivity and digital products — especially data center and cloud services — offers significant areas for growth.

Second, PLDT is best positioned to benefit from these opportunities because PLDT has the most extensive fixed wire network, the best product offering, the largest subscriber base, and the strongest brand equity in fixed line.   

Third, on wireless, we must simply put a brake on the loss of subscribers and revenues, and cut cash OPEX drastically to improve the EBITDA for the wireless business.

Q1 2017 results: Some ‘green shoots’ 
Looking now at the first quarter numbers this year, the results are somewhat mixed but encouraging. On the one hand, our wireless revenues were 18% less, leading to a decline in service revenues by 7% and recurring core income by 26%.  Again, on the bright side, our Home and Enterprise revenues posted robust growth — up 12% and 13%, respectively in Q1 2017.  Excluding international revenues, fixed line revenues already comprise majority of our services revenues at 52%, surpassing wireless for the first time at 48%.  

20170719viewpoint_mvp2

To be fair to wireless, if we look at the Q1 2017 versus the 4Q2016 numbers, service revenues were just 1% lower in the first quarter versus the fourth quarter.  Also, for the first time in several quarters, we added about 370,000 subscribers on a net basis.

First quarter EBITDA grew by 7% year-on-year, the third consecutive quarter that our EBITDA has increased.  This puts us on track to meet our full year core income guidance of P21.5 billion.  

While we can probably take heart from these results, no one is popping open champagne bottles. One quarter does not a year make, and your management know very well that the road to recovery is long, and the climb will be steep.

2017 and onward
So much for numbers. You may now ask — what is this digital journey all about, and how do we get to our destination?

Quite simply, this journey requires two interrelated parts — connectivity and products, both of them must be digital.

Connectivity means buildout of data networks with the quality and coverage to deliver the best digital experience to our customers.

Products mean compelling content — entertainment, sports, e-sports, lifestyle, news, documentaries, and so forth — in both video and audio formats that enhance customer experience.

Triple network roll-outs
As to connectivity, our networks buildout will comprise of the following:

First, roll out of fiber-to-the-home (FTTH) to service the home market.   We’ve expanded the footprint of our fiber service to 3.3 million homes passed as of end-April this year, and by end 2017, 4.4 million homes will be passed by FTTH — significantly ahead of competition.  We’re also setting up fiber-powered PLDT SmartCities in urban centers, with the help of local governments.  We’ve started in four cities, and now, we’re in south Metro Manila, with more SmartCities in the pipeline.

We’ve also deployed hybrid fiber technology called G.fast to deliver fiber-like speeds over our legacy copper wires.  This will enhance the ability of our extensive copper network with fiber-like speed.

20170719viewpoint_asm2

Second, Smart is also accelerating the buildout of its 3G and LTE mobile data networks to raise coverage and capacity. Metro Davao and Metro Cebu are done, and we’re working to complete greater Manila soon and expect to cover 12 more major urban areas in the course of the year.  This will extend LTE coverage to 70% of the country’s population by the end of 2017.  Third party reports are saying that Smart is now delivering the fastest mobile data services on LTE and 3G in the country.

Third, we’re deploying Smart Wi-Fi hotspots in a growing number of high-traffic public places.  PLDT Enterprise started this initiative last year by installing carrier-grade Smart Wi-Fi hotspots in airports, light rails, sea ports, schools, government, and other public spaces.  Smart followed through by building up SmartSpots in popular destinations like restaurants, bars, and boutique malls, where young people hang out.  

Yesterday, we announced the deployment of Wi-Fi along EDSA, with more to follow in Metro Manila.

As to data products, our cloud-based, data center services, digital platforms and solutions are giving our enterprise business its undisputed competitive edge.  By the end of 2017, ePLDT will launch its 10th data center, raising total capacity to over 9,000 racks — three times that of our nearest competitor.  

Going beyond access
While connectivity is a necessary condition to this journey, it is not sufficient by itself.  PLDT’s life as a dumb pipe will be a dead end. That makes digital products imperative to our business — to build a layer of relevant and compelling content on top of our data networks.  

Video content from iflix, Netflix, iWant TV, Fox+, and ESPN are being offered across our fixed and mobile services.   Last week, PLDT Home launched the Roku-powered TVolution service for its Fibr customers. This latest TVolution service is an all-in-one, plug-and-play entertainment box loaded not only with video-on-demand content from iflix and Netflix, but also CignalTV, and free content from YouTube and from over 100 other streaming channels. Roku provides easier access to the best in video entertainment available.

Conclusion
In closing, may I say that the digital age clearly is already upon us, and that the legacy business model of voice and texting is fast receding.

But that journey is shaped by priorities.  Early this year, we’ve set six key ones:  First, to raise the growth momentum of Home and Enterprise businesses; second, stabilize our mobile phone business and gradually return it to growth; third, improve the quality and coverage of our networks; fourth, reduce our cash OPEX; fifth, apply advanced data analytics to drive revenue growth and improve customer experience; and sixth, to reorganize to enhance employee engagement and experience.

The proper execution of this digital journey require people. We all know that.

At the start of 2017, we put a new leadership team in place, which has brought new ideas, new ways of working, fresh perspectives, and a variety of skill sets and experiences in this digital world. We’ll continue to develop our people, to ensure that we’re constantly poised to deliver on innovative growth.

Finally, may I say this: All this isn’t easy for PLDT — as large and as old and as profitable as it is — to accept that change is needed. But we remain idealists about our future — as we were in our past — with no illusions that failure to transform will mean our own extinction.  Disruption therefore is the key to our survival, and revival, in this new day and age.  

Thank you for your attention and good day! CC:

Post your opinion

246 comments

Leave a comment
  1. muhammad AK | May 30, 2018
    Thanks again for the blog post. Much thanks again. Awesome. Major Thanks for the blog post. Awesome. clash of clans mod apk
  2. Barbara Simpson | May 29, 2018
    I am happy to find your distinguished way of writing the post. Now you make it easy for me to understand and implement the concept. Thank you for the post. musicallyfollowersfree.org
  3. Angela lee Lynch | May 27, 2018
    Images entirely on your internet site even when creating awareness swiftly a small amount of sum submits. Rewarding technique for lasting upcoming, I will be book-marking at that time grow to be the surface area end develops inches upwards inches. best wooden playsets
  4. Alan Shaw | May 27, 2018
    I enjoy a person's posting. Its fine to check out you actually explain in words with the soul plus resolution during this vital matter is often without difficulty viewed. paper writing service by customer review
  5. HAnry | May 27, 2018
    To check out become in your blog nevertheless environment remedy obviously merely a small little submits. Reasonable way of possible long term, We're book-marking at a time safe types cease increases collectively. https://www.bbb.org/kitchener/business-reviews/mortgage-broker/ross-taylor-and-associates-in-north-york-on-1362403
  6. daniyal157 | May 26, 2018
    Important thankies for the post.Really looking forward to study more. Awesome.Thanks again for the blog.Really looking forward to read more. Really Great.Thanks-a-mundo for the blog post.Thanks Again. Hold writing.Really appreciate you discussing this blog post.Really looking towards study more. reat.I price the blog article.Really thanks! Much obliged.Great report post. Keep writing.Loose Diamonds Direct Dallas
  7. daniyal157 | May 26, 2018
    Significant thankies for the post.Really looking towards read more. Awesome.Thanks again for the blog.Really looking towards study more. Actually Great.Thanks-a-mundo for the blog post.Thanks Again. Keep writing.Really enjoy you discussing that blog post.Really looking forward to read more. reat.I price the website article.Really many thanks! Much obliged.Great article post. Keep writing.Loose Diamonds Direct Dallas
  8. mian rohail | May 26, 2018
  9. Adu ayam | May 25, 2018
    I found this is an informative and interesting post so i think so it is very useful and knowledgeable. I would like to thank you for the efforts you have made in writing this articlePositive site, where did u come up with the information on this posting? I'm pleased I discovered it though, ill be checking back soon to find out what additional posts you includeS128
  10. Olivia Fox | May 25, 2018
    You know your projects stand out of the herd. There is something special about them. It seems to me all of them are really brilliant! ingles site
  11. Olivia Fox | May 25, 2018
    You know your projects stand out of the herd. There is something special about them. It seems to me all of them are really brilliant! ingles site
  12. Angela lee Lynch | May 24, 2018
    This looks like thoroughly perfect. Every one of these bit of material happen to be fabricated in conjunction with loads of past material. I prefer the fact that considerably. 網頁設計
  13. Angela lee Lynch | May 23, 2018
    This really is at the same time a terrific subject matter as i somewhat certainly wanted taking a look at. This may not quite frequently that we include possibility to lift weights a major issue. Initial Coin Offering Lists
  14. Randy Schneider | May 23, 2018
    Pretty nice post. I just stumbled upon your weblog and wanted to say that I have really enjoyed browsing your blog posts. After all I’ll be subscribing to your feed and I hope you write again soon! freexboxlivecodestool.com
  15. sohail khatri | May 22, 2018
    Pretty nice post. I just stumbled upon your weblog and wanted to say that I have really enjoyed browsing your blog posts. After all I’ll be subscribing to your feed and I hope you write again soon! https://canhovincityquan9site.wordpress.com/
  16. daniyal157 | May 21, 2018
    Enjoy you discussing, good report post. Great.Muchos Gracias for your blog.Really thanks! Will read on...Great post.Much thanks again. Really Great.I value the website article.Really looking forward to read more. Really Great.Really recognize you discussing that article.Really looking towards read more. Really Great.Wow, great blog article.Really many thanks! Awesome.Thanks so significantly for the article post.Much thanks again. Really Cool.wow, awesome website post.Really many thanks! Fantastic.Sports
  17. Samyy | May 21, 2018
    Nevertheless this is besides that an incredible share that marilyn and i certainly appreciated checking. It certainly is not day to day that i maintain the prospect to decide 1. best dui lawyer near me
  18. Danielle Stone | May 20, 2018
    My spouse and i like your content. It is usually good to watch any individual make clear throughout words and phrases over the heart as well as lucidity just for this important matter could possibly be speedily witnessed. Paytm offers
  19. Cheryl Gordon | May 20, 2018
    Excellent and very exciting site. Love to watch. Keep Rocking. Get V Bucks For Fortnite
  20. HAnrck | May 20, 2018
    While a good many weightloss together with eating routine supplementations happen to be commercialized alone that will most women, Thermoburn is among the most hard to find exceptions the fact that makes a decision to encourage again even more when it comes to gents max thermo burn
  21. daniyal157 | May 19, 2018
    That is one great blog.Really thank you! Cool.Say, you got a wonderful blog post.Thanks Again. Actually Cool.Awesome report post. Significantly obliged.Awesome report post.Much thanks again. Significantly obliged.Kaamil
  22. Angela lee Lynch | May 19, 2018
    Speedily this specific web page could without doubt become popular involving most writing a blog along with site-building persons, automobile thoughtful blogposts or possibly testimonials. online vape shop
  23. daniyal157 | May 19, 2018
    That is one brilliant blog.Really thank you! Cool.Say, you got a good blog post.Thanks Again. Actually Cool.Awesome article post. Much obliged.Awesome article post.Much thanks again. Much obliged.Haashim
  24. morning world | May 19, 2018
    Thanks for a very interesting blog. What else may I get that kind of info written in such a perfect approach? I’ve a undertaking that I am simply now operating on, and I have been at the look out for such info. lo romero property for sale
  25. asd | May 18, 2018
    A great content material as well as great layout. Your website deserves all of the positive feedback it’s been getting. I will be back soon for further quality contents. Aanleg zwembad
  26. Sassi Sasso | May 18, 2018
    Satisfy persist it very good get the job done and even As i watch for alot more from your remarkable articles or content. manufacturing consultant 
  27. Emily Curtis | May 18, 2018
    Succeed! It could be one of the most useful blogs we have ever come across on the subject. Excellent info! I’m also an expert in this topic so I can understand your effort very well. Thanks for the huge help. Generator
  28. Johny Robert | May 18, 2018
    This is just like a good blog. I appreciate you and will suggest other peoples. Very nice information. https://extremegrowth.co.uk
  29. Johny Robert | May 18, 2018
    This is just like a good blog. I appreciate you and will suggest other peoples. Very nice information. <a href="https://extremegrowth.co.uk/">buy instagram followers</a>
  30. muhammad AK | May 17, 2018
  31. Nancy McCoy | May 17, 2018
    That's it's better that you ought to best suited examination in advance of making. It is easy to make improved upload that way. professional moving reviews
  32. daniyal157 | May 17, 2018
    Promax7 is the innovation in the latest technology in Cryptocurrency Market which stands in no compete with any miner till date offering 3710 MH/s making it the first and powerful cost efficient miner. This device has been built up with features that increase the basic necessity and increase the output and further leading to shortening of the investment cycle. GPU Miner
  33. Jerry Bowman | May 17, 2018
    Thank you so much for such a well-written article. It’s full of insightful information. Your point of view is the best among many without fail.For certain, It is one of the best blogs in my opinion. Add text on Birthday Cake
  34. morning world | May 17, 2018
    I found your this post while searching for some related information on blog search...Its a good post..keep posting and update the information. Business video surveillance system installation
  35. muhammad AK | May 16, 2018
  36. daniyal157 | May 16, 2018
    Good, thanks for discussing this informative article post.Thanks Again. Great.Very nice blog article. Hold writing.I think this can be a true great blog article.Really getting excited about read more. Need more.I enjoy and recognize your blog article. Fantastic.Very great post.Thanks Again. Fantastic.Major thanks for the article.Much thanks again. Really Cool.how to manufacture a product in China
  37. Sassi Sasso | May 16, 2018
    C123Movies is a free movie streaming site to watch free movies online without downloading. 123 movies 123movies.fun 0123movies 123movies.is 123movies.to xmovies8 fmovies all kind of movies for free 123 free movies
  38. Sharon James | May 15, 2018
    You should all material. It is always terrific to run you can expect to express during key phrases with centre in addition to picture quality through this worthwhile material is only established. weblink marketing1on1.com
  39. muhammad AK | May 15, 2018
    Thanks so much for the article post. Will read on...Danh Gia Ti Vi
  40. infoprediksiskor | May 15, 2018

    im going to share this to my friends so they can check this out too. [url=http://infogameonline.co/]situs judi online[/url] , [url=http://situsagenonline.co/]daftar situs poker online[/url]

  41. infoprediksiskor | May 15, 2018
    this website is really amazing, never seen a great website like this before. <a href="http://infogameonline.co/">judi online</a> , <a href="http://situsagenonline.co/">situs poker online</a>
  42. Katherine Diaz | May 15, 2018
    Rapidly this website may irrefutably end up being well-known amongst just about all running a blog individuals, because of its persistent content articles or even evaluations. ico schedule
  43. daniyal157 | May 15, 2018
    Fantastic article.Thanks Again. Really Cool.Awesome blog.Thanks Again. Much obliged.A huge thank you for the article.Really thanks! Awesome.Great blog.Much thanks again. Fantastic.Thanks therefore significantly for the article.Really looking towards study more. Much obliged.Thank you for the article post. Significantly obliged.I price the blog.Really many thanks! May study on...china sourcing
  44. Jason Garza | May 15, 2018
    Very nice article, I enjoyed reading your post, very nice share, I want to twit this to my followers. Thanks!.  Best site to buy real instagram followers cheap
  45. mian rohail | May 15, 2018
  46. daniyal157 | May 14, 2018
    Fantastic blog post.Really thank you! Cool.Really appreciate you sharing this post.Really getting excited about read more. Awesome.Im obliged for the article.Really many thanks! Great.Thanks for the blog article.Much thanks again. Cool.wow, awesome article post.Really many thanks! Really Cool.I really enjoy the article. Awesome.Looking forward to reading more. Great article post.Thanks Again. Great.I truly appreciate this article. Much obliged.Netflix Help
  47. S128 | May 14, 2018
    so nice and amazing this article.i like this article and can give me idea for my blog.thanks so much.S128
  48. Marie Watson | May 14, 2018
    I was reading some of your content on this website and I conceive this internet site is really informative ! Keep on putting up. Coupon Codes 2018
  49. daniyal157 | May 13, 2018
    Actually enjoyed this article post. Cool.Thank you for the blog.Really thanks! Fantastic.Thank you ever so for you personally post. Hold writing.I cannot thank you enough for the blog.Really thank you! Fantastic.I appreciate you discussing this website post.Really looking towards read more. Great..best sewing machine for beginners
  50. Eric Payne | May 13, 2018
    Ganhar curtidas no instagram gratis, curtidas reais brasileiras de forma gratuita com o site Curtidas Gratis. ganhar curtidas no instagram

    Leave a comment