Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consolidated service revenues for the first half of 2024 reached PHP96.9 billion, a 3% increase from the previous year.
- EBITDA rose by 3% to PHP53.9 billion, achieving a semestral high with an EBITDA margin of 52%.
- The individual business segment saw a 4% growth in revenues to PHP41.9 billion, driven by an 8% increase in mobile data revenues.
- Fiber-only revenues in the home segment grew by 7%, despite a marginal overall decline in home revenues.
- Maya Bank turned cash flow positive in Q2 2024 and is on track to achieve bottom-line breakeven by the last quarter of the year.
Negative Points
- Operating expenses grew marginally by 1% to PHP43 billion, indicating cost pressures.
- Home revenues were marginally lower by 1% year-on-year, impacted by declines in legacy businesses.
- Mobile revenue growth slowed in Q2 compared to Q1, attributed to limited customer mobility and high temperatures.
- The enterprise segment faced a slowdown due to cautious IT and data transformation decisions by customers.
- Gross debt stood at PHP265.4 billion, with 15% dollar-denominated and 5% unhedged, posing currency risk.
Q & A Highlights
Q: Can you please clarify the comment on Maya Bank turning cash flow positive? Do you mean that Maya Bank itself has turned profitable in 2Q?
A: Yes, Maya Bank is now cash flow positive but not Maya as a whole. Maya Bank's loan-to-deposit ratio is about 20% to 22%, with deposits at PHP32.8 billion and loans between PHP6 billion to PHP7 billion. Maya Bank is profitable on its own, contributing positively to head office expenses.
Q: Is the data center monetization still a route that the company is pursuing?
A: Yes, ongoing discussions are in the final stages. The valuation has been agreed upon, involving a combination of old and new shares. The new funds will reduce debt and fund the expansion of VITRO, including Phase II of the Santa Rosa hyperscaler data center.
Q: What is causing the slowdown in mobile revenues in Q2?
A: The slowdown is linked to the early closure of classes and limited mobility due to the heat. However, we expect growth to bounce back in Q3.
Q: Can you explain the 1% growth in home broadband despite record net adds and stable fiber ARPU?
A: The gap is due to the decline in legacy business revenues, such as copper lines and voice calling. Fiber business saw a 7% year-on-year growth, but legacy revenue decline dragged down overall performance.
Q: What is the strategy for prepaid fiber, and can it be a potential profit driver?
A: Prepaid fiber economics are challenging due to high initial CapEx. We started with existing customers needing alternative payment methods. New acquisitions are selective, requiring upfront payment to ensure commitment. We also launched an aggressive postpaid plan at PHP899, which is seeing higher uptake than prepaid options.
Q: Why was there a spike in personnel expenses in Q2 compared to last year?
A: The increase in repairs and maintenance was due to higher technical service fees from suppliers like Cisco and Huawei. Personnel expenses increased by 1%, including merit increases for the year.
Q: How do you plan to push EBITDA margin above 52% in the second half of 2024?
A: We aim to reduce operating expenses, but the margin will likely land between 52% and 53%.
Q: What incremental earnings can be expected from Santa Rosa's initial 20-megawatt capacity?
A: We expect to extract between PHP600 million to PHP1.5 billion in additional revenues within the next 18 months following the opening of Santa Rosa in October.
Q: Why is voice revenue still significant, and is it combined with other products?
A: Legacy revenue includes voice, copper telephony, international calling, and prepaid calling cards. While these are declining, they still contribute to overall revenue.
Q: What percentage of net adds do you expect from the cheaper PHP899 postpaid plan and prepaid fiber plans?
A: Initially, the PHP899 plan accounted for 20% of new connects but has since stabilized at 5%-10%. Prepaid fiber is still ramping up, and we are building installation and sales capacity to target this market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
