6-K 1 phi-6k_20200630.htm PLDT 2Q2020 FORM 6-K phi-6k_20200630.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

August 6, 2020

 

PLDT INC.

(Translation of registrant’s name into English)

 

Ramon Cojuangco Building

Makati Avenue, Makati City

Philippines

(Address of registrant’s principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F   Form 40-F  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (1):     Yes      No  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101 (b) (7):     Yes      No  

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.     Yes      No  

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

Registrant:    PLDT Inc.

 

 

 

 

 

Signature and Title:

/s/ Manuel V. Pangilinan

 

Manuel V. Pangilinan

 

Chairman of the Board

 

President and Chief Executive Officer

 

 

 

 

Signature and Title:

/s/ Anabelle Lim-Chua

 

Anabelle Lim-Chua

 

Senior Vice President

 

(Principal Financial Officer)

 

 

 

 

Signature and Title:

/s/ June Cheryl A. Cabal-Revilla

 

June Cheryl A. Cabal-Revilla

 

Senior Vice President

 

(Principal Accounting Officer)

 

 

 

 

 

 

 

 

Date: 08/06/2020

 


 

 

SEC Number  

PW-55

File Number  

 

 

 

 

 

PLDT Inc.

 

(Company’s Full Name)

 

Ramon Cojuangco Building

Makati Avenue, Makati City

 

(Company’s Address)

 

 

(632) 8816-8556

 

(Telephone Number)

 

 

Not Applicable

 

(Fiscal Year Ending)

(month & day)

 

 

SEC Form 17-Q

 

Form Type

 

 

Not Applicable

 

Amendment Designation (if applicable)

 

 

June 30, 2020

 

Period Ended Date

 

 

Not Applicable

 

(Secondary License Type and File Number)

 

 


 

August 6, 2020

 

Securities & Exchange Commission

Secretariat Building, PICC Complex

Roxas Boulevard, Pasay City

 

Attention:

 

Mr. Vicente Graciano P. Felizmenio, Jr.

 

 

Director – Markets and Securities Regulations Dept.

 

Gentlemen:

 

In accordance with Section 17.1(b) of the Securities Regulation Code and SRC Rule 17.1.1.1.2, we submit herewith two (2) copies of SEC Form 17-Q with Management’s Discussion and Analysis and accompanying unaudited consolidated financial statements for the six months (6) months ended June 30, 2020.

 

Very truly yours,

 

 

 

 

 

/s/ Ma. Lourdes C. Rausa-Chan

 

MA. LOURDES C. RAUSA-CHAN

 

Corporate Secretary

 

 

 

 


 

COVER SHEET

 

SEC Registration Number

P

W

-

5

5

 

 

 

 

 

 

 

Company Name

P

L

D

T

 

I

N

C

.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal Office (No./Street/Barangay/City/Town/Province)

R

A

M

O

N

 

C

O

J

U

A

N

G

C

O

 

B

U

I

L

D

I

N

G

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

M

A

K

A

T

I

 

A

V

E

N

U

E

 

M

A

K

A

T

I

 

C

I

T

Y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Form Type

 

 

 

Department requiring the report

 

 

 

Secondary License Type, If Applicable

 

 

1

7

-

Q

 

 

 

 

 

 

 

M

S

R

D

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANY INFORMATION

 

Company’s Email Address

 

Company’s Telephone Number/s

 

Mobile Number

 

 

jacabal@pldt.com.ph

 

(02) 8816-8534

 

 

 

 

 

No. of Stockholders

 

Annual Meeting

Month/Day

 

Fiscal Year

Month/Day

 

 

11,586

as at June 30, 2020

 

Every 2nd Tuesday in June

 

December 31

 

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation

Name of Contact Person

 

Email Address

 

Telephone Number/s

 

Mobile Number

June Cheryl A. Cabal-Revilla

 

jacabal@pldt.com.ph

 

(02) 8816-8534

 

 

 

Contact Person’s Address

11/F Ramon Cojuangco Bldg. Makati Ave., Makati City

Note:  In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.

 

 

 


 

SECURITIES AND EXCHANGE COMMISSION

 

SEC FORM 17-Q

QUARTERLY REPORT PURSUANT TO SECTION 17

OF THE SECURITIES REGULATION CODE (“SRC”) AND

SRC 17 (2) (b) THEREUNDER

 

1.

For the quarterly period ended

 

June 30, 2020

 

 

 

 

2.

SEC Identification Number

 

PW-55

 

 

 

 

3.

BIR Tax Identification No.

 

000-488-793

 

 

 

 

4.

PLDT Inc.

 

 

 

Exact name of registrant as specified in its charter

 

 

 

 

 

 

5.

Republic of the Philippines

 

 

 

Province, country or other jurisdiction of incorporation or organization

 

 

 

 

 

 

6.

Industry Classification Code:

 

(SEC Use Only)

 

 

 

 

7.

Ramon Cojuangco Building, Makati Avenue, Makati City

 

     0721      

 

Address of registrant’s principal office

 

Postal Code

 

 

 

 

8.

(632) 8816-8556

 

 

 

Registrant’s telephone number, including area code

 

 

 

 

 

 

9.

Not Applicable

 

 

 

Former name, former address, and former fiscal year, if changed since last report

 

 

 

 

 

 

10.

Securities registered pursuant to Sections 8 of the SRC

 

 

 

 

 

 

 

Title of Each Class

 

Number of Shares of Common Stock Outstanding

 

Common Capital Stock, Php5 par value

 

216,055,775 shares as at June 30, 2020

 

 

 

 

11.

Are any or all of these securities listed on the Philippine Stock Exchange?

 

 

 

 

 

 

 

Yes [ X ]

 

No [    ]

 

 

 

 

12.

Check whether the registrant

 

 

 

 

 

 

(a)

has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding 12 months (or for such shorter period the registrant was required to file such reports):

 

 

 

 

 

Yes [ X ]

 

No [    ]

 

 

 

 

(b)

has been subject to such filing requirements for the past 90 days.

 

 

 

 

 

 

 

Yes [ X ]

 

No [    ]

 

 

 


 

TABLE OF CONTENTS

 

PART I -

 

FINANCIAL INFORMATION

 

1

Item 1.

 

Consolidated Financial Statements

 

1

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

1

 

 

Financial Highlights and Key Performance Indicators

 

2

 

 

Performance Indicators

 

3

 

 

Overview

 

4

 

 

Management’s Financial Review

 

4

 

 

Results of Operations

 

5

 

 

Wireless

 

10

 

 

Revenues

 

10

 

 

Service Revenues

 

11

 

 

Non-Service Revenues

 

14

 

 

Expenses

 

14

 

 

Other Income (Expenses)

 

15

 

 

Provision for Income Tax

 

16

 

 

Net Income (Loss)

 

16

 

 

EBITDA

 

16

 

 

Core Income

 

16

 

 

Fixed Line

 

16

 

 

Revenues

 

16

 

 

Service Revenues

 

16

 

 

Non-Service Revenues

 

17

 

 

Expenses

 

18

 

 

Other Income (Expenses)

 

18

 

 

Provision for Income Tax

 

19

 

 

Net Income

 

19

 

 

EBITDA

 

19

 

 

Core Income

 

19

 

 

Others

 

19

 

 

Expenses

 

19

 

 

Other Income (Expenses)

 

20

 

 

Net Income

 

20

 

 

Core Income

 

20

 

 

Liquidity and Capital Resources

 

20

 

 

Operating Activities

 

21

 

 

Investing Activities

 

22

 

 

Financing Activities

 

22

 

 

Changes in Financial Conditions

 

23

 

 

Off-Balance Sheet Arrangements

 

24

 

 

Equity Financing

 

24

 

 

Contractual Obligations and Commercial Commitments

 

24

 

 

Quantitative and Qualitative Disclosures about Market Risks

 

24

 

 

Impact of Inflation and Changing Prices

 

25

PART II

 

OTHER INFORMATION

 

26

 

 

Related Party Transactions

 

30

ANNEX

 

Aging of Accounts Receivable

 

A-1

 

 

Financial Soundness Indicators

 

A-2

 

 

SIGNATURES

 

S-1

 

 

 

 


 

 

 

 

PART I – FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements

Our consolidated financial statements as at June 30, 2020 (unaudited) and December 31, 2019 (audited) and for the six months ended June 30, 2020 and 2019 (unaudited) and related notes (pages F-1 to F-171) are filed as part of this report on Form 17-Q.

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

In the following discussion and analysis of our financial condition and results of operations, unless the context indicates or otherwise requires, references to “we,” “us,” “our” or “PLDT Group” mean PLDT Inc. and its consolidated subsidiaries, and references to “PLDT” mean PLDT Inc., not including its consolidated subsidiaries (please see Note 2 – Summary of Significant Accounting Policies to the accompanying unaudited consolidated financial statements for the list of these subsidiaries, including a description of their respective principal business activities and PLDT’s direct and/or indirect equity interest).

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes.  Our unaudited consolidated financial statements, and the financial information discussed below, have been prepared in accordance with Philippine Financial Reporting Standards, or PFRS, which is virtually converged with International Financial Reporting Standards as issued by the International Accounting Standards Board. PFRS differs in certain significant respects from generally accepted accounting principles, or GAAP, in the U.S.

The financial information appearing in this report and in the accompanying unaudited consolidated financial statements is stated in Philippine pesos.  Unless otherwise indicated, translations of Philippine peso amounts into U.S. dollars in this report and in the accompanying unaudited consolidated financial statements were made based on the exchange rate of Php49.79 to US$1.00, the exchange rate as at June 30,2020 quoted through the Bankers Association of the Philippines.

Some information in this report may contain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended.  We have based these forward-looking statements on our current beliefs, expectations and intentions as to facts, actions and events that will or may occur in the future. Such statements generally are identified by forward-looking words such as “believe,” “plan,” “anticipate,” “continue,” “estimate,” “expect,” “may,” “will” or other similar words.

A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement.  We have chosen these assumptions or bases in good faith.  These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control.  In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance.  Actual results may differ materially from information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors.  When considering forward-looking statements, you should keep in mind the description of risks and other cautionary statements in this report.  You should also keep in mind that any forward-looking statement made by us in this report or elsewhere speaks only as at the date on which we made it.  New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us.  We have no duty to, and do not intend to, update or revise the statements in this report after the date hereof.  In light of these risks and uncertainties, you should keep in mind that actual results may differ materially from any forward-looking statement made in this report or elsewhere.

 

1


 

 

 

 

Financial Highlights and Key Performance Indicators

 

 

 

Six months ended June 30,

 

 

Increase (Decrease)

 

 

 

2020

 

 

2019(1)

 

 

Amount

 

 

%

 

(amounts in million Php, except for EBITDA margin and earnings

   per common share)

 

 

 

 

 

 

 

 

 

 

 

Consolidated Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

86,735

 

 

 

81,984

 

 

 

4,751

 

 

 

6

 

Expenses

 

 

64,819

 

 

 

61,613

 

 

 

3,206

 

 

 

5

 

Other income (expenses) – net

 

 

(4,797

)

 

 

(3,300

)

 

 

(1,497

)

 

 

(45

)

Income before income tax

 

 

17,119

 

 

 

17,071

 

 

 

48

 

 

 

 

Net income

 

 

12,423

 

 

 

12,235

 

 

 

188

 

 

 

2

 

Core income

 

 

12,981

 

 

 

12,320

 

 

 

661

 

 

 

5

 

Telco core income

 

 

13,868

 

 

 

13,203

 

 

 

665

 

 

 

5

 

EBITDA

 

 

43,165

 

 

 

39,666

 

 

 

3,499

 

 

 

9

 

EBITDA margin(2)

 

 

52

%

 

 

51

%

 

 

 

 

 

 

Reported earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

56.70

 

 

 

56.37

 

 

 

0.33

 

 

 

1

 

Diluted

 

 

56.70

 

 

 

56.37

 

 

 

0.33

 

 

 

1

 

Core earnings per common share(3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

59.95

 

 

 

56.89

 

 

 

3.06

 

 

 

5

 

Diluted

 

 

59.95

 

 

 

56.89

 

 

 

3.06

 

 

 

5

 

 

 

 

June 30,

 

 

December 31,

 

 

Increase (Decrease)

 

 

 

2020

 

 

2019

 

 

Amount

 

 

%

 

(amounts in million Php, except for net debt to equity ratio)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Financial Position

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

 

557,692

 

 

 

525,027

 

 

 

32,665

 

 

 

6

 

Property and equipment

 

 

245,064

 

 

 

232,134

 

 

 

12,930

 

 

 

6

 

Cash and cash equivalents and short-term investments

 

 

47,493

 

 

 

24,683

 

 

 

22,810

 

 

 

92

 

Total equity attributable to equity holders of PLDT

 

 

114,902

 

 

 

111,987

 

 

 

2,915

 

 

 

3

 

Long-term debt, including current portion

 

 

235,300

 

 

 

192,556

 

 

 

42,744

 

 

 

22

 

Net debt(4) to equity ratio

 

1.63x

 

 

1.50x

 

 

 

 

 

 

 

 

 

 

Six months ended June 30,

 

 

Change

 

 

 

2020

 

 

2019

 

 

Amount

 

 

%

 

(amounts in million Php, except for operational data)

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

33,890

 

 

 

35,828

 

 

 

(1,938

)

 

 

(5

)

Net cash used in investing activities

 

 

(39,578

)

 

 

(37,135

)

 

 

(2,443

)

 

 

(7

)

Payment for purchase of property and equipment, including

   capitalized interest

 

 

(41,046

)

 

 

(40,961

)

 

 

(85

)

 

 

 

Net cash provided by (used in) financing activities

 

 

27,396

 

 

 

(17,517

)

 

 

44,913

 

 

 

256

 

Operational Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of mobile subscribers

 

 

70,185,489

 

 

 

67,547,646

 

 

 

2,637,843

 

 

 

4

 

Prepaid

 

 

67,738,421

 

 

 

65,151,418

 

 

 

2,587,003

 

 

 

4

 

Postpaid

 

 

2,447,068

 

 

 

2,396,228

 

 

 

50,840

 

 

 

2

 

Number of broadband subscribers

 

 

2,609,166

 

 

 

2,041,946

 

 

 

567,220

 

 

 

28

 

Fixed Line broadband

 

 

2,105,140

 

 

 

1,841,147

 

 

 

263,993

 

 

 

14

 

Fixed Wireless broadband

 

 

504,026

 

 

 

200,799

 

 

 

303,227

 

 

 

151

 

Number of fixed line subscribers

 

 

2,917,641

 

 

 

2,711,411

 

 

 

206,230

 

 

 

8

 

Number of employees:

 

 

18,416

 

 

 

19,457

 

 

 

(1,041

)

 

 

(5

)

Fixed Line

 

 

12,518

 

 

 

13,157

 

 

 

(639

)

 

 

(5

)

LEC

 

 

10,937

 

 

 

11,038

 

 

 

(101

)

 

 

(1

)

Others

 

 

1,581

 

 

 

2,119

 

 

 

(538

)

 

 

(25

)

Wireless

 

 

5,898

 

 

 

6,300

 

 

 

(402

)

 

 

(6

)

 

(1)

Certain amounts for the six months ended June 30, 2019 were reclassified to conform with the current presentation.

(2)

EBITDA margin for the period is measured as EBITDA divided by service revenues.

(3)

Core earnings per common share, or EPS, for the period is measured as core income divided by the weighted average number of outstanding common shares for the period.

(4)

Net debt is derived by deducting cash and cash equivalents and short-term investments from total debt (long-term debt, including current portion).

2


 

 

 

 

 

Exchange Rates – per US$

 

Month end

Rates

 

 

Weighted

average rates

during the year

 

June 30, 2020

 

 

49.79

 

 

 

50.64

 

December 31, 2019

 

 

50.80

 

 

 

51.79

 

June 30, 2019

 

 

51.23

 

 

 

52.21

 

December 31, 2018

 

 

52.56

 

 

 

52.68

 

 

Performance Indicators

We use a number of non-GAAP performance indicators to monitor financial performance.  These are summarized below and discussed later in this report.

EBITDA  

EBITDA is measured as net income excluding depreciation and amortization, amortization of intangible assets, asset impairment on noncurrent assets, financing costs – net, interest income, equity share in net earnings (losses) of associates and joint ventures, foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net, provision for (benefit from) income tax and other income – net.  EBITDA is monitored by management for each business unit separately for purposes of making decisions about resource allocation and performance assessment.  EBITDA is presented because our management believes that it is widely used by investors in their analysis of the performance of PLDT and can assist them in their comparison of PLDT’s performance with those of other companies in the technology, media and telecommunications sector.  We also present EBITDA because it is used by some investors as a way to measure a company’s ability to incur and service debt, make capital expenditures and meet working capital requirements.  Companies in the technology, media and telecommunications sector have historically reported EBITDA as a supplement to financial measures in accordance with PFRS.  EBITDA should not be considered as an alternative to net income as an indicator of our performance, nor should EBITDA be considered as an alternative to cash flows from operating activities, as a measure of liquidity or as an alternative to any other measure determined in accordance with PFRS.  Unlike net income, EBITDA does not include depreciation and amortization, and financing costs and, therefore, does not reflect current or future capital expenditures or the cost of capital.  We compensate for these limitations by using EBITDA as only one of several comparative tools, together with PFRS-based measurements, to assist in the evaluation of operating performance. Such PFRS-based measurements include income before income tax, net income, and operating, investing and financing cash flows.  We have significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in EBITDA.  Our calculation of EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

Core Income and Telco Core Income

Core income is measured as net income attributable to equity holders of PLDT (net income less net income attributable to noncontrolling interests), excluding foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net (excluding hedge costs), asset impairment on noncurrent assets, non-recurring gains (losses), net of tax effect of aforementioned adjustments, as applicable, and similar adjustments to equity share in net earnings (losses) of associates and joint ventures.  Core income results are monitored by management for each business unit separately for purposes of making decisions about resource allocation and performance assessment.  

 

Also, Telco core income is measured as net income attributable to equity holders of PLDT (net income less net income attributable to noncontrolling interests), excluding foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net (excluding hedge costs), asset impairment on noncurrent assets, non-recurring gains (losses), net of tax effect of aforementioned adjustments, as applicable, and similar adjustments to equity share in net earnings (losses) of associates and joint ventures, adjusted for the effect of the share in Voyager Innovations Holdings, Pte. Ltd., or VIH, losses, asset sales, and accelerated depreciation.  Telco core income is used by the management as a basis for determining the level of dividend payouts to shareholders and a basis of granting incentives to employees.  

 

3


 

 

 

 

Core income and Telco core income should not be considered as an alternative to income before income tax or net income determined in accordance with PFRS as an indicator of our performance.  Unlike net income, core income does not include foreign exchange gains and losses, gains and losses on derivative financial instruments, asset impairments and non-recurring gains and losses.  We compensate for these limitations by using core income as only one of several comparative tools, together with PFRS-based measurements, to assist in the evaluation of operating performance.  Such PFRS-based measurements include income before income tax and net income.  Our calculation of core income may be different from the calculation methods used by other companies and, therefore, comparability may be limited.  

Overview

We are one of the leading telecommunications and digital services providers in the Philippines, in terms of both subscribers and revenues, serving the fixed line, wireless and broadband markets.  Through our three principal business segments, Wireless, Fixed Line and Others, we offer a diverse range of telecommunications and digital services across our extensive fiber optic backbone and wireless and fixed line networks.

We serve 75.7 million users through the provision of mobile, fixed line and data services.  In addition to the business segments discussed below, PLDT has found it beneficial to view its business from a customer-served perspective.  Accordingly, we also assign metrics along the following marketing verticals: Home, Individual, Enterprise and International customers.

Our three business units are as follows:

 

Wireless mobile telecommunications services provided by Smart Communications, Inc., or Smart, and Digitel Mobile Philippines, Inc., or DMPI, our mobile service providers; Smart Broadband, Inc., or SBI, and Primeworld Digital Systems, Inc., or PDSI, our wireless broadband service providers; and certain subsidiaries of PLDT Global Corporation, or PLDT Global, our mobile virtual network operations, or MVNO, provider;

 

Fixed Line fixed line telecommunications services primarily provided by PLDT.  We also provide fixed line services through PLDT’s subsidiaries, namely, PLDT Clark Telecom, Inc., PLDT Subic Telecom, Inc., PLDT-Maratel, Inc., Bonifacio Communications Corporation and PLDT Global and certain subsidiaries; data center, cloud, cyber security services, managed information technology services and resellership through ePLDT, Inc., or ePLDT, IP Converge Data Services, Inc., or IPCDSI, and subsidiary, or IPCDSI Group, ABM Global Solutions, Inc., or AGS, and its subsidiaries, or AGS Group, Curo Teknika, Inc. and ePDS, Inc., or ePDS; full service customer rewards and loyalty programs provided by MVP Rewards and Loyalty Solutions, Inc., or MRSI; and distribution of Filipino channels and content through Pilipinas Global Network Limited and its subsidiaries; and

 

Others PLDT Communications and Energy Ventures, Inc., or PCEV, PLDT Global Investment Holdings, Inc., PLDT Global Investments Corporation, or PGIC, PLDT Digital Investments Pte. Ltd., or PLDT Digital, and its subsidiaries, our investment companies.

As at June 30, 2020, our chief operating decision maker, or our Management Committee, views our business activities in three business units: Wireless, Fixed Line and Others.

Management’s Financial Review

In addition to consolidated net income, we use EBITDA and core income to assess our operating performance. The reconciliation of our consolidated net income to our consolidated EBITDA and our consolidated core income for the six months ended June 30, 2020 and 2019 are set forth below.

4


 

 

 

 

The following table shows the reconciliation of our consolidated net income to our consolidated EBITDA for the six months ended June 30, 2020 and 2019:

 

 

 

2020

 

 

2019

 

 

 

(amounts in million Php)

 

Consolidated net income

 

 

12,423

 

 

 

12,235

 

Add (deduct) adjustments:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

20,897

 

 

 

18,903

 

Provision for income tax

 

 

4,696

 

 

 

4,836

 

Financing costs – net

 

 

4,838

 

 

 

4,285

 

Equity share in net losses of associates and joint ventures

 

 

1,028

 

 

 

706

 

Impairment of investments

 

 

659

 

 

 

34

 

Amortization of intangible assets

 

 

352

 

 

 

392

 

Losses on derivative financial instruments – net

 

 

132

 

 

 

308

 

Foreign exchange gains – net

 

 

(513

)

 

 

(362

)

Interest income

 

 

(686

)

 

 

(1,012

)

Other income – net

 

 

(661

)

 

 

(659

)

Total adjustments

 

 

30,742

 

 

 

27,431

 

Consolidated EBITDA

 

 

43,165

 

 

 

39,666

 

 

The following table shows the reconciliation of our consolidated net income to our consolidated core income and telco core income for the six months ended June 30, 2020 and 2019:

 

 

 

2020

 

 

2019

 

 

 

(amounts in million Php)

 

Consolidated net income

 

 

12,423

 

 

 

12,235

 

Add (deduct) adjustments:

 

 

 

 

 

 

 

 

Impairment of investments

 

 

659

 

 

 

34

 

Unrealized losses (gains) in fair value of investments

 

 

361

 

 

 

(142

)

Losses on derivative financial instruments – net, excluding hedge costs

 

 

116

 

 

 

281

 

Manpower rightsizing program

 

 

45

 

 

 

292

 

Core income adjustment on equity share in net losses (income) of associates and joint ventures

 

 

(22

)

 

 

141

 

Net income attributable to noncontrolling interests

 

 

(143

)

 

 

(28

)

Foreign exchange gains – net

 

 

(513

)

 

 

(362

)

Net tax effect of aforementioned adjustments

 

 

55

 

 

 

(131

)

Total adjustments

 

 

558

 

 

 

85

 

Consolidated core income

 

 

12,981

 

 

 

12,320

 

Add (deduct) adjustments:

 

 

 

 

 

 

 

 

Share in VIH losses

 

 

887

 

 

 

631

 

Gain on sale of Rocket Internet shares

 

 

 

 

 

(126

)

Accelerated depreciation, net

 

 

 

 

 

378

 

Total adjustments

 

 

887

 

 

 

883

 

Telco core income

 

 

13,868

 

 

 

13,203

 

 

Results of Operations

The following table shows the contribution by each of our business segments to our consolidated revenues, expenses, other income (expense), income (loss) before income tax, provision for (benefit from) income tax, net income (loss)/segment profit (loss), EBITDA, EBITDA margin, core income and telco core income for the six months ended June 30, 2020 and 2019.  In each of the six months ended June 30, 2020 and 2019, majority of our revenues are derived from our operations within the Philippines.  Our revenues derived from outside the Philippines consist primarily of revenues from incoming international calls to the Philippines.  

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Wireless

 

 

Fixed Line

 

 

Others

 

 

Inter-segment

Transactions

 

 

Consolidated

 

 

 

(amounts in million Php, except for EBITDA margin)

 

For the six months ended June 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

49,911

 

 

 

46,483

 

 

 

 

 

 

(9,659

)

 

 

86,735

 

Expenses

 

 

37,055

 

 

 

37,404

 

 

 

8

 

 

 

(9,648

)

 

 

64,819

 

Other income (expenses) – net

 

 

(2,635

)

 

 

(217

)

 

 

(1,997

)

 

 

52

 

 

 

(4,797

)

Income (loss) before income tax

 

 

10,221

 

 

 

8,862

 

 

 

(2,005

)

 

 

41

 

 

 

17,119

 

Provision for (benefit from) income tax

 

 

2,337

 

 

 

2,403

 

 

 

(217

)

 

 

173

 

 

 

4,696

 

Net income (loss)/Segment profit (loss)

 

 

7,884

 

 

 

6,459

 

 

 

(1,788

)

 

 

(132

)

 

 

12,423

 

EBITDA

 

 

29,012

 

 

 

17,373

 

 

 

(8

)

 

 

(3,212

)

 

 

43,165

 

EBITDA margin(1)

 

 

61

%

 

 

38

%

 

 

 

 

 

 

 

 

52

%

Core income (loss)

 

 

7,867

 

 

 

6,163

 

 

 

(913

)

 

 

(136

)

 

 

12,981

 

Telco core income

 

 

7,867

 

 

 

6,163

 

 

 

(26

)

 

 

(136

)

 

 

13,868

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended June 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

46,231

 

 

 

44,217

 

 

 

 

 

 

(8,464

)

 

 

81,984

 

Expenses

 

 

34,249

 

 

 

35,877

 

 

 

10

 

 

 

(8,523

)

 

 

61,613

 

Other income (expenses) – net

 

 

(2,292

)

 

 

(627

)

 

 

(462

)

 

 

81

 

 

 

(3,300

)

Income (loss) before income tax

 

 

9,690

 

 

 

7,713

 

 

 

(472

)

 

 

140

 

 

 

17,071

 

Provision for (benefit from) income tax

 

 

2,531

 

 

 

2,331

 

 

 

(207

)

 

 

181

 

 

 

4,836

 

Net income (loss)/Segment profit (loss)

 

 

7,159

 

 

 

5,382

 

 

 

(265

)

 

 

(41

)

 

 

12,235

 

EBITDA

 

 

26,005

 

 

 

16,389

 

 

 

(10

)

 

 

(2,718

)

 

 

39,666

 

EBITDA margin(1)

 

 

60

%

 

 

38

%

 

 

 

 

 

 

 

 

51

%

Core income (loss)

 

 

7,166

 

 

 

5,461

 

 

 

(266

)

 

 

(41

)

 

 

12,320

 

Telco core income

 

 

7,544

 

 

 

5,461

 

 

 

239

 

 

 

(41

)

 

 

13,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

3,680

 

 

 

2,266

 

 

 

 

 

 

(1,195

)

 

 

4,751

 

Expenses

 

 

2,806

 

 

 

1,527

 

 

 

(2

)

 

 

(1,125

)

 

 

3,206

 

Other income (expenses) – net