PLDT Inc. (NYSE:PHI) Q3 2023 Earnings Call Transcript

PLDT Inc. (NYSE:PHI) Q3 2023 Earnings Call Transcript November 7, 2023

Melissa de Dios: Good afternoon, and thank you for joining us today, to discuss the Company’s Financial and Operating Results for Nine Months of 2023. Copy of today’s presentation is posted on our website. For those who have not been able to do so, you may download the presentation from www.pldt.com, under the Investor Relations section. Kindly note that this briefing is being recorded. A podcast of this event will be available on our website after the call. QR code for the presentation is on the screen, and the MD&A, FS and podcast will be made available after the call. For today’s presentation, we have with us Mr. Al Panlilio, President and CEO of PLDT and Smart; Mr. Danny Yu, Chief Financial Officer and Chief Risk Officer; Marilyn Victorio-Aquino, our Corporate Secretary and Chief Legal Counsel; Mr. Shailesh Baidwan, President of Maya Philippines and Co-Founder of Maya Bank, as well as other members of the PLDT management team.

At this point, let me turn the floor over to Mr. Panlilio to begin the presentation.

An aerial view of a telecom tower, representing the company’s dedication to communication services.

Al Panlilio: Thank you, Melissa. And good afternoon to all, and thank you for joining us this afternoon. And I’d like to start off the presentation with a few highlights of the business, and then I’ll pass it on to Danny, for more detailed financial highlights report, and then to SB for Maya. Happy to report the first nine months performance for PLDT-Smart. Growth was made possible in nine months, 2023 performance. To start with, we have ₱142.3 billion or 1% growth in revenues, which are nine month high revenues for PLDT. We also had an all-time nine-month high for our EBITDA, of ₱78.4 billion, which counts for the same period of last year, able to maintain margin at 52%, EBITDA margin. Telco core have shown growth also, plus 2%, ₱26.1 billion for the period.

And also want to share the CapEx being managed down ₱55.3 billion versus ₱67.3 billion, of same period last year. So because of that, the Cap intensity gone down to 37% from a high of 46%. That’s clear. And Page 2 next page. So, we are continuing to expand the network, countrywide. We improved – we increased our fiber footprint — our domestic fiber footprint by 4%, and that’s now up to almost 894,000 kilometers. And if you add the fiber optic of backbone of – in terms of our subsea it’s about 1.1 million kilometer of fiber. Homes passed is ₱17.31 million, up from ₱16.78 million, last year. I’m also happy to report that there are no more device latched on to our network, passive return 74% growth. Now we have 3.64 million who are latched on to 5G devices environment network.

Jupiter Cable Systems, which we launched last year, and was also got certification for IS0 22301 BCMS. And just an update on the tower sales that we started about a year and a half ago, two years ago. We closed 1,319 closed towers as of November 3, generating proceeds of about ₱17.4 billion. And in total, from the first sale that we have, we’ve already completed, turnover 5,984 towers, equivalent to approximately ₱78 billion. Next page, please. Happy to report also – next page. The recognition that we’ve gotten as a group, both locally to back market – locally and globally. Ookla [ph] has rated Smart as the best in test, both upload speeds, download speeds, and latency experience, and has been a consistent winner since 2019. Time Magazine actually also put PLDT as the only Philippine telco named, and is ranked highest in sustainability among six cited Philippine companies, recently.

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Q&A Session

And we continue to also get awards in terms of the governance initiatives, and scorecard and recognition, which recognize PLDT, upholding high standards of corporate governance. Next page. Our three business units continue to push for growth through innovation. Smart, we continue to empower digital lifestyles through exciting, personalized offers. And we have [Alex Caeg] here today who can answer your questions on what’s in store for our wireless customers. And by the way, we have now the highest in terms of sub base 55 — sorry, 55.2 million subscribers now on Smart, and PLDT being the number one prepaid brand in country. PLDT Home, Jeremiah De La Cruz is here, he can also share with you some of the plans, and keeping families safe, connected, productive and entertained, of both offers on the fiber and fixed wireless products that we have launched in the market.

And PLDT Enterprise, both Mitch Locsin and Gina, ensuring that we’re able to provide innovative solutions for the digital transformation of the industries that we cover, both large companies and also institutes. Next page, please. Next page. So staying true to our company core, on sustainability. We did put — we had a digital convention held last October, called Vision, and talked about — discussions in the Digi Hub, was about sustainability — in-depth discussions on sustainability and the program that we have embarked as PLDT, that we have School-in-a-Bag turnover, with guest of honor, DICT Sec. Ivan, during that time. And we also implemented E-Waste Collection Stations for delegates, same with the second pillar here where we put it in our businesses where we’re collecting all phones, chargers, devices, modems to properly dispose of this equipment.

And in fact, also in FEBA we did an initiative for sustainability where we collect PET bottles, plastic bottles that we want to also expose sustainably. Next page. Our push for vision building through a public and private collaboration remains to be strong. PLDT Group joined the call for the creation of a Connectivity Index Rating through PISAC, to elevate internet quality in the country, which could bring great things for customers and for people to be able to raise building its — connectivity. We also partnered with Maya, backed by the GDP, DTI, Cashless Expo 2023, which should — just happening this month. And during also the DIGICON, we launched the first ever sovereign cloud, with DICT, to help fast-track digital transformation of the country’s public sector.

But it should also be used, obviously by private sector, as soon as the IRR permit guidelines have been submitted by government. Next page, please. Our PLDT Smart Foundation remains to be very busy, in serving our communities. Just to highlight, our Lab for All public health initiative by the First Lady, is supported not only by PLDT, but also MVP group of companies, others that we continue to grow. Next page. So at this point, we will continue to innovate for tomorrow, but we’re excited for innovations today, and we will continue to push this last quarter to make sure that we end the year — not behind. So at this point, I’d like to move the presentation to Danny, for more details regarding our financials.

Danny Yu: Thank you. Good afternoon, everyone. I’ll be presenting the financial and operating highlights for the first nine months of 2023. Service revenues of ₱142.3 billion for the first nine months of 2023, were higher by 1% compared to the same period last year. On gross basis, service revenues of ₱149.8 billion were up 3% from ₱145.7 billion in 2022. Operating expenses decreased by 3% or ₱1.7 billion to ₱63.9 billion. Consolidated EBITDA rose by 4% to ₱78.4 billion, an all-time 9-month high with EBITDA margin at 52%. Telco core income, excluding the impact of asset sales and Maya, grew to ₱26.1 billion, up 2% year-on-year. Next page. On a segment basis, revenue growth was broad-based. Individual revenues representing about 43% of consolidated revenues rose 1% to ₱60.6 billion.

Record highs were adjusted in the Home and Enterprise segments. Home revenues rose 2% to ₱45.3 billion, with Fiber Only revenues having risen 10% to ₱39.3 billion. Home revenues — our Enterprise business grew by 1% to ₱34.8 billion. Let me now go through the segments in greater detail. Next, please. Home Broadband revenues grew by 2%, Fiber Only revenues, which now account for 87 total Home revenues, were higher by 10% or ₱3.6 billion compared to the same period last year. As a result, across our installation plus migration and low churn, Fiber net adds re-accelerated in the third quarter with 88,000, compared to 42,000 in the second quarter, bringing the total net adds for the year to 210,000. The gross of our Fiber Only revenues and the sequential albeit modest improvement of revenues from our fixed wireless broadband business, underscore our view that the home broadband market remains underpenetrated, we can serve demand more at the lower market segments that’s more sensitive to price.

Unique to PLDT is the ability to complement our fiber offer with others, at different price points, using varied fixed and wireless technologies to address market affordability. PLDT continues to enjoy strong brand equity and superior network quality, making it a formidable competitor in the market. Next, please. Data and ICT remain the key drivers of our enterprise business, which registered a revenue increase of 1% to ₱34.8 billion from the same period last year, with third quarter revenues up by 2%. Corporate data grew by 6% due to higher fiber and managed IT data revenues. ePLDT recorded a 10% increase in revenues mainly from data center and cloud services. With the Santa Rosa Data Center capacity expected to come on stream ahead of competition in the first half in ’24, ePLDT is well positioned — actually the robust demand from hyperscalers.

In addition, our growth pipeline is fueled by our enterprise team’s focus on enabling digital transformation of corporate SMEs and government, through the creation of smart cities and the first sovereign cloud. Next, please. Positive trends are also manifesting in the individual segment which has faced various challenges over the years. Revenue for our individual business rose by 1% in the first nine months of the year. In the third quarter, which is historically low, revenues were higher by ₱100 million versus first quarter, and ₱400 million higher than the same quarter in 2022. 2% and 6% growth in prepaid and postpaid revenues in the third quarter supported year-to-date revenue implements compared to last year. Mobile data revenues jumped ₱52.4 billion, with active data users of almost 38 million and following a 15% price in data traffic.

Average monthly data usage per customer escalated to 10.8 gigabytes, up by 23% from last year and 17% from full year 2022. While the industry availments of number portability remains small since the implementation of MNP in 2020, the majority of customers that ported their numbers, moved to Smart, reflecting recognition of PLDT’s network advantage. Next please. In the first nine months of 2023, 82% of our consolidated service revenues were from data and broadband. By service type, mobile data rose by 3% year-on-year while broadband and corporate data grew by 4% and 6%, respectively. ICT revenues were up 10%, including an 8% price in data center revenues. Our broad-based cost management effort — next, please — was undertaken, resulting in a 3% or ₱1.7 billion in total expenses, including provisions and subsidies.

The combined impact of increase in revenues and decline in costs, is a 4% rise in consolidated EBITDA to ₱78.4 billion, a nine-month record high, with margin up 52%. Next, please. Telco core income for the period grew by 2% to ₱26.1 billion year-on-year, reflecting the impact of higher EBITDA, partly offset by higher depreciation, higher financing costs and higher tax provision. Telco core for the third quarter is stable compared to the same quarter last year. Next, please. On a reported basis, PLDT income grew by 1% to ₱27.9 billion, mainly from the gain from the tower sale and leaseback transactions, ForEx and derivative gains, partly offset by MRP costs. Note that our share in losses from Maya stood at ₱1.7 billion, lower than the ₱2.4 billion reported last year.

This moderation in losses is in line with the expectation of breakeven and profitability towards the end of 2024. Next, please. PLDT’s balance sheet remains healthy. With net debt-to-EBITDA at the end of September at 2.44x, lower than the 2.48x at the end of June. We expect this to further improve with the receipt of the remaining tower sales proceeds. Gross debt amounted to ₱274.5 billion, of which 15% are dollar denominated and 5% unhedged. Interest costs for the period stood at 4.49% pretax, while the average life of debt is 6.7 years. Next please. Total CapEx for nine months amounted to ₱55.3 billion, consisting of network and IT CapEx of ₱49.4 billion, and business CapEx of ₱6 billion. In line with our objective of bringing down CapEx and aiming for positive free cash flow, CapEx intensity for the period has fallen below the 40% mark to 37%, and is lower than the 46% recorded last year.

In addition, the CapEx of ₱55.3 billion is ₱23.1 billion lower than EBITDA for the period of ₱78.4 billion. We maintain our CapEx guidance for the year of between ₱80 billion and ₱85 billion. This includes approximately about ₱11 billion out of the ₱33 billion prior year’s commitment. We continue to tightly screen and closely monitor our CapEx, especially multiyear projects, as well as introduce end-to-end process improvements in the value chain covering plan-to-budget approval, procure to pay, build to provision and related record to report. Next page, please. This page shows the usual network highlights. On the fixed network, we passed 17.3 million homes and cover about 18,100 barangays representing 43% of the total barangays in the Philippines.

Total fiber ports grew to 1 — to 6.2 million, as we have accelerated port rollout. We continue to carefully rationalize the rollout of the ports to ensure optimal utilization. PLDT total fiber footprint remains unparalleled, with a total of over 1.1 million kilometers. Population coverage of our wireless network stands at 97%, about 82% of the total handsets on the network are LTE or 4G. Next page, please. The number of unique 5G devices and 5G data traffic continue to register improvements from the end of 2022. As part of our network optimization to realize operational CapEx and spectrum efficiencies, we reduced the number of our 5G base stations. Nevertheless, our 5G speed remain faster than that of competition based on Ookla’s speed test.

Let me…

Shailesh Baidwan: Thank you, Danny. So in 2023, we continue to push the boundaries of our FinTech ecosystem with Maya Digital Bank at the heart of it, and continue to launch new products and growing all our businesses. So in the Philippines, we are the #1 digital bank in terms of number of depositors and the deposit balance, and we continue to see very good growth across our loans portfolio, and I’ll touch upon that. On the merchant acquiring business, which is where we process Visa, Mastercard to our PH domestic debit. Again, we are the leaders in number of transactions processed in the Philippines across all these various fund sources, and continue to see that market share expand. And we are the number one finance app in the Philippines, which is our Maya consumer app.

So let me give a little more color across each of these. So if we look at, on the Maya consumer app, which was largely a payment-centric app and now has gone on and evolved into an all-in-one full financial service app for consumers. We introduced a high-engagement saving product, last year. Customers look forward at the start of the month to pay the electricity bill, to pay various utility bills, to do their various purchases, which then helps them to earn higher interest rate. And the bulk of that information that we are able to collect on customers, we are able to create better profiles and deeper understanding of the behavior, which then goes into our credit scoring models and allows us to provide them with our credit products as and when they need those.

Very pleased, we have launched our first credit product last year, Maya Credit. And last month, we expanded that with a longer tenure product, Maya Personal Loans. And we’ve seen extremely positive take-up of that in the early stages of its launch. We continue to expand our services by adding on investments. So now customers are able to purchase and invest in a number of funds, and we will add the ability to purchase individual stocks on the Philippines Stock Exchange over the coming weeks. So what this has enabled is, really helped the Maya consumer app to become the all-in-one primary financial services app for the customers, and we are seeing them generating 2x to 4x more ARPU and profit per user versus of payments only. We see the same story when we look at the enterprise side of the business, this is a business where we provide with a large online player, a multi — an omnichannel there, providing you with a full suite of payment solutions including, whether it’s just for QR or whether it’s Visa, Mastercard or any other fund source, including domestic debit.

As I mentioned, our share in a number of transactions today in this business is over 50% across Visa, Mastercard, QRPH, that’s a market. And with the addition of Maya Bank, we’ve now been able to integrate the ability for merchants, especially the SME, the MSMEs to be able to use Maya Bank deposit to put their settlement account. And we have now started testing and piloting better products to both macro and to small SMEs. So in the same portal, where they do all their transactions for payments, they are now able to draw down on credit, on working capital products, which we are able to provide on the back of seeing their payment transactions and business flows. So this is another area where we have piloted a number of products and are now scaling those and rolling those out through the course of the rest of 2023.

And if you go to the next slide. To give you some color around the numbers, the number of depositors that we have in Maya Bank grew to 2.6 million. In fact, as of now, the number is pretty much close to 3 million depositors. And that has resulted in us having a deposit balance of nearly ₱24 billion. We have been, as I mentioned, we started with dispersing consumer loans, adding on newer product consumers and of course adding on the micro and SME products. We have disbursed over ₱16 billion of loans in the last month, and as a result of this expansion and the Maya, both the business on the enterprise side and on the consumer side, becoming key drivers. We’ve seen our segment of data across the business have become profitable in the third quarter of 2023.

And as Danny mentioned, thanks for that. Not only have we been able to grow it more than double our net income year-on-year, but we’ve been able to bring down our cash burn by nearly 40% versus last year, and with the expansion that we are seeing in the business with the continued growth in the net income as we launch new product and scale new products, we are looking at making the business cash flow positive towards the end of 2024. With that, I’m going to hand us back to Al.

Al Panlilio: Thank you, S.B. And this on nine months.

Shailesh Baidwan: I just wanted to give the outlook guidance for 2023. Service revenue growth, low-single-digit growth for the group. EBITDA will also be low-single-digit growth. The core income will be at least ₱24 billion. CapEx will then it will be ₱25 billion operated nine months last year. And we will try to, we will continue, obviously, in dividends — sorry, in this year. And then for dividend, we will obviously try to maintain a 60% dividend payout. MVP, if you might want to add a few things?

Manny Pangilinan: No, I’m good, Al. Thank you. Thank you.

A – Melissa de Dios: [Operator Instructions] The first set of questions comes from Stephen Olivero of China Bank Securities. The first one, how does TEL plan to sustain its top line momentum in 2024, given projected period of elevated interest rates and inflation?

Al Panlilio: I can just start, but I think, we haven’t signed a term budgets for next year, but obviously, we’re going to target growth for revenue line. Some of the initiatives that will be on stream next year will be our 11th data center, which will be on stream by June of next year. So we will have the six-month benefit of that, and hopefully full year in the following year. I think we’re showing a positive momentum on mobile and we continue to grow that. There’s still some growth areas still in — that we are also pursuing. Although Danny did say that, it’s starting to get to maybe a financially-challenged market — segment of the market. That’s why I think the ability of Home, to offer both fiber and fixed wireless solutions, will be helpful in that push. And I know that Enterprise continues to push digital transformation across the Enterprise space of customers. Do you want to add a few things? Melissa.

Melissa de Dios: The next question, how does Maya Bank plan to strike a balance between funding costs and interest income, given the attractive deposit rates your currently offering?

Shailesh Baidwan: Yes, we absolutely are trying to strike a balance, in fact, what we have managed and seen as a deliberate effort on our part, is making sure that the customers where it’s high engagement banking, see a growth in both the customers and all the balances over there, which is where we get a lot of rich information on the customers, and these are customers who, for certain periods of time — positive balances, but also over a period of time, need access to credit. And by virtue of seeing the transaction behavior, we are able to score them and provide them with Maya Credit and that piece has worked really well. What we did see was that we had balances in our personal loans product, which was a time deposit-equivalent product.

And in that, we had some customers with high balances because of the interest rate. What we have done is we are reworking that product. And as a result of that, we have seen some reduction in the balances on that product. So if you look at our performance quarter-on-quarter, the number of customers that we have in Maya Bank has actually gone up, but the number of — the amount of deposit balance has actually stayed pretty much flat, but that’s helped us. And the second is, of course, growing the loan book. At this stage, as I mentioned, we have disbursed over ₱16 million – ₱16 billion of loan. These are largely short tenure loans. So as a result, of course, our outstanding loan book is modest. But as we expand into longer tenure rules, as I mentioned, personal loans, SME loans, we will also start seeing our loan-to-deposit ratio go up.

So we’ve had a deliberate strategy of making sure that we’re growing the number of customers that we have. We are getting the transaction behavior and payment behaviors, which is helping us. And that helps us with high engagement banking, but we’re very conscious of making sure that we’re not — at this stage, getting encumbered with high balance deposits at high interest rates, and that’s what we have pretty much worked on over the course of the last couple of quarters and we continue to refine that.

Melissa de Dios: Use the Raise Hand, Arthur.

Arthur Pineda: Can you hear me?

Melissa de Dios: Yes, we can.

Arthur Pineda: Several questions, please. Firstly, on Mobile. I’m just wondering what can be done to address the revenue growth caps versus your competitor? Now it’s — PLDT has had the benefit of network upgrades for quite a while now with the network advantages being claimed. What are the challenges in taking the premium users away from your competitor? Second question I had is with regard to the data center. Can you get some idea on the expected contributions from this, you’ve mentioned contribution or commercialization by early 2024. How much can this generate into the year? And is this immediately profitable? Or is there a ramp-up phase needed with utilization? And final question comes back to Mobile. I’m just wondering what does it take to get industry revenue growth tracking alongside broader GDP growth.

When you look at other markets in Asia, it seems to be tracking well. Philippines seems to be an outlier, as I’m just wondering what can be done so that you’re back to mid-single digits?

Al Panlilio: I’ll let Alex answer the Mobile question now, exactly.

Unidentified Company Representative: Yes, we’re looking at our growth for 2024, riding on the restart of our network expansion, as well as the delivery of platform capabilities that will allow us to deploy targeted, customized and very timely offers, that are indeed relevant and value part. Obviously, there’s a SKU for our customers on postpaid business. We realize that we have work to do there in order to not just upsell, but also to encourage even greater acquisition. Of course, we’ll have to bank on the strength of the network. We have been looking at improvements in terms of speed as well as quality. And we also continue to work on our indoor coverage where most of the mobile consumption has shifted even as increased mobility has already been seen for the first few quarters this year.

Al Panlilio: Yes, so for — if you look at the sub numbers were ahead based on this third quarter report, we’re at 55.2 global, but said yesterday it’s 4.7. So our task is how do we… If we’re not going to be able to use this, we have to work on moving forward.

Arthur Pineda: Revenue growth on the Fiber Homes from the revenue growth?

Unidentified Company Representative: Well, the programs that we have lined up are geared towards accelerating mobile data burn. A number of our customers have continued to enjoy the better offers, but I think we have to see velocity. That’s why the emphasis on asset burn, as well as understanding the segments which require a higher bandwidth allocations. And at the same time, the related offers that might be interesting for this target market, whether it involves fintech solution, entertainment and the like.

Danny Yu: Thank you, Alex. I’ll ask Biboy [ph] to answer the data center question.

Unidentified Company Representative: Thank you for the question on data centers. I think the advantage of the PLDT platform is, we have available capacity. And secondly, we will be the first to market, to actually have a hyperscale data center in the country. This is very advantageous for us because as companies in the public sector transform digitally, they’re looking for colocation services to meet their digital infrastructure requirements. And we will be in the best position to capture most of this, given those two factors of available capacity, and the first to market with a hyperscaler data center by the middle of next year.

Arthur Pineda: Also, can you monetize on both businesses?

Unidentified Company Representative: Yes. So if you look at the data center, obviously, it is like building a house that you need tenants. So we would need to find the tenants to fill it up. There will be a ramp-up phase. We are looking for an anchor tenant to fill up the space that we have, and the anchor tenants will come in the form of hyperscalers — Eastern or Western hyperscalers. And as soon as they ramp up, then it will be easier for us to monetize the colocation space that they’ve taken in our data center.

Al Panlilio: We did — we have started serving the space and we think — very warm on a few big engagements with hyperscalers, one from the West, one from the East, so maybe two from the West. And that’s something that we’ll really be working hard on. So we want to make sure that we can get it as soon as possible. And in part — we’re looking — at what’s available by June next year, is 10 megawatts, the third portion for not by November, in early part of 2024, would be the balance 16 megawatt. So the teams are pushing very hard to get contracted, or even prior to the completion of the biggest revenue. I hope Arthur, we’ve answered your questions.

Arthur Pineda: Just maybe to clarify, are there any plans to find any strategic partner which would help you accelerate take-up levels on your data centers?

Al Panlilio: We’re undergoing a process now, in fact, we shared it with the Board. And we actually have a very short list, and we’re expecting some binding offers, hopefully by the latter part of November. Just precise — exactly which time, we’re looking for a strategic partner that will grow the business and operate it more efficiently, because of the experience of the partner that we are bringing.

Melissa de Dios: The next question is on Mobile. Have you seen any impact from DITO after it received fresh funding?

Al Panlilio: Alex?

Unidentified Company Representative: There has been on ground, as well as online action from the challenger. So obviously, they will have to ride on marketing offers that will go with the expansion of the network. We understand that a number of customers either from our side or from the other competitor, might be if I may say, frankly, trying to experiment and understand the impact, merit being second scene, inside of devices. But we have seen from the marketplace that a number of the customers have actually gone back to their primary service providers after understanding that the service is more reliable, more consistent and more predictable.

Melissa de Dios: Thank you, Alex. Next, here’s a question. What are your views on prepaid home broadband?

Al Panlilio: Jeremiah take that?

Jeremiah De La Cruz: Yes. Thanks, Al. So first, before I answer the question on prepaid home broadband, particularly prepaid fiber. I just want to remind everybody that PLDT is in a great position to be able to leverage two very, very strong networks. Our mobile network actually rated extremely high, in fact, performing both 5G as well as 4G, which enables us to be able to sell fixed wireless as an offering to customers to be able to service not only areas that we don’t have fiber, but to also service a different demographic and customer that may be looking for more of a sachet-based sort of infrequent usage for various reasons. The second one is our fiber network, which we have actually had quite an extensive rollout and we currently do enjoy about 60% utilization, right?

So we actually have about 60% of all of our ports with tolling customers. So we have two weapons that we’re able to leverage, but because of the situation that we’re in, I guess we’re approaching the market a little bit differently from our competition. We’ve lent our push into the prepaid space with fixed wireless, so we’ve actually seen fixed wireless as a category has been challenged in the market for the last 9 months. But what we are very pleased to be able to report back, is we’ve seen two consecutive quarters of growth in our fixed-wireless space. So we’ve actually seen a 5% quarter-on-quarter growth in terms of fixed wireless revenues. Now whilst that may still be somewhat small compared to, let’s say, for example, fiber revenues, it does show that there is a role for fixed wireless to play in being able to service the different customer needs for the different segments.

From a fiber perspective, we are actually — as we mentioned in the half year results, we do have plans to go into the prepaid fiber space. In fact, we are currently trialing with some of our existing customers now, our prepaid offering. The approach we are taking is much more measured approach though, we want to be very, very targeted with the areas that we make, prepaid fiber available, because we do currently enjoy the largest fiber base with a very, very high utilization rate. We want to make sure that prepaid fiber is something that’s revenue accretive as opposed to revenue dilutive. We’ve seen through some of the other information released by the competition that the prepaid fiber ARPUs are significantly lower than postpaid ARPUs. So we want to make sure that we do prioritize where it is possible, for our ports to be sold to postpaid customers where we get a higher yield.

And where we do have an abundance of prepaid, that’s where we’ll be using prepaid fiber. So to answer your question maybe in a shorter way, we do I think there is a role for prepaid fiber to actually play in the market. But we’re not only dependent on prepaid fiber to be able to service that segment. We also have the benefit of also using fixed wireless to be able to attack that segment of the market.

Melissa de Dios: The next question is you mentioned about the launch of a sovereign cloud, what are the potentials of this business? And what is the traction so far?

Unidentified Company Representative: Thank you for that question. When we built the sovereign cloud, we really had target markets in mind. One was the government services and the other one is the private sector. We felt that as part of our role to help digitalize the economy and help the administration also digitalize most of its public services, building a sovereign cloud in the Philippines was a first step for us in being able to offer that solution. This is a service that is similarly implemented or rolled out in other markets. We are actually the sixth or the seventh market in Asia to be able to roll out a sovereign cloud. So we feel that there’s going to be usage and traction for this. We cannot obviously say who the government agencies are given the sensitivity of data that we will be hosting. But it has been a welcome solution for a need that government agencies have been looking for quite some time.

Melissa de Dios: There’s a question on Maya. Are there any plans for fund raising?

Shailesh Baidwan: Yes, we are very much, as I mentioned, a couple of quick pointers to that. The business — actually all the business became segment EBITDA positive in the third quarter of this year, and we continue to push towards the overall company becoming cash positive towards the end of 2024. In the interim, while we are funded on a lot of the operating side as we expand our loan book, we do need access to capital for some of the regulatory capital and to grow the loan book. So we are concluding external funding round with our existing shareholders, to fund for the requirements that we have until 2024, we should be able to conclude that over the coming days and should be able to share details.

Al Panlilio: I just wanted to add to that, that PLDT will actually participate in a round in fact, we’ve increased its equity, and also increase equity in Maya.

Melissa de Dios: There’s a question on CapEx intensity. You’ve reduced your CapEx intensity significantly. How much lower can that go? And when do you expect it to get to the 25% level similar to other telcos in the region?

Al Panlilio: I’m not sure whether 25% is possible for us, Philippines, that hasn’t been done. Initially what we would like to do is, bring it down to 30% CapEx intensity. That’s a target maybe for next year or so.

Melissa de Dios: There’s a question on whether we’re planning to do any more tower sales?

Al Panlilio: Right now, we want to just complete first, what we have sold. There’s still quite a bit of — since we’ve done a lot in my summary, as I said that we have 5,900 towers, I think that we’re ready. I think for that we already closed in — so it’s only 79% to 80%. So there’s a bit — there’s still 20% that we continue to close, that we think is a big part of the chunk that we gave to you.

Melissa de Dios: Are there any other questions? There’s nothing in the queue. [Operator Instructions] And would you like to share some comments? There are no other questions in the queue.

Manny Pangilinan: [Foreign Language], nothing significant. So better stay quiet, which I didn’t, in the media, right?

Al Panlilio: You will not quote your own way. I think there’s a question from Herman Dela Paz.

Melissa de Dios: Let me see. Herman, please unmute your mic.

Unidentified Analyst: I’m okay. Yes. I have unmuted. Can you hear me?

Melissa de Dios: Yes. Yes, we can. Okay. There’s a question from Herman Dela Paz. Herman? If there are no further questions, I turn the floor over to our Chairman, Mr. Pangilinan, for any final words.

Manny Pangilinan: Nothing really special by way of closing, except to thank you for joining us this afternoon for the for the third quarter briefing. And we look forward to seeing you again perhaps sometime in February or March next year. So in the meantime, on behalf of all of us, we wish all of you a very merry Christmas.

Melissa de Dios: And that concludes today’s briefing. As always, should you have any further questions and clarifications. Please reach out to PLDT Investor Relations. Thank you for your participation. Good afternoon.

Manny Pangilinan: Thank you.

Al Panlilio: Thank you.