PLDT Inc. — 2019 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2019. Although the request identifies 2019 Q4, this filing is an annual report and does not provide a standalone fourth-quarter summary. Financial statements are prepared under IFRS and presented in Philippine pesos (Php), unless otherwise noted.
Business context and key financial metrics
PLDT is a Philippine telecommunications provider with Wireless, Fixed Line and Other businesses. Growth increasingly depends on mobile internet, broadband, data and ICT services, as traditional voice and messaging revenues decline.
| Metric | 2019 | 2018 | Change |
|---|---|---|---|
| Revenue | Php169.187 billion | Php162.914 billion | +4% |
| Service revenue | Php161.355 billion | Php152.369 billion | +6% |
| Expenses | Php129.786 billion | Php149.141 billion | −13% |
| Income before tax | Php32.336 billion | Php22.815 billion | +42% |
| Consolidated net income | Php22.786 billion | Php18.973 billion | +20% |
| Net income attributable to PLDT shareholders | Php22.521 billion | Php18.916 billion | +19% |
| Basic and diluted EPS | Php103.97 | Php87.28 | +19% |
| Adjusted EBITDA (non-IFRS) | Php79.815 billion | Php64.027 billion | +25% |
| Adjusted EBITDA margin | 49% | 42% | +7 percentage points |
| Core income (non-IFRS) | Php25.111 billion | Php25.855 billion | −3% |
| Core EPS (non-IFRS) | Php115.95 | Php119.39 | −3% |
| Operating cash flow | Php69.392 billion | Php61.116 billion | +14% |
| Cash and cash equivalents | Php24.369 billion | Php51.654 billion | −53% |
| Total debt | Php192.556 billion | Php176.276 billion | +9% |
Revenue growth was led by data: Wireless mobile data revenue rose 38% to Php52.848 billion, including mobile internet revenue up 46% to Php48.399 billion. Fixed Line data revenue increased 9% to Php60.764 billion. By contrast, Wireless voice revenue fell 12%, SMS revenue fell 24%, and non-service revenue declined 26% consolidated.
Profitability improved as reported expenses fell, while other income swung from Php9.042 billion of income in 2018 to Php7.065 billion of expenses in 2019. The filing attributes much of that swing to the prior-year Php12.054 billion gain on deconsolidation of Voyager Innovations Holdings (VIH), lower realized gains on Rocket Internet, derivative losses in 2019 and higher financing costs. The 2019 effective tax burden also rose: income tax provision was Php9.550 billion versus Php3.842 billion.
Common dividends declared for 2019 were Php72 per share (Php15.556 billion in total); the company separately reported a 60% payout of telco core income for 2019. Dividends paid during 2019 totaled Php15.592 billion.
Cash flow, capital spending, debt and liquidity
- Operating cash flow was Php69.392 billion. Cash used in investing activities was Php84.316 billion, including Php89.701 billion of property and equipment purchases including capitalized interest. Cash used in financing was Php11.613 billion. Cash and cash equivalents decreased Php27.285 billion during the year.
- Management reported consolidated capital expenditures of Php72.871 billion for 2019, compared with Php58.490 billion in 2018. The separate cash-flow figure for property and equipment purchases is higher; the filing does not provide a simple reconciliation in the cited discussion.
- Debt was Php192.556 billion, including Php19.722 billion due within one year. Long-term debt, net of current portion, was Php172.834 billion. PLDT drew Php37.500 billion in long-term debt and paid Php20.494 billion of principal and Php7.143 billion of interest.
- Cash and short-term investments together were Php24.683 billion at year-end. Management said available cash, including operating cash flow, should cover projected operating, investment, capital expenditure and debt-service needs for the next 12 months, while noting that external financing may be used if prudent. PLDT reported compliance with its debt covenants.
- IFRS 16 adoption added Php15.890 billion of right-of-use assets and Php16.315 billion of lease liabilities at year-end. It reduced rent expense by Php5.281 billion and increased depreciation and financing costs, affecting EBITDA and reported cash-flow classifications.
Material changes, outlook and risks
- 2020 outlook: Management estimated consolidated capital expenditure of approximately Php83 billion, including Php65 billion for network maintenance, expansion and IT, and Php18 billion for broadband installations. Planned priorities include data capacity, FTTH, LTE, network resilience, IT transformation and 5G readiness. Funding sources were expected to include operating cash flow, loans and asset-sale proceeds.
- COVID-19: The pandemic and Philippine quarantine measures occurred after year-end. The filing treated these as non-adjusting events and stated that the impact on 2020 financial position, results and cash flows could not then be determined. PLDT reported increased internet usage and said available capacity was sufficient at the report date; it also offered customer payment extensions and other relief measures.
- Competition and technology: Dito Telecommunity was expected to launch commercial service by March 2021, while mobile number portability could make it easier for customers to switch providers. PLDT cited price competition, OTT substitution, a mature mobile market and the investment required for 5G and network upgrades as key risks.
- Cybersecurity and privacy: The group detected close to 3,000 cyber incidents in 2019, which it said caused no material financial, legal or operational impact. It also reported ten personal-data breaches meeting mandatory reporting criteria; future breaches could trigger penalties, litigation or reputational harm.
- Foreign exchange and debt: Much of PLDT’s revenue is in pesos while some debt, capex and expenses are foreign-currency denominated. Peso depreciation could raise costs, produce FX losses and pressure financial covenants. Approximately 9% of debt was denominated in U.S. dollars at year-end, with an estimated 8% unhedged after hedges and allocated U.S.-dollar cash.
- Contingencies and regulation: Ongoing matters include litigation over labor contracting, competition review of the SMC telecom transactions, frequency use and local tax assessments. Management said it had recorded appropriate provisions but withheld details that could prejudice its legal position. Several subsidiaries’ franchises expired or were due to expire, with subscriber transfers or service continuity subject to regulatory conditions.
- Unusual items: Manpower-rightsizing costs increased to Php3.296 billion from Php1.703 billion. Reported Adjusted EBITDA benefited from IFRS 16’s rent-expense reduction; core income excludes specified nonrecurring and market-value items and is not an IFRS measure. The company also sold Rocket Internet shares during 2019 and held a 1.3% interest at year-end.
The independent auditor issued an unqualified opinion on the IFRS financial statements and on internal control over financial reporting. Management also concluded that disclosure controls and internal control over financial reporting were effective at December 31, 2019.
Most important facts for investors to verify
- Whether 2020 capex of approximately Php83 billion was funded as planned and translated into improved network quality, broadband growth and returns.
- How much of the 2019 EBITDA improvement reflects recurring operations versus IFRS 16, cost reductions and other accounting or one-off effects; also track core income and cash generation.
- Debt maturity, refinancing and covenant headroom, including the effects of peso movements, higher financing costs and lease liabilities.
- The eventual financial and operational effects of COVID-19, customer payment relief, and the entry and rollout of Dito and mobile number portability.
- Developments in reported data breaches, labor and competition cases, franchise renewals, and the costs or liabilities arising from these matters.