PLDT Inc. — 2023 Form 20-F Summary
Business context and reporting period
Annual report for the fiscal year ended December 31, 2023; financial statements are audited and prepared under IFRS. PLDT is a Philippine telecommunications and digital services provider with Wireless, Fixed Line and Others segments. It reported serving 65.3 million users. Figures below are in Philippine pesos (Php); financial amounts are generally in millions unless stated otherwise. This is an annual filing, not a standalone fourth-quarter report.
Financial and operating metrics
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | Php210,953m | Php204,362m | +3% |
| Service revenue | Php201,832m | Php195,344m | +3% |
| Operating expenses | Php170,259m | Php209,427m | -19% |
| Consolidated net income | Php26,824m | Php10,735m | +150% |
| Net income attributable to PLDT equity holders | Php26,614m | Php10,485m | +154% |
| Adjusted EBITDA (non-IFRS) | Php104,233m | Php100,262m | +4% |
| Core income (non-IFRS) | Php32,421m | Php30,152m | +8% |
| Telco core income (non-IFRS) | Php34,341m | Php33,301m | +3% |
| Adjusted EBITDA margin | 52% | 51% | +1 percentage point |
| Operating cash flow | Php85,765m | Php76,200m | +13% |
| Cash used in investing activities | Php55,118m | Php33,006m | Higher outflow |
| Cash used in financing activities | Php39,418m | Php42,304m | Lower outflow |
| Cash and cash equivalents | Php16,177m | Php25,211m | -36% |
| Interest-bearing debt | Php254,798m | Php249,580m | +2% |
Net income margin was approximately 12.7% of revenue in 2023, versus 5.3% in 2022. The company’s net cash and short-term investments were Php16,568m. Cash operating flow less reported cash purchases of property and equipment, including capitalized interest, was approximately Php7,330m; this is a simple calculation, not company-reported free cash flow.
Total assets were Php609,519m, total liabilities Php499,133m, and total equity Php110,386m at year-end. Long-term and short-term debt totaled Php254,798m; current debt was Php11,646m. Lease liabilities were Php47,546m, including current and noncurrent portions. The filing says 69% of debt matures after 2027. PLDT reported compliance with its debt covenants.
Material changes versus prior year
- Revenue growth was driven mainly by data services. Wireless mobile data revenue rose 4%; mobile voice revenue fell 20% and SMS revenue fell 3%. Fixed Line data revenue rose 3%, while fixed-line voice revenue fell 27%, partly reflecting the transfer of load business to Wireless.
- PLDT’s reported subscriber base declined: mobile subscribers fell 13% to 57.8 million, while fixed-line broadband subscribers rose about 1% to 3.27 million. The company changed prepaid subscriber activity and churn definitions in 2023 in connection with SIM registration, limiting direct comparability.
- Expenses fell sharply, particularly depreciation and amortization, which declined to Php58,441m from Php98,631m. The 2022 figure included substantial additional depreciation following useful-life revisions and network modernization. The 2023 comparison also reflects a Php13,924m additional charge from shortening the amortization period for certain subscriber contract costs.
- Net income increased much faster than core income. Other income turned to a net expense of Php4,217m from net income of Php19,097m in 2022, when results included a Php25,852m gross tower sale-and-leaseback gain and Php7,839m income from prescription of a preferred-share redemption liability. Tower sale-and-leaseback gains were Php7,777m in 2023.
- Capital expenditure, net of additions subject to tower sale-and-leaseback, was Php85,083m, down from Php96,810m. Operating cash flow improved, but cash declined, with cash used for investment and financing, dividends and debt service.
Outlook, commentary, risks and unusual items
PLDT estimates 2024 consolidated capital expenditure of Php75bn–Php78bn, focused on network maintenance and expansion, LTE/5G, fiber, IT, cybersecurity and data centers. Management says it aims to reduce capital intensity, achieve positive free cash flow and maintain net debt/EBITDA leverage of 2.0x. Its stated regular dividend policy is 60% of telco core income; it paid Php108 per common share for 2023, including a Php14 special dividend. These are management plans and policies, not a guarantee of results.
- Demand and competition: The company cites intense mobile and broadband competition, a mature prepaid market, falling legacy voice/SMS usage, OTT alternatives, and the risk that subscriber and data growth may not offset declining traditional revenues.
- Regulatory and legal matters: The Supreme Court’s February 2024 decision set aside most DOLE orders concerning regularization of 7,344 contractor workers, but remanded installation, repair and maintenance workers and related monetary claims for further review. The DITO interconnection payment dispute had Php196m outstanding. PCC inquiries into telecommunications competition and interconnection remained ongoing, with no subsequent order reported to Smart.
- U.S. class action: After year-end, PLDT agreed to a proposed US$3m settlement, without admission of liability, concerning alleged disclosures about capital expenditures and internal controls. The court preliminarily approved it in March 2024; final approval was scheduled for August 5, 2024.
- Cybersecurity: PLDT disclosed second-quarter 2023 cyberattacks, which it said were contained without material financial, legal, reputational or regulatory repercussions. The company continues to identify cybersecurity and data privacy as significant risks.
- Other risks: Currency and interest-rate changes, debt service and refinancing, extensive investment needs, natural disasters, vendor and supply-chain reliance, licenses and franchises, and potential changes in regulation could affect results. Approximately 15% of debt was U.S.-dollar-denominated before hedging; management reported a 5% unhedged portion after hedges.
- Other developments: The proposed Sky Cable broadband acquisition was abandoned in February 2024. A proposed 34.9% investment in Radius for approximately Php2,116m remained subject to closing conditions. PLDT’s audited financial statements received an unqualified opinion, and management and the auditor reported effective internal control over financial reporting at December 31, 2023.
Most important facts for investors to verify
- Reconcile the sharp rise in reported net income with the more modest growth in core and telco core income, including the effects of depreciation, subscriber contract cost amortization, tower gains and 2022 one-off income.
- Review the full cash-flow and debt notes: cash fell by Php9,034m, debt rose, lease liabilities increased, and the company paid Php23,328m in cash dividends.
- Assess whether 2024 capex of Php75bn–Php78bn and the 2.0x leverage objective are achievable while sustaining network quality and dividends.
- Track mobile subscriber trends and the effect of revised SIM registration, active-subscriber and churn definitions on reported operating metrics.
- Monitor final approval and payment of the U.S. class-action settlement, the DOLE remand, DITO collections and the PCC proceedings.
- Check subsequent filings for progress on tower transactions, the proposed Radius investment, and the treatment and performance of MIH/Maya investments.
Adjusted EBITDA, core income and telco core income are non-IFRS measures defined by PLDT; the company cautions that these measures are not substitutes for IFRS net income or operating cash flow and may not be comparable with similarly named measures at other companies.