Washington, DC 20549




ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 – For the fiscal year ended December 31, 2018


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 – For the transition period from _________ to _________


SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 — Date of event requiring this shell company report __________

Commission file number 1-03006


(Exact name of Registrant as specified in its charter)

Republic of the Philippines

(Jurisdiction of incorporation or organization)

Ramon Cojuangco Building

Makati Avenue

Makati City, Philippines

(Address of principal executive offices)

Atty. Ma. Lourdes C. Rausa-Chan, telephone: +(632) 816-8556;;
Ramon Cojuangco Bldg., Makati Avenue, Makati City, Philippines

(Name, telephone, e-mail and/or facsimile number and address of Company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.


Title of each class


Name of each exchange on which registered

Common Capital Stock, Par Value Five Philippine Pesos Per Share


New York Stock Exchange*

American Depositary Shares, evidenced by American Depositary Receipts, each representing one share of Common Capital Stock


New York Stock Exchange



Registered on the New York Stock Exchange not for trading but only in connection with the registration of American Depositary Shares, or ADSs, pursuant to the requirements of such stock exchange.

Securities registered or to be registered pursuant to Section 12(g) of the Act.


Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.


Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as at the close of the period covered by the annual report.


As at December 31, 2018:

216,055,775 shares of Common Capital Stock, Par Value Five Philippine Pesos Per Share

300,000,870 shares of Non-voting Preferred Stock, Par Value Ten Philippine Pesos Per Share

150,000,000 shares of Voting Preferred Stock, Par Value One Philippine Peso Per Share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the  Securities Act:  Yes      No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:  Yes      No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes      No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes      No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Emerging growth company 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards1 provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:


International Financial Reporting Standards as issued by the International Accounting Standards Board 


If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.  Item 17      Item 18 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes      No






The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.



























Item 1.


Identity of Directors, Senior Management and Advisors



Item 2.


Offer Statistics and Expected Timetable



Item 3.


Key Information





Performance Indicators





Selected Financial Data





Capital Stock





Dividends Declared





Dividends Paid





Capitalization and Indebtedness





Reasons for the Offer and Use of Proceeds





Risk Factors



Item 4.


Information on the Company










Historical Background and Development





Recent Developments





Business Overview





Capital Expenditures and Divestitures






























Interconnection Agreements





Licenses and Regulations





Material Effects of Regulation on our Business










Environmental Matters





Intellectual Property Rights








Item 4A.


Unresolved Staff Comments



Item 5.


Operating and Financial Review and Prospects










Management’s Financial Review





Critical Accounting Policies





New Accounting Standards and Interpretations to Existing Standards Effective Subsequent to December 31, 2016





Results of Operations










Liquidity and Capital Resources





Impact of Inflation and Changing Prices



Item 6.


Directors, Senior Management and Employees





Directors and Executive Officers





Terms of Office





Family Relationships





Compensation of Key Management Personnel





Share Ownership





Board Practices





Audit, Governance and Nomination, Executive Compensation and Technology Strategy Committees





Employees and Labor Relations





Pension and Retirement Benefits




Page 2 of 2


Item 7.


Major Shareholders and Related Party Transactions





Related Party Transactions



Item 8.


Financial Information





Consolidated Financial Statements and Other Financial Information





Legal Proceedings





Dividend Distribution Policy



Item 9.


The Offer and Listing





Common Capital Stock and American Depositary Shares



Item 10.


Additional Information





Share Capital





Amended Articles of Incorporation and By-Laws





Issuance and Redemption of Preferred Stock





Material Contracts





Exchange Controls and Other Limitations Affecting Securities Holders










Documents on Display



Item 11.


Quantitative and Qualitative Disclosures About Market Risks



Item 12


Description of Securities Other than Equity Securities


















Item 13.


Defaults, Dividend Arrearages and Delinquencies



Item 14.


Material Modifications to the Rights of Security Holders and Use of Proceeds



Item 15.


Controls and Procedures



Item 16A.


Audit Committee Financial Expert



Item 16B.


Code of Business Conduct and Ethics



Item 16C.


Principal Accountant Fees and Services



Item 16D.


Exemption from the Listing Standards for Audit Committees



tem 16E.


IPurchases of Equity Securities by the Issuer and Affiliated Purchaser



Item 16F.


Change in Registrant’s Certifying Accountant



Item 16G.


Corporate Governance



Item 16H.


Mine Safety Disclosure


















Item 17.


Financial Statements



Item 18.


Financial Statements



Item 19.







Exhibit Index














Unless the context indicates or otherwise requires, references to “we,” “us,” “our” or “PLDT Group” mean PLDT Inc. (formerly Philippine Long Distance Telephone Company) and its consolidated subsidiaries, and references to “PLDT” or “the Company” mean PLDT Inc., excluding its consolidated subsidiaries (see Note 2 – Summary of Significant Accounting Policies to the accompanying audited consolidated financial statements in Item 18. “Financial Statements” for a list of these subsidiaries, including a description of their respective principal business activities).

Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding.

All references to the “Philippines” contained in this report mean the Republic of the Philippines and all references to the “U.S.” or the “United States” are to the United States of America.

In this report, unless otherwise specified or the context otherwise requires, all references to “pesos,” “Philippine pesos” or “Php” are to the lawful currency of the Philippines, all references to “dollars,” “U.S. dollars” or “US$” are to the lawful currency of the United States and all references to “Japanese yen,” “JP¥” or “¥” are to the lawful currency of Japan.  Unless otherwise indicated, conversion of peso amounts into U.S. dollars in this report were made based on the volume weighted average exchange rate quoted through the Bankers Association of the Philippines, or BAP, which was Php52.56 to US$1.00 on December 31, 2018.  On March 20, 2019, the volume weighted average exchange rate quoted was Php52.89 to US$1.00.


In this annual report, each reference to:


ARPU means average revenue per user;


BIR means Bureau of Internal Revenue;


BSP means Bangko Sentral ng Pilipinas;


CMTS means cellular mobile telephone system;


CPCN means Certificate of Public Convenience and Necessity;


DFON means domestic fiber optic network;


Digitel means Digital Telecommunications Phils., Inc.;


DMPI means Digitel Mobile Philippines, Inc.;


DSL means digital subscriber line;


First Pacific means First Pacific Company Limited;


First Pacific Group means First Pacific and its Philippine affiliates;


FP Parties means First Pacific and certain Philippine affiliates and wholly-owned non-Philippine subsidiary;


FTTH means Fiber-to-the-HOME;


GAAP means Generally Accepted Accounting Principles;


GSM means global system for mobile communications;


HSPA means high-speed packet access;


IFRS means International Financial Reporting Standards, as issued by the International Accounting Standards Board;


IGF means international gateway facility;


IP means internet protocol;


IT means information technology;


LEC means local exchange carrier;


LTE means long-term evolution;


MVNO means mobile virtual network operations;


NGN means Next Generation Network;




NTC means the National Telecommunications Commission of the Philippines;


NTT means Nippon Telegraph and Telephone Corporation;


NTT Communications means NTT Communications Corporation, a wholly-owned subsidiary of NTT;


NTT DOCOMO means NTT DOCOMO, Inc., a majority-owned and publicly traded subsidiary of NTT;


PAPTELCO means Philippine Association of Private Telephone Companies, Inc.;


PCEV means PLDT Communications and Energy Ventures, Inc.;


PDRs means Philippine Depositary Receipts;


Philippine SEC means the Philippine Securities and Exchange Commission;


PLDT Beneficial Trust Fund means the beneficial trust fund created by PLDT to pay the benefits under the PLDT Employees’ Benefit Plan;


PLP means PLDT Landline Plus;


PSE means the Philippine Stock Exchange, Inc.;


R.A. means Republic Act of the Philippines;


SIM means Subscriber Identification Module;


Smart means Smart Communications, Inc.;


U.S. SEC means the United States Securities and Exchange Commission;


VAS means Value-Added Service;


VoIP means Voice over Internet Protocol;


VPN means virtual private network;


W-CDMA means Wideband-Code Division Multiple Access;


WiFi means a wireless network technology that uses radio waves to provide high-speed internet and network connections; and


WiMAX means Worldwide Interoperability for Microwave Access.


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 are generally 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 set forth in Item 3. “Key Information – 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.


Our consolidated financial statements as at December 31, 2018 and 2017 and for the three years ended December 31, 2018, 2017 and 2016 included in Item 18. “Financial Statements” of this annual report on Form 20-F have been prepared in conformity with IFRS.  

As at December 31, 2018, our business activities were categorized into three business units: Wireless, Fixed Line and Others.  




Item 1.

Identity of Directors, Senior Management and Advisors

Not applicable.

Item 2.

Offer Statistics and Expected Timetable

Not applicable.

Item 3.

Key Information

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.

Adjusted EBITDA

Adjusted EBITDA is measured as net income excluding depreciation and amortization, amortization of intangible assets, asset impairment on noncurrent assets, financing costs, 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 (expenses) – net.  Adjusted EBITDA is monitored by the management for each business unit separately for purposes of making decisions about resource allocation and performance assessment.  Adjusted 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 Adjusted 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 Adjusted EBITDA as a supplement to financial measures in accordance with IFRS.  Adjusted EBITDA should not be considered as an alternative to net income as an indicator of our performance, nor should Adjusted 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 IFRS.  Unlike net income, Adjusted EBITDA does not include depreciation and amortization or financing costs and, therefore, does not reflect current or future capital expenditures or the cost of capital.  We compensate for these limitations by using Adjusted EBITDA as only one of several comparative tools, together with IFRS-based measurements, to assist in the evaluation of operating performance.  Such IFRS-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 Adjusted EBITDA.  Our calculation of Adjusted EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.  A reconciliation of our consolidated net income to our consolidated Adjusted EBITDA for the years ended December 31, 2018, 2017 and 2016 is presented in Item 5. “Operating and Financial Review and Prospects –– Management’s Financial Review” and Note 4 –– Operating Segment Information to the accompanying audited consolidated financial statements in Item 18. “Financial Statements”.

Core Income

Core income is measured as net income attributable to equity holders of PLDT (net income less net income attributable to non-controlling interests), excluding foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net (excluding hedge costs), asset impairment on noncurrent assets, nonrecurring 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 the management for each business unit separately for purposes of making decisions about resource allocation and performance assessment. Also, core income is used by the management as a basis for determining the level of dividend payouts to shareholders and a basis for granting incentives to employees.  Core income should not be considered as an alternative to income before income tax or net income determined in accordance with IFRS 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 nonrecurring gains and losses.  We compensate for these limitations by using core income as only one of several comparative tools, together with IFRS-based measurements, to assist in the evaluation of operating performance.  Such IFRS-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.  A



reconciliation of our consolidated net income to our consolidated core income for the years ended December 31, 2018, 2017 and 2016 is presented in Item 5. “Operating and Financial Review and Prospects – Management’s Financial Review” and Note 4 – Operating Segment Information to the accompanying audited consolidated financial statements in Item 18. “Financial Statements”.

Selected Financial Data

The selected consolidated financial information below as at December 31, 2018, 2017 and 2016 and for the financial years ended December 31, 2018, 2017 and 2016, should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements, and the accompanying notes, included elsewhere in Item 18. “Financial Statements” of this annual report on Form 20-F.  As disclosed under “Presentation of Financial Information,” our consolidated financial statements as at and for the years ended December 31, 2018, 2017 and 2016 have been prepared and presented in conformity with IFRS.  The selected consolidated financial information as at December 31, 2015 and 2014 have been derived from our audited financial statements not included in this annual report.

We have adopted IFRS 9, Financial Instruments, with a date of initial application of January 1, 2018.  IFRS 9 replaces IAS 39, Financial Instruments: Recognition and Measurement, and all previous versions of IFRS 9.  The standard introduces new requirements for classification and measurement, impairment and hedge accounting. We have also adopted IFRS 15, Revenues from Contracts with Customers, with a date of initial application of January 1, 2018.  IFRS 15 supersedes IAS 11, Construction Contracts, IAS 18, Revenue, and related interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. 

We applied the modified retrospective method upon adoption of IFRS 9 and IFRS 15 with the date of initial application of January 1, 2018.  Under this method, the cumulative effect arising from the transition was recognized as an adjustment to the opening balance of retained earnings. Accordingly, comparative information for prior periods were not restated. See Note 2 – Summary of Significant Accounting Policies and Note 3 - Management’s Use of Accounting Judgments, Estimates and Assumptions to the accompanying audited consolidated financial statements in Item 18. “Financial Statements” for further discussion.























(in millions, except earnings per common share amounts,

weighted average number of common shares

and dividends declared per common share amounts)


Statements of Operations Data:



























US $3,135



Php 164,752



Php 159,926



Php 165,262



Php 171,103



Php 170,835


Service revenues

























Non-service revenues


















































Net income for the year

























Earnings per common share for the year

   attributable to equity holders of PLDT











































































Balance Sheet Data

























Cash and cash equivalents

























Total assets

























Net assets

























Total long-term debt - net of current


























Total debt(2)

























Total liabilities

























Total equity attributable to equity holders of


























Weighted average number of common shares

   for the year (in thousands)

























Other Data:

























Depreciation and amortization

























Net cash provided by operating activities

























Net cash used in investing activities

























Net cash used in financing activities

























Dividends declared to common shareholders

























Dividends declared per common share



























We maintain our accounts in Philippine pesos, the functional and presentation currency under IFRS.  For convenience, the Philippine peso financial information as at and for the year ended December 31, 2018, has been converted into U.S. dollars at the exchange rate of Php52.56 to US$1.00, the rate quoted through the Bankers Association of the Philippines, or BAP, as at December 31, 2018.  This



conversion should not be construed as a representation that the Philippine peso amounts represent, or have been or could be converted into, U.S. dollars at that rate or any other rate.


Total debt represents the sum of (i) current portion of long-term debt; (ii) long-term debt – net of current portion.

Capital Stock

The following table summarizes PLDT’s capital stock issued and outstanding as at December 31, 2018 and 2017:




No. of shares



December 31,

















(in millions)



(Pesos in millions)


Non-Voting Preferred Stock

















10% Cumulative Convertible Preferred Stock  II and JJ*













Series IV Cumulative Non-convertible Redeemable

   Preferred Stock**

















Voting Preferred Stock


































Common Stock




































On June 8, 2015, the Company issued 870 shares of Series JJ 10% Cumulative Convertible Preferred Stock, which are currently outstanding.  In April 2011, the Company issued 370 shares of Series II 10% Cumulative Convertible Preferred Stock, all of which were redeemed by May 11, 2016.  


Includes 300,000,000 shares subscribed for Php3,000,000,000, of which Php360,000,000 has been paid.

Dividends Declared

The following table shows the dividends declared to common shareholders from the earnings for the years ended December 31, 2016, 2017 and 2018:
















Per share














(in Pesos)



(Pesos in





August 2, 2016


August 16, 2016


September 1, 2016











March 7, 2017


March 21, 2017


April 6, 2017


























August 10, 2017


August 25, 2017


September 8, 2017











March 27, 2018


April 13, 2018


April 27, 2018


























August 9, 2018


August 28, 2018


September 11, 2018











March 21, 2019


April 4, 2019


April 23, 2019

























Dividends Paid

The following table shows a summary of dividends paid per share of PLDT's common stock stated in both Philippine peso and U.S. dollars:




In Philippine




In U.S.












Regular Dividend – April 16, 2014









Regular Dividend – September 26, 2014









Special Dividend – April 16, 2014


















Regular Dividend – April 16, 2015









Regular Dividend – September 25, 2015(1)









Special Dividend – April 16, 2015


















Regular Dividend – April 1, 2016









Regular Dividend – September 1, 2016


















Regular Dividend – April 6, 2017









Regular Dividend – September 8, 2017


















Regular Dividend – April 27, 2018









Regular Dividend – September 11, 2018













Payment was moved to September 28, 2015 in view of Proclamation No. 1128, Series of 2015, dated September 15, 2015 declaring September 25, 2015 as a regular holiday.

Dividends on PLDT’s common stock were declared and paid in Philippine pesos.  For the convenience of the reader, the Philippine peso dividends have been converted into U.S. dollars based on the Philippine Dealing System Reference Rate on the respective dates of dividend payments from 2014 to 2017, and based on exchange rates quoted through the BAP for 2018 dividend payments.  See Note 19 – Equity to the accompanying audited consolidated financial statements in Item 18. “Financial Statements” for further information on our dividend payments.


Capitalization and Indebtedness

Not applicable.

Reasons for the Offer and Use of Proceeds

Not applicable.

Risk Factors


You should carefully consider all of the information in this annual report, including the risks and uncertainties described below.  If any of the following risks actually occurs, it could have a material adverse effect on our business, financial condition or results of operations and the trading price of our ADSs could decline and you could lose all or part of your investment.

Risks Relating to Us


If we are not able to adapt to changes and disruptions in technology and by over-the-top, or OTT, services and address changing consumer demand on a timely basis, we may experience a decline in the demand for our services, be unable to implement our business strategy and experience a material adverse effect on our business, results of operations, financial condition and prospects.


The rapid change of technology and proliferation of OTT services (such as Facebook, Skype, Viber, WhatsApp and other similar services) and the ensuing change in customer behavior, have disrupted our traditional businesses.  As a result, our traditional revenue sources, such as short messaging service, or SMS, voice and international calling services, have declined, and we expect this trend to continue with the rise in data revenue.


The growing use of mobile data in the Philippines, coupled with the prevalence of OTT services have negatively impacted our domestic calling service in recent years.  OTT services continue to increasingly compete with us in voice and data services and continue to affect our business model.  We are also facing growing competition from providers offering services using alternative wireless technologies and IP-based networks, including efforts by the Philippine government to roll-out its free WiFi services to selected areas within various municipalities in the country.  Moreover, net settlement payments between PLDT and other foreign telecommunications carriers for origination and termination of international call traffic between the Philippines and other countries, which have been our predominant source of foreign currency revenues, have been declining in recent years and have diminished in its contribution to total service revenues.  


While the trend of increasing mobile data usage has resulted in, and is expected to continue to have, a positive impact on our data revenues, there is no guarantee that such increase will alleviate the decline in the revenue from our traditional businesses in full.  We may not be able to maintain and attract customers more effectively than our competitors.  We will also need to invest in new infrastructure, systems and personnel to provide high quality services for increasing mobile data usage.  As a result, our capital costs could increase as we phase out outdated and unprofitable technologies and invest in new ones. We may not be able to accurately predict technological trends or the success of new services in the market.  In addition, there could be legal or regulatory restraints on our introduction of new services.  If our services fail to gain acceptance in the marketplace, or if costs associated with implementation and completion of the introduction of these services materially increase, our ability to retain and attract customers could be adversely affected. We can neither assure you that we would be able to adopt or successfully implement new technologies and services nor assure you that future technological changes will not adversely affect our business, results of operations, financial condition and prospects.




Our failure to keep pace with technological changes and evolving industry standards relating to the emergence of the 5G technology could harm our competitive position or negatively impact our results of operations.


Fifth-generation wireless, or 5G, is the latest iteration of cellular technology, engineered to greatly increase the speed and responsiveness of wireless networks. 5G is characterized by significantly higher speeds and low latency which will enable mobile users to download data at a much faster speed than the technology of previous generations. 5G is also expected to anchor the Internet of Things, or IoT, which will allow users to be connected not only to each other but to their homes, vehicles, public infrastructure, and more.


In order to introduce and implement the 5G technology to our customers, we may need to obtain additional licenses or upgrade our networks.  If we are unable to acquire such licenses or upgrade such systems, on reasonable terms or at all, we may not be able to implement the 5G technology in a timely manner or at all, which in turn may negatively impact our ability to draw new customers and/or maintain our existing customer base.  


Further, we may need to incur significant capital expenditures to acquire licenses or install infrastructure to enable the 5G technology.  As new technologies relating to 5G systems are developed, our equipment and infrastructure may need to be replaced or upgraded or we may need to rebuild our network, in whole or in part.    


We are currently deploying 5G pilot programs in anticipation of commercial rollouts in the near future.  However, we are dependent on the availability of 5G-capable devices such as handsets and modems before we can roll out commercial services and generate revenues.  A delay in the release of reasonably-priced 5G handsets could negatively impact the mass acceptance of 5G services amongst our customers and our ability to monetize these investments, which in turn could adversely affect our growth prospects.


The anticipated entry of a third major telecommunications player and/or increased competition from other telecommunications services providers may reduce our market share and decrease our profit margin, and we cannot assure you that any potential change in the competitive landscape of the telecommunications industry in the Philippines would not have a material adverse effect on our business, results of operations, financial condition and prospects.


Increasing competition among existing telecommunications services providers, as well as competition from new competitors, could materially and adversely affect our business and prospects by, among other factors, forcing us to lower our tariffs, reducing or reversing the growth of our customer base and reducing usage of our services.  Competition in the mobile telecommunications industry is particularly intense, with network coverage, quality of service, product offerings, and price dictating subscriber preference, while competition in the fixed line side is relatively more active as well.  Vital capacity and coverage expansion may continue to increase our capital expenditures.  Recently, the industry went through a period where both mobile operators have grown more aggressive in maintaining and growing market share, especially in light of a maturing market.  Our principal mobile competitor, Globe Telecom, Inc., or Globe, has introduced aggressive marketing campaigns and promotions, such as unlimited voice and SMS offers.  It has also begun to compete more actively in the fixed line segment, especially with their introduction of a fixed wireless home broadband service which competes directly with our home broadband business.


In 2017, the Philippine government announced its intentions to encourage competition within the telecommunications industry through the introduction of a third major player.  As part of this push, the government is proposing and has introduced certain measures that would facilitate and enable the operations of a new player.  Some of these are:  tower sharing policy, mobile number portability, removal of the mobile interconnect charges, and the lifting of foreign ownership restrictions for telecommunication companies.  


In November 2018, the Philippine government, through the Department of Information and Communications Technology, declared as the third telecom player a consortium consisting of Udenna Corporation, Chelsea Logistics Corporation and China Telecom, or the NMP Consortium.  The NMP Consortium indicated that they had reached an agreement with Mislatel Company, or Mislatel, for the use of Mislatel’s telecommunications franchise.  In February 2019, the Senate Committee on Public Services approved the transfer of the controlling interest in Mislatel to the NMP Consortium under certain conditions.


A third major player will likely adversely threaten our market share.  Furthermore, we believe that the third player, when it enters the market, may put forth aggressive offers to lure customers away from us and Globe.  To maintain our competitive posture, we may need to match those offers and offer other incentives to prevent existing customers from switching.  Furthermore, we may need to make additional investments in our network to further improve the customer experience in order to effectively compete with the third telecom player and Globe.  A loss of market share and increased costs to maintain our competitive posture will adversely affect our business, financial condition and results of operations.




In addition to the entry of a third major player, we cannot assure you that the number of providers of telecommunications services will not increase in the future or that competition for customers will not cause our mobile and fixed line subscribers to switch to other operators, or otherwise cause us to increase our marketing and capital expenditures, lose customers or reduce our rates, resulting in a reduction in our profitability.


Our ability to compete effectively will depend on, among other things, network coverage, quality of service, price, our development of new and enhanced products and services, the reach and quality of our sales and distribution channels and our capital resources.  It will also depend on how successfully we anticipate and respond to various factors affecting our industry, including new technologies and business models, changes in consumer preferences and demand for existing services, demographic trends and economic conditions.  If we are not able to respond successfully to these competitive challenges, it could have a material adverse effect on our business, results of operations, financial condition and prospects.


The success of our business depends on our ability to maintain and enhance our brands.


We believe that our reputation and brands in the industry are crucial to the success of our business.  To maintain and enhance our reputation and brands, we need to successfully provide the best customer experience so that we not only maintain our current customer base but attract new subscribers as well. If we are not successful in maintaining and improving our brands, our business, financial position, and/or results of operations may be negatively affected.


Our reliance on outsourcing and strategic sourcing arrangements, technology vendor contracts, and other partnerships and/or joint ventures may prevent us from meeting organizational targets or impact our brand image.


We have entered into a number of outsourcing agreements with technology vendors covering key operations in order to improve efficiencies and maximize knowledge transfer. These arrangements may disrupt existing operations and result in resistance among employees.  Furthermore, any delays in implementation or failure to bring about the desired results will hamper our ability to meet our medium-term targets.


In particular, as part of our extensive capital expenditures program to overhaul our fixed and wireless networks infrastructure and our IT systems, we have entered into agreements with Amdocs Philippines, Inc., or Amdocs, and Huawei Technologies Co. Ltd., or Huawei, to upgrade and modernize a significant portion of our IT infrastructure.  We cannot guarantee that we will be able to accomplish this transformation in a timely fashion, or at all, or in the manner intended. Furthermore, we cannot guarantee that such transformation will not result in service disruptions, network outages or encounter other issues that may detrimentally affect consumer experience. This may adversely affect our business, financial condition and results of operations.


Our business relies heavily as well on third party vendors, some of whom may encounter financial difficulties or consolidate with other vendors. This may result in shrinking the already limited pool of qualified vendors which in turn may materially impact their ability to fulfill their obligations and thereby impact our operations.  The limited number of vendors may also result on our dependence on a single vendor to provide critical services.


Our ability to earn revenues could be disrupted if our suppliers are no longer able or willing to provide us with our products due to extenuating territorial circumstances.  In the event that either of our potential suppliers cannot or will not provide us with our products, we may be forced to find alternative supplies. We cannot guarantee that we will be able to obtain our products or products of similar quality from alternate suppliers, in part or at all. Failure to obtain alternative sources will disrupt our operations and hinder our ability to generate revenues.


The mobile telecommunications industry in the Philippines may not continue to grow.


The majority of our total revenues are currently derived from the provision of mobile services to customers in the Philippines.  As a result, we depend on the continued development and growth of this industry in the Philippines.  The mobile penetration rate in the country, however, has already reached approximately 133% as at December 31, 2018, and thus the industry may well be considered mature insofar as services such as SMS and domestic voice are concerned.


Data is emerging as the key driver for revenues.  However, further growth of the market depends on many factors beyond our control, including the continued introduction of new and enhanced mobile devices, the price levels of mobile handsets, consumer tastes and preferences, and the amount of disposable income of existing and potential subscribers.  Any economic, technological or other developments resulting in a reduction in demand for mobile services or otherwise causing the Philippine mobile telecommunications industry to stop growing or reducing the rate of its growth, could materially harm our business, results of operations, financial condition and prospects.




The licenses, franchises and regulatory approvals, upon which PLDT relies, may be subject to revocation or delay, which could result in the suspension of our services or abandonment of any planned expansions and could thereby have a material adverse effect on our business, results of operations, financial condition and prospects.


Failure to comply with the foreign ownership restrictions


Section 11, Article XII of the 1987 Philippine Constitution provides that no franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations of associations organized under the laws of the Philippines, at least 60% of whose capital is owned by such citizens.  Exceeding the foreign ownership restrictions imposed under the Philippine Constitution may subject the Company to (1) sanctions set out in Section 14 of the Philippine Foreign Investments Act of 1991, as amended, comprising a fine not exceeding (a) the lower of (x) 0.5% of the total paid in capital of the Company and (y) Php5 million, in the case of a corporate entity, (b) Php200,000, in the case of the president of the Company or other responsible officers, and (c) Php100,000, in the case of other natural persons, which we refer to collectively as the Monetary Sanctions, and/or (2) the Philippine government commencing a quo warranto case in the name of the Republic of the Philippines against the Company to revoke the Company’s franchise that permits the Company to engage in telecommunications activities.


We believe that as of the date of this report, PLDT is in compliance with the requirements of the Constitution, and this position was supported by the Supreme Court; however, we cannot assure you that subsequent changes in law or additional litigation would not result in a different conclusion.  See Item 8. “Financial Information – Legal Proceedings” and Note 26 – Provisions and Contingencies – In the Matter of the Wilson Gamboa Case and Jose M. Roy III Petition to the accompanying audited consolidated financial statements in Item 18. “Financial Statements” for further discussion.


Failure to renew CPCNs


We operate our business under franchises, each of which is subject to amendment, termination or repeal by the Philippine Congress, and to various provisional authorities and CPCNs, which have been granted by the NTC and will expire between now and 2028. Some of our CPCNs and provisional authorities have already expired. Although we have filed applications for extension of these CPCNs and provisional authorities, we cannot assure you that the NTC will grant the applications for renewal.  Failure to renew CPCNs can materially and adversely affect our ability to conduct the essential functions of our business, and therefore adversely affect our financial condition and results of operations.  See Item 4. “Information on the Company – Licenses and Regulations” for more information.


Failure to comply with R.A. 7925  


The Philippine Congress may revoke, or the Solicitor General of the Philippines may file a case against Smart and DMPI to revoke, the franchise of Smart and DMPI for their failure to comply with R.A. 7925, which requires making a public offering of at least 30% of the aggregate common shares of a telecommunications entity with regulated types of services.  See Item 4. “Information on the Company – Material Effects of Regulation on our Business” for further discussion.  


On May 19, 2017, Republic Act No. 10926 took effect which extended the Legislative Franchise of Smart.  The law contains a provision which exempts Smart from the requirement of listing of shares if a grantee is wholly owned by a publicly listed company with at least thirty per centum (30%) of whose authorized capital stock is publicly listed. Thus, Smart is in compliance with RA 7925.


We cannot assure you that any of our franchise, permits or licenses will not be revoked and any such revocation could have a material adverse effect on our business, financial conditions or prospects.


Our business is significantly affected by laws and regulations, including regulations in respect of rates and taxes and laws relating to anti-competitive practices and monopoly.


The NTC regulates the rates we are permitted to charge for services that have not yet been deregulated, such as local exchange services.  We cannot assure you that the NTC will not impose additional obligations on us that could lead to the revocation of our licenses if not adhered to and/or to the reduction in our total revenues or profitability.  The NTC could adopt changes to the regulations or implement additional guidelines governing our interconnection with other telecommunications companies or the rates and terms upon which we provide services to our customers. The occurrence of any of these changes could materially reduce our revenues and profitability.




The PLDT Group is also subject to a number of national and local taxes.  We cannot assure you that the PLDT Group will not be subject to new, increased and/or additional taxes and that the PLDT Group would be able to impose or pass on additional charges or fees on its customers to compensate for the imposition of such taxes or charges, or for the loss of fees and/or charges.  


Moreover, we are subject to laws and regulations relating to anti-competitive practices and anti-monopoly.  The Philippine Competition Act came into effect on August 8, 2015 and prohibits practices that restrict market competition through anti-competitive agreements and abuse of a dominant position.  It also requires parties to provide notification and obtain clearance for certain mergers and acquisitions.  The Philippine Competition Act prescribes administrative and criminal penalties for violations of these prohibitions.  While our business practices have not in the past been found to have violated any laws and regulations related to anti-competition and anti-monopoly, we cannot assure you that any new or existing governmental regulators will not, in the future, take the position that our business practices to have an anti-competitive effect on the Philippine telecommunications industry, nor can we assure you that such regulators will not take that position that we have violated the relevant laws and regulations relating to anti-competition and anti-monopoly in the future.  


In particular, PLDT was engaged in litigation with the Philippine Competition Commission, or the PCC, relating to PLDT’s investments in Vega Telecom Inc., or VTI, Bow Arken Holdings Company, or Bow Arken, and Brightshare Holdings, Inc., or Brightshare, or the SMC Transactions.  Although the Court of Appeals, or CA, among other things, compelled the PCC to recognize that the SMC Transactions as deemed approved by operation of law, the CA did clarify that the deemed approved status of the SMC Transactions does not, however, remove the power of PCC to conduct post-acquisition review to ensure that no anti-competitive conduct is committed by the parties.  Any future expansion in our services, particularly in our mobile services, could subject us to additional conditions in the granting of our provisional authorities by the NTC and to increased regulatory scrutiny, which could harm our reputation and business, and which could have a material adverse effect on our growth and prospects.  In addition, the occurrence of any such event could impose substantial costs or cause interruptions or considerable delays in the provision, development or expansion of our services.  See Note 10 – Investments in Associates and Joint VenturesNotice of Transaction filed with the Philippine Competition Commission, or PCC to the accompanying audited consolidated financial statements in Item 18. “Financial Statements” for further discussion.


Changes in regulations or user concerns regarding privacy and protection of user data, or any failure to comply with such laws, could adversely affect our business.


Legislation such as R.A. 10173 (Data Privacy Act of 2012) and its Implementing Rules and Regulations (“Data Privacy Act”) aim to protect individual privacy.  The rules apply to the processing of personal data in the public and private sectors, as well as to acts done or practices engaged in and outside of the Philippines under certain conditions.  From 2018, the National Privacy Commission, or NPC, has gradually shifted its focus from campaigning for Data Privacy Act awareness to compliance checks on entities engaged in personal data processing. Personal data breaches and other controversies relating to the unauthorized processing of personal data both within the Philippines and abroad have also increased public scrutiny on the activities of entities engaged in personal data processing.  Provisions in Data Privacy Act on the Rights of Data Subjects2 and the NTC issuances under MC 05-07-2016 and NTC MC No. 05-06-2007 on the rights of the subscriber on record to their data and Call Data Records highlight PLDT’s statutory obligation to be able to furnish complete and correct data to its users upon their request.  These developments lead to increased impetus on PLDT not only to ensure compliance with Data Privacy Act and similar laws, rules and regulations but also to meet industry best practices and customer expectations on data protection.


Any failure, or perceived failure, by us to make effective modifications to our policies, or to comply with any privacy, data-retention or data-protection-related laws, regulations, orders or industry self-regulatory principles, including Data Privacy Act, could result in proceedings or actions against us by governmental entities or others, a loss of user confidence, damage to the PLDT brands, and a loss of users or advertising partners, any of which could potentially have an adverse effect on our business.



The Rights of Data Subjects under the Data Privacy Act are as follows: right to be informed whether their personal data is being processed; right to object to the processing of their personal data; right to reasonable access to their personal data; right to rectification of inaccuracy or error; right to erasure or blocking of their personal data; the right to data portability; right to file a complaint; and right to damages due to inaccurate, incomplete, outdated, false, unlawfully obtained or unauthorized use of personal data.




In addition, various federal, state and foreign legislative or regulatory bodies may enact new or additional laws and regulations concerning privacy, data-retention and data-protection issues, including laws or regulations mandating disclosure to domestic or international law enforcement bodies, which could adversely impact our results of operations, businesses, brand or reputation with users. For instance, in May 2018, the General Data Protection Regulation (GDPR) came into force in the European Union and European Economic Area countries. In the United States, there is also increasing clamor for the enactment of a federal privacy law.


The interpretation and application of privacy, data protection and data retention laws and regulations are often uncertain as these are highly dependent on the local context and culture and they can also be impacted by changes in technology. These laws may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices, complicating long-range business planning decisions. If privacy, data protection or data retention laws are interpreted and applied in a manner that is inconsistent with our current policies and practices we may be fined or ordered to change our business practices in a manner that adversely impacts our operating results. Complying with these varying international requirements could cause us to incur substantial costs or require us to change our business practices or operating platforms in a manner adverse to our business.


Inadequate handling of confidential information, including personal customer information by our corporate group, contractors and others, may adversely affect our credibility or corporate image.


We possess a substantial amount of personal information of our customers.  In the event an information leak occurs, whether at our end or on the part of our contractors and service providers, we might be subjected to penalties under the data privacy law, our credibility and corporate image may be significantly damaged, and we may experience an increase in cancellations of customer contracts and slower increase in additional subscriptions, any of which could have a material adverse effect on our business, results of operations, financial condition and prospects.


Legislation and regulation of online payment systems could create unexpected costs, subject us to enforcement actions for compliance failures, or cause us to change our digital technology platforms or business models.


Regulators have been increasing their focus on online and mobile payment services, and recent regulatory and other developments could reduce the convenience or utility of our payment services for users.  Governmental regulation of certain aspects of mobile payments systems under which PLDT operates could result in obligations or restrictions with respect to the types of products that we may offer to consumers, the payment card systems that link to our mobile payments systems, the jurisdictions in which our payment services or apps may be used, and higher costs, such as fees charged by banks to process funds through our mobile payments systems.  Such obligations and restrictions could be further increased as more jurisdictions regulate payment systems.  Moreover, if this regulation is used to provide resources or preferential treatment or protection to selected payments and processing providers, it could displace us from, or prevent us from entering into, or substantially restrict us from participating in, particular geographies.  


Limitations in the amount of frequency spectrum or facilities made available to us could negatively affect our ability to maintain and improve our service quality and level of customer satisfaction, could increase our costs and could reduce our competitiveness.


The available radio frequency spectrum is one of the principal limitations on a wireless network’s capacity, and there are limitations in the spectrum and facilities available to us to provide our services. Our future wireless growth will increasingly depend on our ability to offer innovative video products and data services and a wireless network that has sufficient spectrum and capacity to support these innovations. Improvements in our service depend on many factors, including continued access to and deployment of adequate spectrum.


Our competitiveness may decline if we cannot obtain the necessary or optimal allocation of spectrum from the Philippine government.  If the Philippine government does not fairly allocate spectrum to wireless providers in general, revoke spectrum previously granted to us, or if we cannot acquire needed spectrum or deploy the services customers desire on a timely basis without burdensome conditions or at adequate cost while maintaining network quality levels, then our ability to attract and retain customers, and therefore maintain and improve our operating margins, could be materially adversely affected.




Other mobile service providers in the world may not adopt or use the technologies and the frequency bands that are compatible with ours, which could affect our ability to sufficiently offer international services.


If a sufficient number of mobile service providers do not adopt the technologies and the frequency bands that are compatible with ours, if mobile service providers switch to other technologies or frequency bands, or if there is a delay in the introduction and expansion of compatible technologies and frequency bands, we may not be able to offer international roaming or other international services as expected, which may adversely affect our business.


We may not be successful in our acquisitions of, and investments in, other companies and businesses, and may therefore be unable to fully implement our business strategy.


As growth slows or reverses in our traditional fixed line and mobile businesses, and as part of our strategy to grow other business segments, we make acquisitions and investments in companies or businesses to enter new businesses or defend our existing markets.  The success of our acquisitions and investments depends on a number of factors, such as:



our ability to identify suitable opportunities for investment or acquisition;



our ability to reach an acquisition or investment agreement on terms that are satisfactory to us or at all;



the extent to which we are able to influence or exercise control over the acquired company;



the compatibility of the economic, business or other strategic objectives and goals of the acquired company with those of the PLDT Group, as well as the ability to execute the identified strategies in order to generate fair returns on the investment; and



our ability to successfully integrate the acquired company or business with our existing businesses.


Any of our contemplated acquisitions and investments may not be consummated due to reasons or factors beyond our control.  Even if any contemplated acquisitions and investments are consummated, we may not be able to realize any or all of the anticipated benefits of such acquisitions and investments and we cannot assure you that the consummation of such acquisitions and investments will not result in losses for a prolonged period of time.  Moreover, if we are unsuccessful in our contemplated acquisitions and investments, we may not be able to fully implement our business strategy to maintain or grow certain of our businesses and our results of operations and financial position could be materially and adversely affected.


We are exposed to the fluctuations in the market values of our investments.


Given the nature of our business and our foray into the digital business, we have made investments in various start-up companies.  For example, in 2014, we invested in Rocket Internet SE (formerly Rocket Internet AG), or Rocket, to drive the development of online and mobile payment solutions, the fair value of which has declined significantly since our investment.  Due to the significant decline in fair value of our investment in Rocket Internet, we recognized a series of impairments that amount to, in the aggregate, Php11,045 million, since then.  See Note 11 – Financial Assets at FVPL/Available-for-Sale Financial Investments – Investment of PLDT Online in Rocket Internet to the accompanying audited consolidated financial statements in Item 18. “Financial Statements” for more information.  Credit ratings and market values of this investment and similar investments can be negatively impacted by liquidity, credit deterioration or losses, financial results, foreign exchange rates, or other factors.  As a result, our investments could decline and result in a material impairment, which could have a material adverse effect on our financial condition and operating results.  


If we are unable to install and maintain telecommunications facilities and equipment in a timely manner, we may not be able to maintain our current market share and the quality of our services, which could have a material adverse effect on our results of operations and financial condition.


Our business requires the regular installation of new, and the maintenance of existing, telecommunications transmission and other facilities and equipment, which are being undertaken.  The installation and maintenance of these facilities and equipment are subject to a number of risks and uncertainties, such as:



shortages of equipment, materials and labor;



delays in issuance of national and local government building permits;



work stoppages and labor disputes;





interruptions resulting from man-made events (e.g., sabotage), inclement weather and other natural disasters;


rapid technological obsolescence;



inability of vendors to deliver on commitments;



unforeseen engineering, environmental and geological problems; and



unanticipated cost increases.


Any of these factors could give rise to delays or cost overruns in the installation of new facilities or equipment or could prevent us from deploying our networks and properly maintaining the equipment used in our networks, and hence could affect our ability to maintain existing services and roll-out new services, for example, which could have a material adverse effect on our results of operations and financial condition.


Actual or perceived health risks or other problems relating to mobile handsets or transmission masts could lead to litigation or decreased mobile communications usage.


The effects of, and any damage caused by, exposure to an electromagnetic field remain the subject of careful evaluations by the international scientific community.  We cannot rule out that exposure to electromagnetic fields or other emissions originating from mobile handsets will not be identified as a health risk in the future. Our mobile business may be harmed as a result of any future alleged, or actual, health risk or the perception of any health risk, which could result in a lower number of customers, reduced usage per customer or even potential consumer liability.


Our business relies on secure network infrastructure and computer systems, and any cyber-attacks against them, or the perception of such attacks, may materially adversely affect our operations, financial condition and results of operations.


Our business operations rely on us securely maintaining our network infrastructure and computer systems. A cyber-attack on our systems could cause service disruptions, damage to our systems and infrastructure, including damage to our physical assets, malfunction of our technology or services, accidental and/or deliberate misuse of our systems and other assets, alteration of our technology, publication of our proprietary technologies, methods, processes, business strategies and other confidential information,  as well as unauthorized access to confidential information about our customers, including their financial information, any of which may lead to reputational harm, loss of confidence in our brand, litigation, regulatory actions and loss in customers, each of which, individually or in the aggregate may materially adversely affect our business, financial condition and results of operations.


A key development in 2018 was the appointment of a Chief Information Security Officer, or CISO, to oversee the implementation and management of information and cyber security processes, especially regarding compliance with the business directions and applicable local and international laws and regulations. PLDT also established the Cyber Security Operations Group, or CSOG, headed by the CISO, to create, implement and operate the information security management system, or ISMS, framework and to support the review and update the security policy.


In regard to cyber security risks, PLDT is vulnerable to cybersecurity threats such as denial of service, ransomware, malware, identity theft, botnets and phishing, among others.  While we have invested in protection technologies that can integrate and enhance our capabilities to fight cybersecurity threats, we cannot assure you that any of such defenses will be effective against or neutralize the effects of any cyber incidents resulting from unintentional cyber security breaches or deliberate attacks on our network infrastructure or computer systems.  Similarly, we cannot assure you that our business will not be significantly disrupted in the event of a security breach or attack. If we fail to timely and effectively prevent the occurrence of any new or existing cyber security incidents, or fail to promptly rectify any such incidents, our business could be significantly disrupted, our results of operations could be materially and adversely affected, and the confidence of our stakeholders could be lost.


In 2018, 223 phishing cases against PLDT employees aimed at obtaining unauthorized access to PLDT’s systems were reported.  This is slightly lower than the 232 reported cases in 2017, but significantly higher than the 92 reported cases in 2016.  Phishing is a persistent threat to PLDT and we have intensified the education campaign on our employees against phishing.  Despite our efforts to battle phishing, if unauthorized access to our systems occur, we may suffer direct financial losses, liabilities to customers and third parties, governmental fines, financial outlay to introduce or upgrade our systems and train employees, and/or reputational damage, any of which may materially and adversely affect our business, financial position and/or results of operations.




Cable and equipment theft, equipment failures, natural disasters, man-made events, terrorist acts and territorial disputes may materially adversely affect our operations.


Theft of telecommunication cables, major equipment failures or natural disasters, including severe weather, terrorist acts or other similar or related contingencies could adversely affect our wireline and wireless networks, including telephone switching offices, microwave links, third-party-owned local and long-distance networks on which we rely, our cell sites or other equipment, our customer account support and information systems, or employee and business records, and could have a material adverse effect on our operations.  


Natural disasters, terrorist acts or acts of war could cause damage to our infrastructure and result in significant disruptions to our operations.


Our business operations are subject to interruption by natural disasters, power outages, terrorist attacks, cyber-attacks and other events beyond our control.  Such events could cause significant damage to our infrastructure upon which our business operations rely, resulting in degradation or disruption of service to our customers.  While we maintain insurance coverage for some of these events, the potential liabilities associated with these events could exceed the insurance coverage we maintain.  Our system redundancy may be ineffective or inadequate, and our disaster recovery planning may be insufficient for all eventualities.  These events could also damage the infrastructure of the suppliers that provide us with the equipment and services that we need to operate our business and provide products to our customers.  A natural disaster or other event causing significant physical damage could cause us to experience substantial losses resulting in significant recovery time and expenditures to resume operations.  In addition, these occurrences could result in lost revenues from business interruption as well as damage to our reputation.


Our businesses require substantial capital investment, which we may not be able to finance.


Our projects under development and the continued maintenance and improvement of our networks and services, including Smart’s projects, networks, platforms and services, require substantial ongoing capital investment.  Our consolidated capital expenditures totaled Php58,490 million, Php40,299 million and Php42,825 million for the years ended December 31, 2018, 2017 and 2016, respectively.  We currently estimate that our consolidated capital expenditures in 2019 will be approximately Php78 billion.  


Future strategic initiatives could require us to incur significant additional capital expenditures.  We may be required to finance a portion of our future capital expenditures from external financing sources, some of which have not yet been fully arranged.  There can be no assurance that financing for new projects will be available on terms acceptable to us, or at all.  If we cannot complete our development programs or other capital projects on time due to our failure to obtain the required financing, our growth, results of operations, financial condition and prospects could be materially and adversely affected.  Furthermore, if we are unable to monetize our investments and generate the expected revenues, our cashflows and gearing may be negatively impacted.


Our results of operations and our financial position could be materially and adversely affected if the Philippine peso significantly fluctuates against the U.S. dollar.


A substantial portion of our capital expenditures, a portion of our indebtedness and related interest expense and a portion of our operating expenses are denominated in U.S. dollars and other foreign currencies, whereas most of our revenues are denominated in Philippine pesos.   See Note 20 – Interest-bearing Financial Liabilities to the accompanying audited consolidated financial statements in Item 18. “Financial Statements”.


A depreciation of the Philippine peso against the U.S. dollar would increase the amount of our U.S. dollar-denominated debt obligations, capital expenditures, and operating and interest expenses in Philippine peso terms.  In the event that the Philippine peso depreciates against the U.S. dollar, we may be unable to generate enough funds through operations and other means to offset the resulting increase in our obligations in Philippine peso terms.  Moreover, a depreciation of the Philippine peso against the U.S. dollar may result in our recognition of significant foreign exchange losses, which could materially and adversely affect our results of operations.  A depreciation of the Philippine peso could also cause us not to be in compliance with the financial covenants imposed on us by our lenders under certain loan agreements and other indebtedness.  Further, fluctuations in the Philippine peso value and of interest rates impact the mark-to-market gains/losses of certain of our financial debt instruments, which were designated as non-hedged items.




The Philippine peso has been subject to significant depreciation in recent years with the Philippine peso depreciated by approximately 28% from a high of Php41.08 for year end 2012 to Php52.56 as at December 31, 2018 and further depreciated to Php52.89 as at March 20, 2019.  We cannot assure you that the Philippine peso will not depreciate further and be subject to significant fluctuations going forward, due to a range of factors, including:



political and economic developments affecting the Philippines, including the level of remittances from overseas Filipino workers;



global economic and financial trends;



the volatility of emerging market currencies;



any interest rate increases by the Federal Reserve Bank of the United States and/or the BSP; and



higher demand for U.S. dollars by both banks and domestic businesses to service their maturing U.S. dollar obligations or foreign exchange traders including banks covering their short U.S. dollar positions, among others.


Our debt instruments contain restrictive covenants which require us to maintain certain financial tests and our indebtedness could impair our ability to fulfill our financial obligations and service our other debt.


Our existing debt instruments contain covenants which, among other things, require PLDT to maintain certain financial ratios and other financial tests, calculated on the basis of IFRS at relevant measurement dates, principally at the end of each quarter period.  For a description of some of these covenants, see Note 20 – Interest-bearing Financial Liabilities to the accompanying audited consolidated financial statements in Item 18. “Financial Statements”.


Our indebtedness and the requirements and limitations imposed by our debt covenants could have important consequences.  For example, we may be required to dedicate a substantial portion of our cash flow to payments on our indebtedness, which could reduce the availability of our cash flow to fund working capital, capital expenditures and other general corporate requirements.


The principal factors that could negatively affect our ability to comply with these financial ratio covenants and other financial tests are depreciation of the Philippine peso relative to the U.S. dollar, poor operating performance of PLDT and its subsidiaries, impairment or similar charges in respect of investments or other long-lived assets that may be recognized by PLDT and its subsidiaries, and increases in our interest expense.  Interest expense may increase as a result of various factors including issuance of new debt, the refinancing of lower cost indebtedness by higher cost indebtedness, depreciation of the Philippine peso relative to the U.S. dollar, the lowering of PLDT’s credit ratings or the credit ratings of the Philippines, increase in reference interest rates, and general market conditions.  Of our total consolidated debts, approximately 13% and 20% were denominated in U.S. dollars as at December 31, 2018 and 2017, respectively.  Considering our consolidated hedges and U.S. dollar cash balances allocated for debt, the unhedged portion of our consolidated debt amounts was approximately 8% as at December 31, 2018 and 2017, therefore, the financial ratio and other tests are expected to be negatively affected by any weakening of the Philippine peso relative to the U.S. dollar.


If we are unable to meet our debt service obligations or comply with our debt covenants, we may need to restructure or refinance our indebtedness, seek additional equity capital or sell assets.  An inability to effect these measures successfully could result in a declaration of default and an acceleration of maturities of some or all of our indebtedness, which could have a material adverse effect on our business, results of operations and financial condition.


Our subsidiaries could be limited in their ability to pay dividends to us due to internal cash requirements and their creditors having superior claims over their assets and cash flows, which could materially and adversely affect our financial condition.


A significant part of our total revenues and cash flows from operating activities are derived from our subsidiaries, particularly Smart.  Smart has significant internal cash requirements for debt service, capital expenditures and operating expenses and as a result, may be financially unable to pay any dividends to PLDT.  Although Smart has been making dividend payments to PLDT regularly since December 2002, there can be no assurance that PLDT will continue to receive these dividends or other distributions, or otherwise be able to derive liquidity from Smart or any other subsidiary or investee in the future.




Creditors of our subsidiaries generally have priority claims over our subsidiaries’ assets and cash flows.  We and our creditors will effectively be subordinated to the existing and future indebtedness and other liabilities, including trade payables, of our subsidiaries, except that we may be recognized as a creditor with respect to loans we have made to subsidiaries.  If we are recognized as a creditor of a subsidiary, our claim will still be subordinated to any indebtedness secured by assets of the subsidiary and any indebtedness of the subsidiary otherwise deemed superior to the indebtedness we hold.


We may have difficulty meeting our debt payment obligations if we do not continue to receive cash dividends from our subsidiaries and our financial condition could be materially and adversely affected as a result.


A significant number of shares of PLDT’s voting stock are held by four shareholders, which may not act in the interests of other shareholders or stakeholders in PLDT.


As at January 31, 2019, the First Pacific Group and its Philippine affiliates, NTT Communications and NTT DOCOMO, and JG Summit Holdings, Inc. and its affiliates, or JG Summit Group, collectively, beneficially own approximately 53.9% in PLDT’s outstanding common stock (representing 31.8% of our overall voting stock).  See Item 7. “Major Shareholders and Related Party Transactions” for further details regarding the shareholdings of NTT Communications and NTT DOCOMO in PLDT, and the rights granted pursuant to the Cooperation Agreement, Strategic Agreement and the Shareholders Agreement.  


Additionally, all of PLDT’s shares of voting preferred stock, which represent approximately 41% of PLDT’s total outstanding shares of voting stock are owned by a single stockholder, BTF Holdings, Inc., or BTFHI.


The FP Parties and/or NTT Communications and/or NTT DOCOMO and/or JG Summit Group and/or BTFHI may exercise their respective voting rights over certain decisions and transactions in a manner that could be contrary to the interests of other shareholders or stakeholders in PLDT.


Failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could adversely impact investor confidence and the market price of our common shares and ADSs, and have a material adverse effect on our business, our reputation, financial condition and results of operations.


We are required to comply with various Philippine and U.S. laws and regulations on internal control.  However, internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud.  Therefore, even effective internal control over financial reporting can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.  If we fail to maintain the adequacy of our internal control over financial reporting, including our failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed, we could fail to meet our reporting obligations and there could be a material adverse effect on our business, our reputation, financial condition and results of operations, and the market prices of our common shares and ADSs could decline significantly.


We are unionized and are vulnerable to work stoppages, slowdowns or increased labor costs.


As at December 31, 2018, PLDT has three employee unions, representing in the aggregate 5,572, or 32%, of the employees of the PLDT Group.  This unionized workforce could result in demands that may increase our operating expenses and adversely affect our profitability.  For instance, PLDT experienced significant charges from its manpower rightsizing program in 2018 and 2017, mainly incurred in the fixed-line business.  See Note 5 – Income and Expenses – Compensation and Employee Benefits to the accompanying audited consolidated financial statements in Item 18. “Financial Statements”.  Each of our different employee groups require separate collective bargaining agreements.  If PLDT and any of its unions are unable to reach an agreement on the terms of their collective bargaining agreement or if we were to experience widespread employee dissatisfaction, we could be subject to work slowdowns or stoppages. Any of these events would be disruptive to our operations and could harm our business.




Additionally, on July 3, 2017, PLDT received a Compliance Order from the Department of Labor and Employment of the Philippines, or DOLE, in connection with the non-payment of statutorily required monetary benefits, including the 13th month pay, to certain contractor employees.  On July 31, 2018, the Court of Appeals promulgated a decision granting PLDT’s prayer for an injunction against the Compliance Order and remanded back to the DOLE for further proceedings the computation of the monetary awards, which in the regularization orders amounted to Php51.8 million. We cannot guarantee that PLDT or its subsidiaries will not be subject to similar proceedings or other labor-related regulatory activities, the results of which may have an adverse reputational and/or financial impact. See Note 26 – Provisions and Contingencies to the accompanying audited consolidated financial statements in Item 18. “Financial Statements”.


The loss of key personnel or the failure to attract and retain highly qualified personnel could compromise our ability to effectively manage our business and pursue our growth strategy.


Our future performance depends on our ability to attract and retain highly qualified key technical, development, sales, services and management personnel.  The loss of key employees could result in significant disruptions to our business, and the integration of replacement personnel could be costly and time consuming, could cause additional disruptions to our business, and could be unsuccessful.  We cannot guarantee the continued employment of any of the members of our senior leadership team, who may depart our Company for any number of reasons, such as other business opportunities, differing views on our strategic direction or other personal reasons.  Any inability to attract, retain or motivate our personnel could have a material adverse effect on our results of operations and prospects.


Adverse results of any pending or future litigation, internal or external investigations and/or disputes may impact PLDT’s cash flows, results of operations and financial condition.


We are currently involved in various legal proceedings.  Our estimate of the probable costs for the resolution of these claims have been developed in consultation with our counsel handling the defense in these matters and is based upon our analysis of potential results.  Our future financial performance could be materially affected by an adverse outcome or by changes in our estimates or effectiveness of our strategies relating to these proceedings and assessments.  


For more information on PLDT’s legal proceedings, see Item 8. “Legal Proceedings” and Note 26 – Provisions and Contingencies to the accompanying consolidated financial statements in Item 18. “Financial Statements.” While PLDT believes the positions it has taken in these cases are legally valid, the final results of these cases may prove to be different from its expectations.  In addition, there is no assurance that PLDT will not be involved in future litigation or other disputes, the results of which may materially and adversely impact its business and financial conditions.  


Our financial condition and operating results will be impaired if we experience high fraud rates related to device financing, credit cards, dealers, or subscriptions.


Our operating costs could increase substantially as a result of fraud, including device financing, customer credit card, subscription, or dealer fraud. If our fraud detection strategies and processes are not successful in detecting and controlling fraud, whether directly or by way of the systems, processes, and operations of third parties such as customers, national retailers, dealers, and others, the resulting loss of revenue or increased expenses could have a material adverse effect on our financial condition and operating results.


Risks Relating to the Philippines


PLDT’s business may be adversely affected by political or social or economic instability in the Philippines.


The Philippines is subject to political, social and economic volatility that, directly or indirectly, could have a material adverse impact on our ability to sustain our business and growth. 


The Philippines, China and several Southeast Asian nations have been engaged in a series of long-standing territorial disputes over certain islands in the West Philippine Sea, also known as the South China Sea.  Should these territorial disputes continue or escalate further, the Philippines and its economy may be disrupted and our operations could be adversely affected as a result. In particular, further disputes between the Philippines and China may lead both countries to impose trade restrictions on the other’s imports. Any such impact from these disputes could adversely affect the Philippine economy, and materially and adversely affect our business, financial position and financial performance.




We cannot assure you that the political environment in the Philippines will be stable or that the current or any future government will adopt economic policies that are conducive to sustained economic growth or which do not materially and adversely impact the current regulatory environment for the telecommunications and other companies. 


If foreign exchange controls were to be imposed, our ability to meet our foreign currency payment obligations could be adversely affected.


The Philippine government has, in the past, instituted restrictions on the conversion of the Philippine peso into foreign currencies and the use of foreign exchange received by Philippine companies to pay foreign currency-denominated obligations.  The Monetary Board of the BSP has statutory authority, with the approval of the President of the Philippines, during a foreign exchange crisis or in times of national emergency, to:



suspend temporarily or restrict sales of foreign exchange;



require licensing of foreign exchange transactions; or



require the delivery of foreign exchange to the BSP or its designee banks.


We cannot assure you that foreign exchange controls will not be imposed in the future.  If imposed, these restrictions could materially and adversely affect our ability to obtain foreign currency to service our foreign currency obligations.


As a foreign private issuer, we follow certain home country corporate governance practices which may afford less protection to holders of our ADSs.


As a foreign private issuer incorporated in the Philippines and listed on the PSE, we are permitted under applicable NYSE rules to follow certain home country corporate governance practices.  The corporate governance practice and requirements in the Philippines do not require us to have a majority of the members of our board of directors to be independent, and do not require regularly scheduled executive sessions of non-management directors or regularly scheduled executive sessions where only independent directors are present.  Further, the criteria for independence of directors and audit committee members applicable in the Philippines differ from those applicable under the NYSE rules.  These Philippine home country corporate governance practices may afford less protection to holders of our ADSs.


The credit ratings of the Philippines may restrict the access to capital of Philippine companies, including PLDT.


Historically, the Philippines’ sovereign debt has been rated non-investment grade by international credit rating agencies.  In December 2018, the Philippines’ long-term foreign currency-denominated debt was affirmed by Fitch Ratings, or Fitch, as investment-grade with a rating of BBB with a stable outlook, and Standard and Poor’s, or S&P, and Moody’s Investor Service, or Moody’s, affirmed the Philippines’ long-term foreign currency-denominated debt to the investment-grade rating of BBB+ and Baa2, respectively, with a stable outlook.  Though investment grade, the relatively low sovereign rating of the Philippine Government will directly and adversely affect companies domiciled in the Philippines as international credit rating agencies issue credit ratings by reference to that of the sovereign.  No assurance can be given that Fitch, Moody’s, S&P, or any other international credit rating agency will not downgrade the credit ratings of the Philippine Government in the future and, therefore, Philippine companies, including PLDT.  Any such downgrade could have a material adverse impact on the liquidity in the Philippine financial markets, the ability of the Philippine Government and Philippine companies, including PLDT, to raise additional financing, and the interest rates and other commercial terms at which such additional financing is available.

Item 4.

Information on the Company



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


Our common shares are listed and traded on the PSE and our ADSs are listed and traded on the NYSE in the United States.  




We had a market capitalization of approximately Php291,675 million, or US$5,399 million, as at December 31, 2018, representing one of the largest market capitalizations among Philippine-listed companies.  We had total revenues of Php164,752 million, or US$3,135 million, and net income attributable to equity holders of PLDT of Php18,916 million, or US$360 million, for the year ended December 31, 2018.

Historical Background and Development


PLDT was incorporated under the old Corporation Law of the Philippines (Act 1459, as amended) on November 28, 1928 as Philippine Long Distance Telephone Company, following the merger of four telephone companies under common U.S. ownership.  Under its Amended Articles of Incorporation, PLDT’s corporate term is currently limited through 2028.


PLDT’s original franchise was granted in 1928 and was last amended in 1991, extending its effectiveness until 2028 and broadening PLDT’s franchise to permit PLDT to provide virtually every type of telecommunications service.  PLDT’s franchise covers the business of providing basic and enhanced telecommunications services in and between the provinces, cities and municipalities in the Philippines and between the Philippines and other countries and territories including mobile, wired or wireless telecommunications systems; fiber optics; multi-channel transmission distribution systems and their VAS (including but not limited to transmission of voice, data, facsimile, control signals, audio and video); information services bureau and all other telecommunications systems technologies presently available or that can be made available through technical advances or innovations in the future.  Our subsidiaries, including Smart and DMPI, also maintain their own franchises with a different range of services and periods of legal effectiveness for their licenses.

Our principal executive offices are located at the Ramon Cojuangco Building, Makati Avenue, Makati City, Philippines and our telephone number is +(632) 816-8556.  Our website address is  The contents of our website are not a part of this annual report.

Recent Developments


Investment of PGIH in Multisys


On November 8, 2018, the PLDT Board of Directors approved the investment of Php2,150 million in Multisys for a 45.73% equity interest through its wholly-owned subsidiary, PGIH.  Multisys is a Philippine software development and IT solutions provider engaged in designing, developing, implementing business system solutions and services covering courseware, webpage development and designing user-defined system programming.  PGIH’s investment involves the acquisition of new and existing shares.


On December 3, 2018, PGIH completed the closing of its investment in Multisys.  PGIH paid Php523 million to the owner of Multisys for the acquisition of existing shares and invested Php800 million into Multisys as a deposit for future subscription pending the approval by the Philippine SEC of the capital increase of Multisys.


On February 1, 2019, the Philippine SEC approved the capital increase of Multisys.  


Loss of Control of PCEV over VIH


On October 4, 2018, PLDT, as the ultimate Parent Company of PCEV, VIH, Vision Investment Holdings Pte. Ltd., or Vision, an entity indirectly controlled by KKR & Co., Inc., or KKR, and Cerulean Investment Limited, or Cerulean, an entity indirectly owned and controlled by Tencent Holdings Limited, or Tencent, entered into subscription agreements under which Vision and Cerulean, or the Lead Investors, will separately subscribe to and VIH will allot and issue to the Lead Investors a total of up to US$175 million Convertible Class A Preferred Shares of VIH, with an option for VIH to allot and issue up to US$50 million Convertible Class A Preferred Shares to such follower investors as may be agreed among VIH, PLDT and the Lead Investors, or the upsize option.


On November 26, 2018, PLDT, the International Finance Corporation, or IFC, and IFC Emerging Asia Fund, or IFC EAF, a fund managed by IFC Asset Management Company, entered into subscription agreements under which IFC and IFC EAF, the follower investors, will separately subscribe to and VIH will allot and issue to the follower investors a total of up to US$40 million Convertible Class A Preferred Shares of VIH pursuant to the upsize option.




The foregoing investment in VIH is not subject to the compulsory merger notification regime under the Philippine Competition Act and its implementing rules and regulations.  In addition, the Bangko Sentral ng Pilipinas confirmed that it interposes no objection to the investment.


On November 28, 2018, VIH received the US$175 million funding from KKR and Tencent.  Subsequently, VIH received the US$40 million funding from IFC and IFC EAF.  As a result, PCEV’s ownership was reduced to 48.74% and retained only two out of the five board seats in VIH, which resulted to a loss of control.


ePLDT’s Additional Investment in ePDS


On March 5, 2018 and August 7, 2018, the Board of Directors of ePLDT approved the additional investment in ePDS amounting to Php134 million and Php66 million, respectively, thereby increasing its equity interest in ePDS from 67% to 95%.


Sale of Rocket Internet Shares


On April 16, 2018, Rocket Internet announced the buyback of up to 15 million Rocket Internet shares through a public share purchase offer, or the Offer, against payment of an offer price in the amount of €24 per share.  PLDT Online Investments Pte. Ltd., or PLDT Online, committed to accept the Offer of Rocket Internet for at least 7 million shares, or approximately 67.4% of the total number of shares directly held by PLDT Online.


On May 4, 2018, Rocket Internet accepted the tender of PLDT Online of 7 million shares and paid the total consideration of €163 million, or Php10,059 million, which was settled on May 9, 2018, reducing the equity ownership in Rocket Internet from 6.1% to 2.0%.


On May 23, 2018, Rocket Internet redeemed 10.8 million shares, reducing its share capital of the company to €154 million.  As a result of the redemption of shares, PLDT Online’s equity ownership in Rocket Internet increased from 2.0% to 2.1%.


On various dates in the third quarter of 2018, PLDT Online sold 0.7 million Rocket Internet shares for an aggregate amount of €22 million, or Php1,346 million, reducing the equity ownership in Rocket Internet from 2.1% to 1.7%.

Conversion of PLDT Online’s iflix Convertible Note

On August 4, 2017, PLDT Online subscribed to a convertible note of iflix for US$1.5 million, or Php75 million, in a new funding round led by Hearst Entertainment.  The convertible note was paid on August 8, 2017.  The note is zero coupon, senior and unsubordinated, non-redeemable, transferable and convertible into Series B Preferred Shares subject to occurrence of a conversion event.  iflix will use the funds to invest in its local content strategy and for its regional and international expansion.

On December 15, 2018, the US$1.5 million convertible note held by PLDT Online was converted into 1.0 million Series B Preferred Shares of iflix upon the occurrence of the cut-off date.  After the conversion of all outstanding convertible notes, PLDT Online’s equity ownership in iflix was reduced from 7.3% to 5.3%.

Investment of PLDT Capital in Phunware

On September 3, 2015, PLDT Capital subscribed to an 8% US$5 million Convertible Promissory Note, or Note, issued by Phunware, a Delaware corporation.  Phunware provides an expansive mobile delivery platform that creates, markets, and monetizes mobile application experiences across multiple screens.  The US$5 million Note was issued to and paid for by PLDT Capital on September 4, 2015.

On December 18, 2015, PLDT Capital subscribed to Series F Preferred Shares of Phunware for a total consideration of US$3 million.  On the same date, the Note and its related interest were converted to additional Phunware Series F Preferred Shares. 



On February 27, 2018, Phunware entered into a definitive Agreement and Plan of Merger, or Merger Agreement, with Stellar Acquisition III, Inc., or Stellar, relating to a business combination transaction for an enterprise value of US$301 million, on a cash-free, debt-free basis.  Pursuant to the Merger Agreement, the holders of Phunware common stock will be entitled to the right to receive the applicable portion of the merger consideration in the form of Stellar common shares, which are listed on the Nasdaq Stock Market.  As a result, the holders of Phunware preferred stock have requested the automatic conversion of all outstanding preferred shares into common shares effective as of immediately prior to the closing of the transaction on a conversion ratio of one common share per one preferred share.  In addition to the right to receive Stellar common shares, each holder of Phunware stock is entitled to elect to receive its pro rata share of warrants to purchase Stellar common shares that are held by the affiliate companies of Stellar’s co-Chief Executive Officers, or Stellar’s Sponsors.


On November 28, 2018, PLDT Capital elected to receive its full pro rata share of the warrants to purchase Stellar common shares held by Stellar’s Sponsors.

On December 26, 2018, Phunware announced the consummation of its business combination with Stellar.  Stellar, the new Phunware holding company, changed its corporate name to “Phunware, Inc.,” or PHUN, and Phunware changed its corporate name to “Phunware OpCo, Inc.”  Upon closing, PLDT Capital received the PHUN common shares equivalent to its portion of the merger consideration and its full pro rata share of warrants to purchase PHUN common shares.

Investment of PLDT Capital in Matrixx

On December 18, 2015, PLDT Capital entered into a Stock and Warrant Purchase Agreement with Matrixx, a Delaware corporation.  Matrixx provides the IT foundation to move to an all-digital service environment with a new real-time technology platform designed to handle the surge in interactions without forcing the compromises of conventional technology.  Under the terms of the agreement, PLDT Capital subscribed to convertible Series B Preferred Stock of Matrixx for a total consideration of US$5 million, or Php237 million, and was entitled to purchase additional Series B Preferred Stock upon occurrence of certain conditions on or before March 15, 2016.  PLDT Capital did not exercise its right to purchase additional Series B Preferred Stock of Matrixx.  

On December 20, 2018, Matrixx entered into a Repurchase Agreement with PLDT Capital to repurchase all of its capital stock held by PLDT Capital including a warrant to purchase capital stock for US$5 million.  The transaction closed on the same day.  

Investment of iCommerce in Philippines Internet Holding S.à.r.l., or PHIH

On January 20, 2015, PLDT and Rocket Internet entered into a joint venture agreement designed to foster the development of internet-based businesses in the Philippines.  PLDT, through its subsidiary, Voyager, and Asia Internet Holding S.à r.l., or AIH, which is 50%-owned by Rocket Internet, were the initial shareholders of the joint venture company PHIH.  iCommerce, former subsidiary of Voyager, replaced the latter as shareholder of PHIH on October 14, 2015 and held a 33.33% equity interest in PHIH.

The objective of PHIH was the creation and development of online businesses in the Philippines, the leveraging of local market and business model insights, the facilitation of commercial, strategic and investment partnerships, and the acceleration of the rollout of online startups in the Philippines.  In accordance with the underlying agreements, iCommerce paid approximately €7.4 million to PHIH as contribution to capital.  Payment of another contribution by iCommerce to the PHIH capital of approximately €2.6 million was requested in 2016 and remained outstanding.

On September 15, 2017, AIH initiated arbitral proceedings via the German Arbitration Institute (DIS) against iCommerce for not settling the €2.6 million contribution.  AIH required the payment of €2.6 million plus interest and all costs of the arbitral proceedings.

On December 14, 2017, the management and operations of iCommerce was transferred from VIH to PLDT Online.  As a result, VIH ceased to have any direct interest in iCommerce and any indirect interest in PHIH. See Note 2 – Summary of Significant Accounting Policies – Transfer of iCommerce to PLDT Online to the accompanying audited financial statements in Item 18.



On April 19, 2018, iCommerce, together with PLDT and Voyager, executed a Settlement Agreement with AIH to terminate the arbitral proceedings and to settle disputes over rights and obligations in connection with the PHIH agreements.  On the same date, iCommerce executed a Share Transfer Agreement with AIH to transfer its PHIH shares to AIH.  As a result, iCommerce gave up its 33.33% equity interest for zero value and its claims over the remaining cash of PHIH. iCommerce, AIH and PHIH waived all other claims in connection with PHIH, including any claims against iCommerce.

In separate letters dated April 26, 2018, iCommerce and AIH informed the DIS that both parties have concluded an out-of-court settlement with AIH requesting for the termination of the arbitral proceedings.

On May 7, 2018, iCommerce received the order of the DIS for the termination of the arbitral proceedings and the administrative fees to be paid in relation to the arbitral proceedings.  With the foregoing, iCommerce has completed the exit from the joint venture.

Consolidation of the Digital Investments of Smart under PCEV

On February 27, 2018, the Board of Directors of PCEV approved the consolidation of the various digital investments under PCEV.

On March 14, 2018, PCEV entered into a Share Purchase Agreement with Voyager to purchase 53 million ordinary shares of VIH, representing 100% of the issued and outstanding ordinary shares of VIH, for a total consideration of Php465 million.  The total consideration was settled on March 15, 2018, while the transfer of shares to PCEV was completed on April 6, 2018.

On March 14, 2018, VIH entered into Share Purchase Agreement with Smart to purchase all of its 170 million common shares of Voyager for a total consideration of Php3,527 million.  The total consideration was settled on April 16, 2018.


On April 12, 2018, PCEV entered into a Subscription Agreement with VIH to subscribe to additional 96 million ordinary shares of VIH with a par value of SG$1.00 per ordinary shares, for a total subscription price of SG$96 million, or Php3,806 million, which was settled on April 13, 2018.


Sale of PCEV’s Receivables from MPIC


On March 2, 2018, PCEV entered into a Receivables Purchase Agreement, or RPA, with various financial institutions, or the Purchasers, to sell a portion of its receivables from MPIC due in 2019 to 2021 amounting to Php5,550 million for a total consideration of Php4,852 million, which was settled on March 5, 2018.  Under the terms of the RPA, the Purchasers will have exclusive ownership of the purchased receivables and all of its rights, title, and interest.  


On March 23, 2018, PCEV entered into another RPA with a financial institution to sell a portion of its receivables from MPIC due in 2019 amounting to Php2,230 million for a total consideration of Php2,124 million, which was settled on April 2, 2018. 

Agreement between PLDT, Smart and Amdocs

On January 24, 2018, PLDT and Smart entered into a seven-year, US$300 million Managed Transformation Agreement with Amdocs, a leading provider of software and services to communications and media companies, to upgrade PLDT’s business IT systems and improve its business processes and services, aimed at enhancing consumer satisfaction, reducing costs and generating increased revenues.


On September 28, 2018, PLDT and Amdocs expanded their strategic partnership under a new six-year service agreement to consolidate, modernize and manage PLDT and Smart’s IT Infrastructure, to further enhance customer experience and engagement.




Transfer of Hastings PDRs to PLDT Beneficial Trust Fund


On January 22, 2018, ePLDT’s Board of Directors approved the assignment of the Hastings PDRs, representing 70% economic interest in Hastings Holdings, Inc., to the PLDT Beneficial Trust Fund for a total consideration of Php1,664 million.  The assignment was completed on February 15, 2018 and ePLDT subsequently ceased to have any economic interest in Hastings.  

Divestment of CURE

On October 26, 2011, PLDT received the Order issued by the NTC approving the application jointly filed by PLDT and Digitel for the sale and transfer of approximately 51.6% of the outstanding common stock of Digitel to PLDT.  The approval of the application was subject to conditions which included the divestment by PLDT of CURE, in accordance with the Divestment Plan.   

In a letter dated July 26, 2012, Smart informed the NTC that it has complied with the terms and conditions of the divestment plan as CURE had rearranged its assets, such that, except for assets necessary to pay off obligations due after June 30, 2012 and certain tax assets, CURE’s only remaining assets as at June 30, 2012 were its congressional franchise, the 10MHz of 3G frequency in the 2100 band and related permits.

In a letter dated September 10, 2012, Smart informed the NTC that the minimum Cost Recovery Amount, or CRA, to enable PLDT to recover its investment in CURE includes, among others, the total cost of equity investments in CURE, advances from Smart for operating requirements, advances from stockholders and associated funding costs.  In a letter dated January 21, 2013, the NTC referred the computation of the CRA to the Commissioners of the NTC.  


In a letter dated March 5, 2018, PLDT informed the NTC that it is waiving its right to recover any and all costs related to the 10MHz of 3G radio frequency previously assigned to CURE.  Accordingly, CURE will not claim any cost associated with it in the event of subsequent assignment by the NTC to another qualified telecommunications company.  With the foregoing, PLDT is deemed to have fully complied with its obligation to divest from CURE as a condition to the sale and transfer of DTPI shares to PLDT.


For more information relating to the (1) DOLE Compliance Order to PLDT, see Note 26 – Provisions and Contingencies; (2) Petition against the Philippine Competition Commission, see Note 10 – Investment in Associates and Joint Ventures; and (3) Wilson Gamboa and Jose M. Roy III Petition, see Note 26 – Provisions and Contingencies, to the accompanying audited consolidated financial statements Item 18. “Financial Statements”.


Business Overview


As at December 31, 2018, our business activities were categorized into three business units: Wireless, Fixed Line and Others.  


We monitor the operating results of each business unit separately for purposes of making decisions about resource allocation and performance assessment.  See Note 4 – Operating Segment Information to the accompanying audited consolidated financial statements in Item 18. “Financial Statements”.




Our wireless business focuses on driving the growth in our data services while managing our legacy business of voice and SMS.  We generate data revenues from across all segments of our wireless business, whether mobile internet using smartphones or mobile broadband using pocket wifi and other similar devices.


We provide (a) mobile services, (b) home broadband services, and (c) MVNO and other services, through our wireless business, which contributed approximately 98% and (collectively for home broadband, and MVNO and other services) 2%, respectively, of our wireless service revenues in 2018.  Mobile data usage has surged in the past several years while voice and SMS usage has slowed down.  Wireless revenues contributed 54% of our consolidated revenues in 2018 as compared to 58% and 63% for the years ended December 31, 2017 and 2016, respectively.  Our mobile service revenues, were 90%, 91% and 93% of our total wireless revenues in 2018, 2017 and 2016, respectively.




Our mobile services, which accounted for approximately 98% of our wireless service revenues for the year ended December 31, 2018, are provided through Smart and DMPI with 60,499,017 total subscribers as at December 31, 2018 as compared to 58,293,908 total subscribers as at December 31, 2017, and 62,763,209 total subscribers as at December 31, 2016, representing a combined market share of approximately 45%, 49% and 50% as at December 31, 2018, 2017 and 2016, respectively.  Our mobile revenue market share has been eroding due to the combined impact of aggressive price competition and the consequent loss of subscriber market share.  This was exacerbated by a larger proportion of legacy revenues from SMS and international voice relative to competition, that offset growth in our mobile data revenues.  However, mobile penetration in the Philippines increased to approximately 133% in 2018 from 118% in 2017, although the existence of subscribers owning multiple SIM cards results in this penetration rate being inflated to a certain extent.


As at December 31, 2018, approximately 96% of our mobile subscribers were prepaid service subscribers.  The predominance of prepaid service reflects one of the distinguishing characteristics of the Philippine mobile market, allowing us to reduce billing and administrative costs on a per-subscriber basis, as well as to control credit risk.  


LTE SIMs and smartphone ownership among our subscribers grew significantly this year, resulting in a substantial increase in our mobile data revenues.  As a result, our mobile internet revenues, which are part of our mobile data service revenues, increased by Php13,121 million, or 65%, to Php33,207 million in 2018 from Php20,086 million in 2017.  Our mobile internet revenues contributed 87% and 76% of our mobile data service revenues in 2018 and 2017, respectively.  Conversely, mobile broadband revenues, which are derived from the use of pocket wifi and other similar mobile broadband devices, decreased by Php1,441 million, or 24%, to Php4,589 million.


Smart’s and DMPI’s wireless networks provide extensive voice and broadband coverage in the Philippines, covering substantially all of major metropolitan areas and most of the other population centers in the Philippines.  Our low spectrum band resources (700MHz, 850MHz and 900MHz) are primarily used to provide coverage whilst higher spectrum bands (1800MHz, 2100MHz, 2300MHz and 2600MHz) provide extended coverage and additional capacity.  Our communications network supports HSPA+ (for 3G) and LTE-Advanced to provide improved broadband experience for our customers.  


Fixed Line


We are the leading provider of fixed line telecommunications services throughout the Philippines, servicing retail, corporate and SME clients.  Our fixed line business group offers voice, data and miscellaneous services.  We had 2,710,972 fixed line subscribers as at December 31, 2018, an increase of 47,762, or 2%, from 2,663,210 fixed line subscribers as at December 31, 2017, mainly due to higher net additions in 2018 compared with 2017.  Revenues from our fixed line business were 52%, 49% and 44% of our consolidated revenues for the years ended December 31, 2018, 2017 and 2016, respectively.  International voice revenues have been declining largely due to a drop in call volumes as a result of the availability of alternative calling options and OTT services.  An increase in our data service revenues in recent years has mitigated such decline to a certain extent.  Recognizing the growth potential of data services, we have put considerable emphasis on the development of new data-capable and IP-based networks.  


Our 14,584-kilometer long DFON is complemented by an extensive digital microwave backbone network operated by Smart.  This microwave network complements the higher capacity fiber optic networks and is vital in delivering reliable services to areas not covered by fixed terrestrial transport network.  Our fixed line network reaches all of the major cities and municipalities in the Philippines, with a concentration in the Metropolitan Manila area.  Our network offers the country’s most extensive connections to international networks through two international gateway switching exchanges and various regional submarine cable systems in which we have economic interests.


See Item 4. “Information on the Company – Infrastructure – Fixed Line Network Infrastructure” for further information on our fixed line infrastructure.




Our other business in 2018 consisted primarily of VIH and certain subsidiaries, the digital innovations arm of PLDT and Smart, which was deconsolidated from PCEV effective November 30, 2018; PCEV, an investment holding company, which owns an 8.74% effective interest in Meralco as at December 31, 2016 through its 25% equity interest in Beacon, until the full divestment of Beacon shares to MPIC on June 13, 2017.  PLDT Global Investments Corporation, or PGIC, which owns an 18.32% economic interest in Beta, an investment holding company of SPi Technologies, Inc. and its subsidiaries, or SPi Group, where we reinvested approximately US$40



million of the proceeds from the sale of BPO in 2013; PLDT Digital Investments Pte. Ltd., or PLDT Digital, an investment holding company, which owns a 1.7% equity interest in Rocket Internet, through its wholly-owned subsidiary, PLDT Online; and PLDT Global Holdings, Inc., or PGIH, an investment holding company, which completed the closing of its investment in Multisys in December 3, 2018.


Capital Expenditures and Divestitures


See Item 5. “Operating and Financial Review and Prospects – Plans” for capital expenditures planned for 2019 and Item 5. “Operating and Financial Review and Prospects – Liquidity and Capital Resources” for information concerning our principal capital expenditures for the years ended December 31, 2016, 2017 and 2018.  


On May 30, 2016, the PLDT Board approved the Company’s acquisition of 50% equity interest, including outstanding advances and assumed liabilities, in the entities that own the telecommunications business of SMC with Globe acquiring the remaining 50% interest.  See Item 10. “Additional Information – Material Contracts” for further information.


On May 30, 2016, PCEV sold common and preferred stock of Beacon, representing approximately 25% equity interest in Beacon to MPIC for a total consideration of Php26,200 million.


On May 19, 2017, AOGL entered into a Share Purchase Agreement with Partners Group, relating to the acquisition of SPi Global for an enterprise value of US$330 million.  The transaction was completed on August 25, 2017.


On June 13, 2017, PCEV entered into a Share Purchase Agreement with MPIC to sell its remaining 25% equity interest in Beacon, consisting of 646 million shares of common stock and 458 million shares of preferred stock, for a total consideration of Php21,800 million.  


On March 2, 2018, PCEV entered into a RPA with various financial institutions to sell a portion of its receivables from MPIC amounting to Php5,550 million for a total consideration of Php4,852 million.  On March 23, 2018, PCEV entered into another RPA with a financial institution to sell a portion of its receivables from MPIC amounting to Php2,230 million for a total consideration of Php2,124 million.


On May 4, 2018, Rocket Internet accepted the tender offer of PLDT Online of 6.8 million shares for a total consideration of €163.2 million, or Php10,059 million, which was settled on May 9, 2018.


On November 28, 2018 and December 10, 2018, VIH received the US$175 million funding from KKR and Tencent, and the US$40 million funding from IFC and IFC EAF, respectively.


See Item 4. “Recent Developments” for further information.




See Exhibit 8. “List of Subsidiaries” for a listing of PLDT’s significant subsidiaries, including name, country of incorporation, proportion of ownership interests and, where different, proportion of voting power held.  




We believe our business is characterized by the following competitive strengths:



Recognized Brands.  PLDT, Smart, TNT and Sun are widely recognized brand names in the Philippines.  We have built the PLDT brand name for 90 years as the leading telecommunications provider in the Philippines.  Smart is recognized in the Philippines as an innovative provider of high-quality mobile services.  The TNT brand, which is provided using Smart’s network, has also gained significant recognition as a price-competitive brand.  Since its launch in 2003, Sun has built considerable brand equity as a provider of “unlimited” services.  Having a range of strong and recognizable brands allows us to offer to various market segments differentiated products and services that suit customers’ budgets and usage preferences.



Leading Market Shares.  We have maintained our position as a market leader in fixed line and broadband markets in the Philippines in terms of both subscribers and revenues.  





Diversified Revenue Sources.  We derive our revenues from two of our business segments, namely, Wireless and Fixed Line.  Revenue sources of our wireless business include mobile (voice, SMS, mobile data, and inbound roaming and other mobile services), home broadband, and MVNO and other services.  The revenues from data services, particularly mobile internet services, have been increasing over the past several years but were offset by the continued decline of mobile voice and SMS revenues.  Our fixed line business derives service revenues from voice (local exchange, international and domestic services), data and miscellaneous services.  The revenue contributions from our home broadband, corporate data and leased lines, and ICT services compensated for the declining revenues from international and domestic fixed line services due to pressures on traditional fixed line voice revenues as a result of the popularity of OTT service providers.  



Superior Integrated Network.  With the most extensive telecommunications networks in the Philippines, we are able to offer a wide array of communications services.  Part of our network transformation program included the continued upgrade of our fixed line network to an all IP-based NGN, the build-out of our transmission and FTTH network, the investment in increased international bandwidth capacity, and the expansion of our 3G, 4G LTE and wireless broadband networks in order to enhance our data and broadband capabilities.  Our network investments include the upgrade of our IT capabilities which are essential in enabling us to offer more relevant services to our customers.  



Innovative Products and Services.  VIH, (through its subsidiaries Voyager and PayMaya) is the digital innovations arm of PLDT and Smart.  VIH creates and launches platforms, services and solutions for emerging markets in the areas of digital financial services, access including sponsored data, data-in-sachets, digital marketing solutions, and the incubation of other new technologies.  Through Voyager and PayMaya, VIH offers various digital financial services and financial technology solutions.  VIH was deconsolidated from PCEV effective November 30, 2018.



Strong Strategic Relationships.  We have important strategic relationships with First Pacific, NTT DOCOMO and NTT Communications.  We believe the technological support, international experience and management expertise made available to us through these strategic relationships will enable us to enhance our market leadership and provide/cross-sell a wider range of products and services.




The key elements of our business strategy are:



Build on our strong positions in the fixed line and wireless businesses.  We plan to continue building on our position as one of the leading fixed line and wireless service providers in the Philippines by continuing to launch new products and services to increase subscriber value and utilization of our existing facilities and equipment at reduced cost, and to increase our subscribers’ use of our network for both voice and data, as well as their reliance on our services.  



Capitalize on our strength as an integrated provider of telecommunications services.  We offer the broadest range of telecommunications services among all operators in the Philippines.  We plan to capitalize on this position to maximize revenue opportunities by cross-selling our products and services, and by developing convergent products that feature the combined benefits of voice and data, fixed line, wireless, and other products and services, including media content, utilizing our network and business platforms.



Strengthen our leading position in the data and broadband market.  Leveraging on the strengths of our fixed line and wireless businesses, we are committed to further develop our fastest growing business, particularly mobile internet.  Consistent with our strategy of introducing innovative products and services using advanced technology, we continue to launch various products and services in the data and broadband market that deliver quality of experience according to different market needs, including data centers and cloud-related services.  We will also accelerate the deployment of new base stations to boost quality and coverage, and accommodate technology bands under the co-use arrangements we entered into with BellTel, one of VTI’s subsidiaries.





Provide the customer a superior data experience. We are in the process of executing our digital transformation strategy through our wireless business focusing on: (i) investing in network infrastructure to improve 3G and 4G coverage and capacity, as well as network resilience;
(ii) upgrading service development platforms to improve customers’ ease-of-use, billing systems, customer interface; and (iii) expanding our content portfolio to include entertainment, peace-of-mind/convenience, and games, among others.



Maintain a strong financial position and improve shareholder returns. In 2018, we paid out dividends approximately 60% of our core earnings.  We plan to continue utilizing our free cash flows for the payment of cash dividends to common shareholders and investments in new growth areas.  As part of our growth strategy, we have made and may continue to make acquisitions and investments in companies or businesses.  We will continue to consider value-accretive investments in telecommunications as well as telco-related businesses.



We provide mobile, home broadband, and MVNO and other services, through our Wireless business segment.  

The following table summarizes key measures of our wireless business as at and for the years ended December 31, 2018, 2017 and 2016:




December 31,












Systemwide mobile subscriber base







































Home Broadband subscriber base(1)













Growth rate of mobile subscribers







































Growth rate of Home Broadband subscribers
















Home Ultera and WiMax businesses were transferred to PLDT beginning 2018.

Mobile Services


We offer mobile communications services all over the country under the brand names Smart, TNT and Sun to focus on the needs of specific segments of the market. With a continuous and in-depth consumer understanding program, each of our brands strive to provide relevant products and cater to the communications, entertainment and services requirements of our target market segments.


In 2018, we clustered programs consistent with our key objectives: (i) reinforcing our LTE network; (ii) migrating subscribers to LTE; and (iii) driving mobile data usage and monetization.


Reinforcing our LTE Network


We strive to provide our customers across the country with a world-class mobile data experience through a superior LTE network in terms of coverage, capacity, quality and internet speeds.  


Smart marked a milestone in 2018 as we fulfilled our commitment to the NTC to provide broadband coverage to at least 90 percent of cities and municipalities in the Philippines. Smart made the three-year commitment when the NTC granted the use of frequencies back in 2016.  


Smart also continued the roll-out of LTE-Advanced (LTE-A) and carrier aggregation technology, which allows the combination of two or more radio frequency bands in order to deliver much faster data speeds to mobile phone users.


Smart also activated 4x4 Multiple Input, Multiple Output (MIMO) and 256 Quadrature Amplitude Modulation (QAM) technologies in very high data traffic locations within Metro Manila to further boost speeds.




In November 2018, Smart launched the country’s first 5G cell sites in the Makati Central Business District with technology partner Huawei, and at the Clark Freeport Zone (CFZ) in Pampanga with technology partner Ericsson. Smart also made the country’s first successful video call on a 5G connection between the newly launched Smart 5G cities Makati City and Pampanga.


Migrating Customers to LTE


Leveraging our improved network, we increased efforts to migrate our subscribers to LTE.


In 2018, Smart rolled out an LTE education campaign for Smart, Sun and TNT customers, and urged them to conveniently upgrade to LTE using the Smart LTE-Ready Self-Service Upgrade SIM.


Smart also continued its strategic partnerships with vendors of LTE-capable smartphones, and distribution partners that bundled LTE SIMs with LTE-capable smartphones.


Driving Mobile Data Usage and Monetization


To suit the demands of our varying consumer segments, we introduced new data offers aimed at introducing customers to the many benefits of mobile internet, and stimulating their data usage.


Smart Prepaid


In April 2018, Smart Prepaid partnered with YouTube to launch Free YouTube Every Day promo.


Aimed at introducing more customers to video streaming, Free YouTube Every Day gave prepaid users of Smart, TNT and Sun up to 1 hour of free YouTube streaming daily when they register to select prepaid promos.  The promo, which ended in October 2018, ran for six months and grew YouTube traffic in the Smart Network by nearly 15 times among subscribers compared to the start of the promo.


Following the success of Free YouTube Every Day, Smart Prepaid introduced Video Every Day promo in November 2018, this time to give prepaid subscribers of Smart, TNT and Sun an additional 1 hour of streaming on YouTube, iflix, NBA League Pass, iWant, and Cignal Play when they register to select GigaSurf packages.


In December, to mark Smart’s 25th anniversary, Smart Prepaid spearheaded the Smart Amazing 25 promo. The company’s biggest promo to date, Smart Amazing 25 gave all Smart, TNT and Sun customers a chance to win smartphones, data, MVP Rewards points, and the grand prize of Php25 million cash – every time they registered to select promos or paid their bill in full and on time.




TNT, Smart’s value brand, reinforced its efforts to reposition itself as a data brand.  In April 2018, TNT kicked off its Tropa Trip Summer Fest, which gathered subscribers to a day of games and entertainment that highlighted the brand’s data offers.


In July 2018, TNT launched a campaign to promote Free YouTube Every Day. The campaign was reinforced by TNT YouTube Breaktime, a series of mall activations held in Manila, Cavite, Pampanga, Nueva Ecija, Bacolod, and Davao.  The YouTube promo for TNT subscribers ended last October 31, 2018.


In November 2018, TNT sought to introduce more subscribers to mobile internet with the launch of SurfSaya, of which one variant offers 300MB open access data plus 100MB per day for Facebook and Messenger; unlimited calls to TNT, Smart and Sun; and unlimited texts to all networks, valid for three days for only Php30.  The promotion will run until May 2019.


Smart Postpaid


In line with our Wireless business segment’s strategy to drive mobile data usage among customers, Smart Postpaid launched GigaX Plans in February 2018.




The data-packed plans offer generous open access data, a separate data allocation for video streaming, and a data rollover feature that allowed subscribers of Plan 999 and above to enjoy their unused data from the previous month.


As part of the launch of GigaX Plans, Smart partnered with leading phone manufacturers Samsung, Huawei and Oppo to highlight advanced devices.  The new GigaX plans also provided new subscribers as much as two times more data during the first six months.


Moreover, Smart Postpaid sustained its device amortization model, which gave subscribers the flexibility to choose and bundle any device with their line-only plans for a fixed cost each month. With this, Smart Postpaid continued to bring in the latest and highly-anticipated flagship devices from Samsung, Huawei, and Apple with aggressive acquisition and re-contracting campaigns.  


As additional perk to subscribers, Smart expanded its Free YouTube Every Day promo to include postpaid customers, giving them additional 1 hour of free YouTube streaming daily on top of their monthly plan inclusions from June to July 2018.


Smart Postpaid also partnered with content providers so customers may charge their monthly subscriptions to the NBA League Pass and Netflix to their postpaid bill.


Launched in May 2018, Smart Postpaid’s partnership with NBA allows customers to watch live and on-demand NBA games online and via their mobile devices, and access NBA highlights, game recaps, and daily top plays, among other content via the NBA League Pass.


Additionally, Smart and Netflix launched their partnership in December 2018 to give subscribers convenient way to stream Netflix.


Smart Bro


As Smart’s mobile broadband brand, Smart Bro continued its initiatives to encourage more subscribers to adopt LTE-capable devices so they may benefit from faster and more reliable mobile internet connectivity.


Smart Bro drove LTE penetration by providing competitively-priced LTE Pocket WiFi Prepaid Kits as well as Smart Bro Postpaid Plans throughout the year.


In June 2018, Smart Bro offered the iPad 6th Gen (32GB) bundled with an LTE Pocket WiFi with 6GB monthly data allocation.


Smart Bro also pushed its swap program that sought to replace 3G mobile broadband devices with LTE Pocket WiFi units.




Sun strengthened its efforts to stimulate data usage among subscribers through its best-value mobile internet offers with Sun-to-Sun calls and texts. 


In April 2018, Sun promoted the Free YouTube Every Day promo in a campaign that positioned YouTube as a platform for users to develop knowledge and skills. Under the promo, Sun subscribers enjoyed up to one hour of Free YouTube streaming with every registration to select prepaid promos.

In June 2018, Sun Postpaid launched Non-Stop LTE Plans, which feature non-stop access to Facebook, Facebook Messenger, and Google Search; open access data to access other apps, websites, and games; unlimited Sun-to-Sun calls and texts; and inclusions for texts to other networks. 

To increase customer access to video content, Sun Postpaid partnered with iflix and iWant to give subscribers free one month access to the streaming services. 




In November 2018, following LTE network upgrades across Cebu, Sun introduced the program ‘Para Nimo Cebu’. The program encouraged customers to swap their old Sun 3G SIMs with the new Sun LTE SIMs, and to take advantage of Sulit Surf Plus promos, which come with a complete combination of open access data, unlimited tri-net calls, and unlimited all-net texts.




Our current policy is to recognize a prepaid subscriber as active only when the subscriber activates and uses the SIM card.  Beginning the second quarter of 2017, a prepaid mobile subscriber is considered inactive if the subscriber does not reload within 90 days after the full usage or expiry of the last reload, revised from the previous 120 days.


Smart Prepaid call and text cards and TNT prepaid cards are sold in three different tiers, while Smart eLoad’s over-the-air reloads are available in multiple denominations as well.  The stored value of a prepaid card and eLoads remain valid for 365 days regardless of the denomination, pursuant to the MC No. 05-12-2017 issued by NTC and DITC.


Smart also offers fixed rate or “bucket” packages as a means of driving subscriber activations and stimulating usage.  These bucket packages, which offer data packages with fixed amount of text messages and call minutes for a limited validity period, have proven to be popular with subscribers.  


Smart also offers unlimited text with voice and data allocation under its various brands in order to be competitive.  These plans include high data allocation, unlimited text to all networks, and call minutes with monthly service fees. Additional charges at different rates for usage in excess of the allocated amounts, depending on the monthly plan.  


Smart subscribers pay an international direct dialing rate, which applies to most destinations, including the United States, Hong Kong, Japan, Singapore, United Kingdom and United Arab Emirates.  Smart charges different rates for 29 other destinations.  Smart subscribers also have the option of calling at more affordable rates through Smart Sulit IDD load.  


International web browsing was also made more affordable and convenient with Roam Surf, whereby subscribers automatically enjoy web browsing abroad for a fixed rate per day, open to both Smart Postpaid and Prepaid subscribers and covering over 120 countries within the Americas, Asia, Africa, Europe, and Oceania.  Data allocation may vary depending on country of destination.  We also offer Smart Travel WiFi, a broadband device that provides high-speed internet service in over 100 countries, which is powered by virtual SIM technology that enables local connectivity for up to five devices to local networks in Asia and elsewhere in the world.


Another data roaming service of Smart is Roam Chat, which offers Smart Prepaid and Smart Postpaid to use five popular chat messaging apps, Viber, WeChat, Line, Telegram and WhatsApp, while roaming abroad in over 120 countries.


In compliance with Memorandum Circular No. 05-07-2018 issued by the National Telecommunications Commission, or NTC, the interconnection rate for our voice calls was reduced to Php0.50 per minute from Php2.50 per minute, and the rate for SMS was down to Php0.05 per message from Php0.15 per message effective September 1, 2018.

Sales and Distribution


Distributors and Dealers


We sell our mobile services primarily through our regional and key account partners that generally have their own direct sales forces and retail networks.  We currently have 19 exclusive regional and 105 exclusive provincial distributors, and 107 key account partners, 25 of which are exclusive.  A number of our trade partners are likewise major distributors of smartphones and devices that are retailed in their owned telecommunications outlets.  Account managers from our sales force manage the distribution network and regularly update these business partners on upcoming marketing strategies, promotional campaigns and new products.  Smart’s over-the-air reloads called Smart eLoad, moved Smart into a new realm of distribution that approximates those of fast-moving consumer good companies.  These over-the-air reloads, which were based on the “sachet” marketing concept of consumer goods, required a distribution network that approximates those of fast-moving consumer goods companies.  Sun also offers over-the-air reloads through Sun’s Xpress Load.  Starting with just 50,000 outlets when it was launched, our distribution network now encompasses approximately 1.4 million retailers with



Smart and Sun combined.  These retailers must be affiliated with one of Smart’s and Sun’s authorized regional and provincial distributors.  With the prepaid reloading distribution network now extended to corner store and individual retailers, Smart’s prepaid service became more affordable and accessible to subscribers.  


Retail Stores


Retail Stores are company owned Smart Stores with 115 branches and Sun Shops with 91 branches that showcase our Company’s products and services to customers nationwide.  Our frontlines enable unique digital experiences through daily customer interaction.  We offer enticing products and services based on the customer needs. We also cater for customer aftersales request and inquiries.  Our Stores also accepts payment for bills, postpaid and prepaid sales.  


Satellite Branches which has a total of 46 stores nationwide are partner-owned Smart and Sun branded stores operating as auxiliary touchpoints for converged wired and wireless sales, aftersales and bills payment.


In November 2018, we unveiled our PLDT-Smart converged store in Makati CBD. The store is a one-stop digital hub and store for PLDT, Smart, and Cignal products. The store also has a digital self-service counters which allow subscribers to view and print their bills, check account details, request for repairs and other services.  The store also features interactive booths that allow guests to browse the internet, play games, watch videos or listen to music inside the store.  


Enterprise Business


Enterprise Business is the group responsible in marketing and selling Smart and Sun products and services to Corporate clients. Services offered include Smart and Sun Postpaid and Broadband services with bundled phones, tablets and other routers, Smart Infinity, M2M and IOT solutions and platform solutions such as Messaging Suite and Bizload. Our Enterprise Business Group also partners with software and application vendors in various industry-specific solutions and mobile security.


These services are being sold primarily through PLDT Enterprise team and it’s two major groups, Alpha and SME. Alpha is the relationship arm of PLDT Enterprise for the top three thousand corporate clients while SME handles the relationships for the small and medium enterprises. New channels include the Micro SME segment, which sells through the brick and mortar stores and online, and the Enterprise Extension which handles sales to employees of existing Enterprise clients.


Emerging Channels


The Emerging Channels Group leads in identifying and growing new and non-traditional channels. The team aims to ensure that we are equipped to maximize opportunities presented by industry trends and new technologies. We enable the customer to avail of a new service or upgrade their existing subscription.  Emerging Channels is composed of Telesales, Online, and Postpaid Field Sales.




We reach out to our subscribers to offer the latest promos and services. Our Telesales agents, in partnership with different contact center providers, enable existing subscribers to upgrade their mobile and broadband experience at the comfort of their own home.




Consumers can also enjoy the convenience of availing our service through the Smart Online Store, where they can transact online to choose phones and apply for new postpaid plans, renew an existing plan, buy prepaid SIM and devices, or subscribe for e-load and various add-on promos. We also have My Smart App and Paywall that allows add-on promo availment via load conversion or bill on top.




Postpaid Field Sales


In October 2018, we launched a new channel called Postpaid Field Sales (PFS). PFS is a new group which was built for an outbound sales attack for Postpaid targeting the corporate individual and capable communities. Through the development and growth of this new channel, we would be able to regain the wireless postpaid stronghold.  Starting with 52 territories, complemented by distributor partners, PFS has been on the road towards exponentially growing the mobile postpaid business.


Home Broadband Service


HOME Ultera is a fixed wireless broadband service being offered under PLDT’s HOME brand.  HOME Ultera, powered by LTE technology, is specifically designed for the home and offers customized packages.


HOME Ultera and WiMax businesses were transferred to PLDT effective January 1, 2018.

Fixed Line


We provide voice services, including LEC, international and domestic services, data and miscellaneous services under our fixed line business.


We offer postpaid and prepaid fixed line services.  Initially intended to be an affordable alternative telephone service for consumers under difficult economic conditions, our prepaid fixed line services came to form an important part of our overall churn and credit risk exposure management strategy.  

The following table summarizes key measures of our fixed line services as at and for the years ended December 31, 2018, 2017 and 2016:




December 31,












Systemwide fixed line subscriber base







































Growth rate of fixed line subscribers