Operating Segment Information

12 Months Ended

Dec. 31, 2022

Disclosure of operating segments [abstract]

Operating segments are components of the PLDT Group that engage in business activities from which they may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of PLDT Group). The operating results of these operating segments are regularly reviewed by the Management Committee to make decisions about how resources are to be allocated to each of the segments and to assess their performances, and for which discrete financial information is available.

For management purposes, we are organized into business units based on our products and services. We have three reportable operating segments as follows:

•

Wireless – mobile telecommunications services provided by Smart and DMPI, our mobile service providers; SBI and PDSI, our wireless broadband service providers; and certain subsidiaries of PLDT Global, our mobile virtual network operations, or MVNO, provider;

•

Fixed Line – fixed line telecommunications services primarily provided by PLDT. We also provide fixed line services through PLDT’s subsidiaries, namely, ClarkTel, BCC and PLDT Global and certain subsidiaries; data center, cloud, cyber security services, managed information technology services and resellership through ePLDT and its subsidiaries; full-service customer rewards and loyalty programs provided by MRSI; distribution of Filipino channels and content through PGNL and its subsidiaries; and software development and IT solutions provided by Multisys; and

•

Others – PCEV, PGIH, PLDT Digital and its subsidiaries, our investment companies.

See Note 2 – Summary of Significant Accounting Policies for further discussion.

The chief operating decision maker, which we refer to as the Management Committee monitors the operating results of each business unit separately for purposes of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on net income for the year; earnings before interest, taxes, and depreciation and amortization, or EBITDA; EBITDA margin; and core income. Net income for the year is measured consistent with net income in our consolidated financial statements.

EBITDA for the year is measured as net income excluding depreciation and amortization, amortization of intangible assets, asset impairment on noncurrent assets, financing costs – net, interest income, equity share in net earnings (losses) of associates and joint ventures, foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net, provision for (benefit from) income tax and other income (expenses) – net.

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

Core income for the year is measured as net income attributable to equity holders of PLDT (net income less net income attributable to noncontrolling interests), excluding foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net (excluding hedge costs), asset impairment on noncurrent assets, other non-recurring gains (losses), net of tax effect of aforementioned adjustments, as applicable, and similar adjustments to equity share in net earnings (losses) of associates and joint ventures.

Telco core income for the year is measured as net income attributable to equity holders of PLDT (net income less net income attributable to noncontrolling interests), excluding foreign exchange gains (losses) – net, gains (losses) on derivative financial instruments – net (excluding hedge costs), asset impairment on noncurrent assets, non-recurring gains (losses), net of tax

effect of aforementioned adjustments, as applicable, and similar adjustments to equity share in net earnings (losses) of associates and joint ventures, adjusted for the effect of the share in VIH losses, asset sales, and accelerated depreciation. Telco core income is used by the management as a basis for determining the level of dividend payouts to shareholders and one of the bases for granting incentives to employees.

Segment revenues, segment expenses and segment results include transfers between business segments. These transfers are eliminated in full upon consolidation.

Core earnings per common share, or core EPS, for the year is measured as core income divided by the weighted average number of outstanding common shares. See Note 8 – Earnings Per Common Share for the weighted average number of common shares.

EBITDA, EBITDA margin, core income and core EPS are non-IFRS measures.

The amounts of segment assets and liabilities and segment profit or loss are based on measurement principles that are similar to those used in measuring the assets and liabilities and profit or loss in our consolidated financial statements, which is in accordance with IFRS. The segment revenues, net income, and other segment information of our reportable operating segments for the years ended December 31, 2022, 2021 and 2020, and as at December 31, 2022 and 2021 are as follows:


	Wireless			Fixed Line			Others			Inter- segment Transactions			Consolidated
	(in million pesos, except for EBITDA margin)
December 31, 2022
Revenues
External customers		103,482			101,763			—			—			205,245
Service revenues		95,060			101,167			—			—			196,227
Non-service revenues		8,422			596			—			—			9,018
Inter-segment transactions		792			26,949			—			(27,741	)		—
Service revenues		792			26,949			—			(27,741	)		—
Non-service revenues		—			—			—			—			—
Total revenues		104,274			128,712			—			(27,741	)		205,245

Results
Depreciation and amortization		52,660			55,790			—			(9,736	)		98,714
Asset impairment		1,173			4,933			1			—			6,107
Interest income		451			202			14			(14	)		653
Equity share in net losses of associates and joint ventures		—			(253	)		(3,051	)		—			(3,304	)
Financing costs – net		8,349			6,107			—			(2,690	)		11,766
Provision for (benefit from) income tax		3,793			(1,025	)		(134	)		140			2,774
Net income (loss) / Segment profit (loss)		15,104			16,185			(2,669	)		(17,885	)		10,735
EBITDA		53,260			50,382			(12	)		(9,685	)		93,945
EBITDA margin		56	%		39	%		—			—			48	%
Core income (loss)		13,034			38,448			(2,959	)		(17,956	)		30,567
Telco core income (loss)		13,034			37,970			68			(17,956	)		33,116

Assets and liabilities
Operating assets		310,549			257,976			10,768			(24,313	)		554,980
Investments in associates and joint ventures		40			43,304			8,202			—			51,546
Deferred income tax assets – net		6,871			9,280			53			1,432			17,636
Total assets		317,460			310,560			19,023			(22,881	)		624,162
Operating liabilities		246,170			272,489			1,630			(10,292	)		509,997
Deferred income tax liabilities		—			204			—			—			204
Total liabilities		246,170			272,693			1,630			(10,292	)		510,201

Other segment information
Capital expenditures, including capitalized interest (Note 9)(a)		46,636			50,174			—			—			96,810

(a)


	Wireless			Fixed Line			Others			Inter- segment Transactions			Consolidated
	(in million pesos, except for EBITDA margin)
December 31, 2021
Revenues
External customers		105,492			87,765			—			—			193,257
Service revenues		98,512			87,239			—			—			185,751
Non-service revenues		6,980			526			—			—			7,506
Inter-segment transactions		1,127			29,298			—			(30,425	)		—
Service revenues		1,127			29,290			—			(30,417	)		—
Non-service revenues		—			8			—			(8	)		—
Total revenues		106,619			117,063			—			(30,425	)		193,257

Results
Depreciation and amortization		40,459			22,139			—			(10,429	)		52,169
Asset impairment		1,241			3,743			1			—			4,985
Interest income		355			275			26			—			656
Equity share in net gains (losses) of associates and joint ventures		—			103			(1,204	)		—			(1,101	)
Financing costs – net		7,551			6,029			—			(3,166	)		10,414
Provision for (benefit from) income tax		3,366			4,103			(270	)		279			7,478
Net income (loss) / Segment profit (loss)		9,434			26,146			384			(9,288	)		26,676
EBITDA		60,876			45,832			(7	)		(10,801	)		95,900
EBITDA margin		61	%		39	%		—			—			52	%
Core income (loss)		13,645			26,298			(666	)		(9,340	)		29,937
Telco core income (loss)		13,645			25,736			192			(9,340	)		30,233

Assets and liabilities
Operating assets		299,513			285,083			7,351			(32,368	)		559,579
Investments in associates and joint ventures		39			43,519			9,806			—			53,364
Deferred income tax assets – net		4,695			8,433			(81	)		338			13,385
Total assets		304,247			337,035			17,076			(32,030	)		626,328
Operating liabilities		213,219			293,162			1,023			(8,710	)		498,694
Deferred income tax liabilities		—			169			—			—			169
Total liabilities		213,219			293,331			1,023			(8,710	)		498,863

Other segment information
Capital expenditures, including capitalized interest (Note 9)		36,898			52,085			—			—			88,983


	Wireless			Fixed Line			Others			Inter- segment Transactions			Consolidated
	(in million pesos, except for EBITDA margin)

December 31, 2020
Revenues
External customers		101,789			79,215			—			—			181,004
Service revenues		95,748			77,886			—			—			173,634
Non-service revenues		6,041			1,329			—			—			7,370
Inter-segment transactions		2,422			19,524			—			(21,946	)		—
Service revenues		2,422			19,524			—			(21,946	)		—
Non-service revenues		—			—			—			—			—
Total revenues		104,211			98,739			—			(21,946	)		181,004

Results
Depreciation and amortization		35,134			19,383			—			(7,037	)		47,480
Asset impairment		2,196			5,490			1			(41	)		7,646
Interest income		537			636			92			(55	)		1,210
Equity share in net gains (losses) of associates and joint ventures		—			(50	)		2,378			—			2,328
Financing costs – net		6,886			6,059			55			(2,914	)		10,086
Provision for (benefit from) income tax		4,536			3,734			(617	)		788			8,441
Net income (loss) / Segment profit (loss)		15,166			14,509			(318	)		(4,777	)		24,580
EBITDA		60,272			33,405			(12	)		(7,507	)		86,158
EBITDA margin		61	%		34	%		—			—			50	%
Core income (loss)		16,440			15,463			193			(4,967	)		27,129
Telco core income (loss)		17,217			13,649			2,188			(4,967	)		28,087

Assets and liabilities
Operating assets		219,412			319,384			6,371			(41,000	)		504,167
Investments in associates and joint ventures		40			43,690			8,393			—			52,123
Deferred income tax assets – net		6,943			11,628			(350	)		1,335			19,556
Total assets		226,395			374,702			14,414			(39,665	)		575,846
Operating liabilities		227,687			274,614			1,457			(48,303	)		455,455
Deferred income tax liabilities		23			330			—			373			726
Total liabilities		227,710			274,944			1,457			(47,930	)		456,181

Other segment information
Capital expenditures, including capitalized interest (Note 9)		33,118			38,786			—			—			71,904

The following table shows the reconciliation of our consolidated net income to our consolidated EBITDA for the years ended December 31, 2022, 2021 and 2020:


	2022				2021			2020
				(in million pesos)
Consolidated net income		10,735				26,676			24,580
Add (deduct) adjustments:
Depreciation and amortization (Notes 9 and 10)		98,714				52,169			47,480
Financing costs – net (Note 5)		11,766				10,414			10,086
Foreign exchange losses (gains) – net (Notes 5 and 28)		4,685				3,890			(1,488	)
Equity share in net losses of associates and joint ventures (Note 11)		3,304				1,101			2,328
Provision for income tax (Note 7)		2,774				7,478			8,441
Other non-recurring expenses		504				148			—
Amortization of intangible assets (Note 15)		228				2,822			2,496
Interest income (Note 5)		(653	)			(656	)		(1,210	)
Loss (gains) on derivative financial instruments – net (Note 28)		(2,322	)			(1,400	)		378
Other income (expenses) – net		(35,790	)			(6,742	)		(6,933	)
Net loss (gain) on debt modification (Note 5)		295				(1,372	)		—
VIH gain on dilution of shares (Notes 5 and 11)		(660	)			(826	)		(394	)
Income from prescription of preferred shares redemption liability (Note 20)		(7,839	)			—			—
Gain on sale and leaseback of telecom towers – gross of expenses (Note 9)		(25,234	)			—			—
Others		(2,352	)			(4,544	)		(6,539	)
Total adjustments		83,210				69,224			61,578
Consolidated EBITDA		93,945				95,900			86,158

The following table shows the reconciliation of our consolidated net income to our consolidated core income and telco core income for the years ended December 31, 2022, 2021 and 2020:


	2022				2021			2020
				(in million pesos)
Consolidated net income		10,735				26,676			24,580
Add (deduct) adjustments:
Accelerated depreciation		51,204				1,110			—
Manpower rightsizing program, or MRP (Note 5)		5,028				269			2,625
Foreign exchange losses – net (Notes 5 and 28)		4,685				3,890			(1,488	)
Other non-recurring expenses		810				—			—
Net loss (gain) on debt modification – net of amortization of debt discount/premium		470				(1,339	)		—
Impairment of investments and investment derecognized (Notes 11 and 12)		50				60			659
Sun Trademark amortization (Note 15)		—				2,628			1,877
Losses from changes in fair value of financial assets at FVPL		—				174			—
CREATE Act impact for prior year deferred taxes		—				(355	)		—
Core income adjustment on equity share in net income of associates and joint ventures		(195	)			(7	)		(6	)
Net income attributable to noncontrolling interests		(250	)			(309	)		(296	)
Loss (gains) on derivative financial instruments – net, excluding hedge costs (Note 28)		(2,572	)			(1,651	)		284
Income from prescription of preferred shares redemption liability (Note 20)		(7,839	)			—			—
Gain on sale and leaseback of telecom towers – net of expenses (Note 9)		(24,563	)			—			—
Net tax effect of aforementioned adjustments		(6,996	)			(1,209	)		(1,106	)
Total adjustments		19,832				3,261			2,549
Consolidated core income		30,567				29,937			27,129
Add (deduct) adjustments:
Share in VIH losses		3,239				1,981			1,954
Accelerated depreciation – net of tax		—				—			1,496
Loss on sale of Rocket Internet SE shares		—				—			364
Gain from condonation of debt		—				—			(240	)
Gain on sale and leaseback of Smart Headquarters – net of tax		—				—			(2,293	)
Gain on asset sales – net of tax (Note 5)		(30	)			(983	)		—
VIH gain on dilution – net of tax		(660	)			(702	)		(323	)
Total adjustments		2,549				296			958
Telco core income		33,116				30,233			28,087

The following table shows the reconciliation of our consolidated basic and diluted core EPS to our consolidated basic and diluted EPS attributable to common equity holder of PLDT for the years ended December 31, 2022, 2021 and 2020:


				2022						2021						2020
	Basic			Diluted			Basic			Diluted			Basic			Diluted
Consolidated core EPS		141.20			141.20			138.29			138.29			125.29			125.29
Add (deduct) adjustments:
Gain on sale and leaseback of telecom towers – net of expenses		86.95			86.95			—			—			—			—
Income from prescription of preferred redemption liability		27.21			27.21			—			—			—			—
Gains on derivative financial instruments – net excluding hedge costs		8.93			8.93			5.73			5.73			(0.92	)		(0.92	)
Core income adjustment on equity share in net income of associates and joint ventures		0.90			0.90			0.03			0.03			0.03			0.03
CREATE Act impact on deferred taxes – net		—			—			1.64			1.64			—			—
Losses from changes in fair value of financial assets at FVPL		—			—			(0.81	)		(0.81	)		—			—
Sun Trademark amortization		—			—			(9.12	)		(9.12	)		(6.08	)		(6.08	)
Impairment of investments		(0.23	)		(0.23	)		(0.28	)		(0.28	)		(3.05	)		(3.05	)
Net gains (loss) on debt modification – net of amortization of debt discount/premium		(1.63	)		(1.63	)		4.65			4.65			—			—
Impairment of property and equipment		(3.60	)		(3.60	)		—			—			—			—
Foreign exchange losses – net		(16.26	)		(16.26	)		(13.50	)		(13.50	)		5.36			5.36
MRP		(17.46	)		(17.46	)		(1.02	)		(1.02	)		(8.51	)		(8.51	)
Accelerated depreciation		(177.75	)		(177.75	)		(3.85	)		(3.85	)		—			—
Total adjustments		(92.94	)		(92.94	)		(16.53	)		(16.53	)		(13.17	)		(13.17	)
Consolidated EPS attributable to common equity holders of PLDT (Note 8)		48.26			48.26			121.76			121.76			112.12			112.12

The following table presents our revenues from external customers by category of products and services for the years ended December 31, 2022, 2021 and 2020:


	2022			2021		2020
			(in million pesos)
Wireless services
Service revenues:
Mobile		93,029			95,619		95,589
Home broadband		2,028			2,889		40
MVNO and others		3			4		119
		95,060			98,512		95,748
Non-service revenues:
Sale of mobile handsets and broadband data modems		8,422			6,980		6,041
Total wireless revenues		103,482			105,492		101,789
Fixed line services
Service revenues:
Voice		22,249			20,222		19,484
Data		78,692			66,760		58,064
Miscellaneous		226			257		338
		101,167			87,239		77,886
Non-service revenues:
Sale of computers, phone units and SIM cards		495			454		1,140
Point-product-sales		101			72		189
		596			526		1,329
Total fixed line revenues		101,763			87,765		79,215
Total revenues		205,245			193,257		181,004

Disclosure of the geographical distribution of our revenues from external customers and the geographical location of our total assets are not provided since majority of our consolidated revenues are derived from our operations within the Philippines.

There is no revenue transaction with a single external customer that accounted for 10% or more of our consolidated revenues from external customers for the years ended December 31, 2022, 2021 and 2020.