PLDT 6K Current report | PHI 12 Nov 24

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

November 12, 2024

PLDT INC.

(Translation of registrant’s name into English)

Ramon Cojuangco Building

Makati Avenue, Makati City

Philippines

(Address of registrant’s principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.


Registrant: PLDT Inc.


Signature and Title:	/s/ Manuel V. Pangilinan
	Manuel V. Pangilinan
	Chairman, President and Chief Executive Officer


Signature and Title:	/s/ Danny Y. Yu
	Danny Y. Yu
	Senior Vice President and PLDT Group Chief Financial Officer
	(Principal Financial Officer)


Signature and Title:	/s/ Gil Samson D. Garcia
	Gil Samson D. Garcia
	First Vice President
	(Principal Accounting Officer)

Date: November 12, 2024


SEC Number	PW-55
File Number

PLDT Inc.

(Company’s Full Name)

Ramon Cojuangco Building

Makati Avenue, Makati City

(Company’s Address)

(632) 82500254

(Telephone Number)

Not Applicable

(Fiscal Year Ending)

(month & day)

SEC Form 17-Q

Form Type

Not Applicable

Amendment Designation (if applicable)

September 30, 2024

Period Ended Date

Not Applicable

(Secondary License Type and File Number)

November 12, 2024

The Philippine Stock Exchange, Inc.

6/F Philippine Stock Exchange Tower

28th Street corner 5th Avenue

Bonifacio Global City, Taguig City


Attention:		Atty. Stefanie Ann B. Go
		Officer-In-Charge - Disclosure Department

Securities & Exchange Commission

7907 Makati Avenue, Salcedo Village

Barangay Bel-Air, Makati City


Attention:		Mr. Vicente Graciano P. Felizmenio, Jr.
		Director – Markets and Securities Regulation Department

Gentlemen:

In compliance with Section 17(b) of the Securities Regulation Code and SRC Rule 17.3, we submit herewith a copy of
SEC Form 17-Q with Management’s Discussion and Analysis and accompanying unaudited consolidated financial statements for the nine months ended September 30, 2024 of PLDT Inc.

This submission shall also serve as our compliance with Section 17.1 of the Securities Regulation Code regarding the filing of reports on significant developments.


Very truly yours,

/s/ Mark David P. Martinez
MARK DAVID P. MARTINEZ
Assistant Corporate Secretary PLDT Inc.

COVER SHEET


SEC Registration Number
P	W	-	5	5

Company Name

Principal Office (No./Street/Barangay/City/Town/Province)

Form Type

Department requiring the report

Secondary License Type, If Applicable

COMPANY INFORMATION


Company’s Email Address	Company’s Telephone Number/s	Mobile Number
gdgarcia@pldt.com.ph	(632) 8816-8056

No. of Stockholders

Annual Meeting

Month/Day

Fiscal Year

Month/Day

11,360

as at September 30, 2024

Every 2nd Tuesday in June

December 31

CONTACT PERSON INFORMATION

The designated contact person MUST be an Officer of the Corporation


Name of Contact Person	Email Address	Telephone Number/s	Mobile Number
Gil Samson D. Garcia	gdgarcia@pldt.com.ph	(632) 8816-8056

Contact Person’s Address

19/F Smart Tower, Ayala Ave., Makati City

Note: In case of death, resignation or cessation of office of the officer designated as contact person, such incident shall be reported to the Commission within thirty (30) calendar days from the occurrence thereof with information and complete contact details of the new contact person designated.

SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-Q

QUARTERLY REPORT PURSUANT TO SECTION 17
OF THE SECURITIES REGULATION CODE (“SRC”) AND

SRC 17 (2) (b) THEREUNDER


1.	For the quarterly period ended		September 30, 2024

2.	SEC Identification Number		PW-55

3.	BIR Tax Identification No.		000-488-793-000

4.	PLDT Inc.
	Exact name of registrant as specified in its charter

5.	Republic of the Philippines
	Province, country or other jurisdiction of incorporation or organization

6.	Industry Classification Code:		(SEC Use Only)

7.	Ramon Cojuangco Building, Makati Avenue, Makati City			0721
	Address of registrant’s principal office			Postal Code

8.	(632) 82500254
	Registrant’s telephone number, including area code

9.	Not Applicable
	Former name, former address, and former fiscal year, if changed since last report

10.	Securities registered pursuant to Sections 8 of the SRC

	Title of Each Class		Number of Shares of Common Stock Outstanding
	Common Capital Stock, Php5 par value		216,055,775 shares as at September 30, 2024

11.	Are any or all of these securities listed on the Philippine Stock Exchange?

	Yes [ X ]	No [ ]

12.	Check whether the registrant

(a)	has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17 thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and 141 of the Corporation Code of the Philippines, during the preceding 12 months (or for such shorter period the registrant was required to file such reports):

	Yes [ X ]	No [ ]

(b)	has been subject to such filing requirements for the past 90 days.

	Yes [ X ]	No [ ]

TABLE OF CONTENTS


PART I –	FINANCIAL INFORMATION	1
Item 1.	Consolidated Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
	Financial Highlights and Key Performance Indicators	2
	Performance Indicators	3
	Overview	4
	Management’s Financial Review	5
	Results of Operations	7
	Consolidated	8
	Revenues	8
	Expenses	9
	Other Income (Expenses) – Net	9
	Net Income (Loss)	9
	EBITDA	9
	Core Income	10
	Telco Core Income	10
	Wireless	11
	Revenues	11
	Service Revenues	11
	Non-Service Revenues	14
	Expenses	14
	Other Income (Expenses) – Net	15
	Provision for Income Tax	15
	Net Income	15
	EBITDA	15
	Core Income	15
	Fixed Line	15
	Revenues	15
	Service Revenues	16
	Non-Service Revenues	17
	Expenses	17
	Other Income (Expenses) – Net	18
	Provision for Income Tax	18
	Net Income	18
	EBITDA	18
	Core Income	18
	Others	19
	Revenues	19
	Expenses	19
	Other Income (Expenses) – Net	19
	Net Income (Loss)	19
	Core Income (Loss)	19
	Liquidity and Capital Resources	19
	Operating Activities	20
	Investing Activities	21
	Financing Activities	21
	Changes in Financial Conditions	22
	Off-Balance Sheet Arrangements	23
	Equity Financing	23
	Contractual Obligations and Commercial Commitments	24
	Quantitative and Qualitative Disclosures about Market Risks	25
	Impact of Inflation and Changing Prices	25
PART II –	OTHER INFORMATION	26
	Related Party Transactions	27
ANNEX –	Aging of Accounts Receivable	A-1
	Financial Soundness Indicators	A-2
	SIGNATURES	S-1

PART I – FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Our consolidated financial statements as at September 30, 2024 (unaudited) and December 31, 2023 (audited) and for the nine months ended September 30, 2024 and 2023 (unaudited) and related notes (pages F-1 to F-124) are filed as part of this report on Form 17-Q.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In the following discussion and analysis of our financial condition and results of operations, unless the context indicates or otherwise requires, references to “we,” “us,” “our” or “PLDT Group” mean PLDT Inc. and its consolidated subsidiaries, and references to “PLDT” or “the Company” mean PLDT Inc., not including its consolidated subsidiaries (please see Note 2 – Summary of Significant Accounting Policies to the accompanying unaudited consolidated financial statements for the list of these subsidiaries, including a description of their respective principal business activities and PLDT’s direct and/or indirect equity interest).

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes. Our unaudited consolidated financial statements, and the financial information discussed below, have been prepared in accordance with Philippine Financial Reporting Standards (PFRS) which is virtually converged with International Financial Reporting Standards as issued by the International Accounting Standards Board. PFRS differs in certain significant respects from generally accepted accounting principles (GAAP) in the U.S.

The financial information appearing in this report and in the accompanying unaudited consolidated financial statements are stated in Philippine Peso. Unless otherwise indicated, in this report and in the accompanying unaudited consolidated financial statements, the exchange rate used to convert the U.S. Dollar amounts into the Philippine Peso was Php56.02 to US$1.00, the Philippine Peso-U.S. Dollar exchange rate as quoted through the Bankers Association of the Philippines as at September 30, 2024.

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 generally are 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. 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.

Financial Highlights and Key Performance Indicators


	Nine Months Ended September 30,						Increase (Decrease)
	2024			2023			Amount			%
(amounts in million Php, except for EBITDA margin and earnings per common share)
Consolidated Income Statement
Revenues		160,942			156,356			4,586			3
Expenses		119,087			116,587			2,500			2
Other expenses – net		(4,792	)		(2,225	)		(2,567	)		(115	)
Income before income tax		37,063			37,544			(481	)		(1	)
Net income		28,224			27,998			226			1
Continuing operations		28,224			28,011			213			1
Discontinued operations		—			(13	)		13			100
Core income		25,793			24,592			1,201			5
Continuing operations		25,793			24,605			1,188			5
Discontinued operations		—			(13	)		13			100
Telco core income		26,578			26,076			502			2
EBITDA		80,718			78,319			2,399			3
Continuing operations		80,718			78,364			2,354			3
Discontinued operations		—			(45	)		45			100
EBITDA margin(1)		52	%		52	%
Reported earnings per common share:
Basic		129.71			128.83			0.88			1
Diluted		129.71			128.83			0.88			1
Reported earnings per common share from continuing operations:
Basic		129.71			128.89			0.82			1
Diluted		129.71			128.89			0.82			1
Core earnings per common share(2):
Basic		119.18			113.62			5.56			5
Diluted		119.18			113.62			5.56			5
Core earnings per common share from continuing operations:
Basic		119.18			113.68			5.50			5
Diluted		119.18			113.68			5.50			5


	September 30,		December 31,		Increase (Decrease)
	2024		2023		Amount			%
(amounts in million Php, except for net debt to equity ratio)
Consolidated Statements of Financial Position
Total assets		619,995		609,519		10,476			2
Property and equipment		308,216		287,103		21,113			7
Cash and cash equivalents and short-term investments		12,408		16,568		(4,160	)		(25	)
Total equity attributable to equity holders of PLDT		111,683		105,218		6,465			6
Long-term debt, including current portion		270,583		254,798		15,785			6
Net debt(3) to equity ratio	2.33x		2.28x			—			—

(1)

EBITDA margin for the period is measured as EBITDA from continuing operations divided by service revenues.

(2)

Core earnings per common share (“EPS”) for the period is measured as core income divided by the weighted average number of outstanding common shares for the period.

(3)

Net debt is derived by deducting cash and cash equivalents, short-term investments and debt instruments at amortized cost from total interest-bearing financial liabilities (principal amount of long-term debt, including current portion i.e., excluding debt issuance cost).


	Nine Months Ended September 30,						Change
	2024			2023			Amount			%
(amounts in million Php, except for operational data)
Consolidated Statements of Cash Flows
Net cash provided by operating activities		68,118			65,838			2,280			3
Net cash used in investing activities		(47,207	)		(51,858	)		4,651			9
Payment for purchase of property and equipment, including capitalized interest		(48,676	)		(66,827	)		18,151			27
Net cash used in financing activities		(26,132	)		(17,530	)		(8,602	)		(49	)
Operational Data
Number of mobile subscribers:		60,271,009			55,246,130			5,024,879			9
Prepaid		58,061,522			53,105,076			4,956,446			9
Postpaid		2,209,487			2,141,054			68,433			3
Number of broadband subscribers:		3,858,368			3,689,708			168,660			5
Fixed Line broadband		3,394,975			3,280,419			114,556			3
Fixed Wireless broadband		463,393			409,289			54,104			13
Number of fixed line voice subscribers		3,727,873			3,792,278			(64,405	)		(2	)
Total number of subscribers		67,857,250			62,728,116			5,129,134			8
Number of employees:		15,014			15,666			(652	)		(4	)
Fixed Line		10,874			11,424			(550	)		(5	)
LEC		9,613			10,063			(450	)		(4	)
Others		1,261			1,361			(100	)		(7	)
Wireless		4,140			4,242			(102	)		(2	)


Exchange Rates – per US$	Month end rates		Weighted average rates during the year
September 30, 2024		56.02		57.01
December 31, 2023		55.42		55.62
September 30, 2023		56.66		55.49
December 31, 2022		55.82		54.52

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.

EBITDA

EBITDA for the period 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 is monitored by management for each business unit separately for purposes of making decisions about resource allocation and performance assessment. EBITDA is presented because our management believes that it is widely used by investors in their analysis of our performance and can assist them in their comparison of our performance with those of other companies in the technology, media and telecommunications sector. Companies in the technology, media and telecommunications sector have historically reported EBITDA as a supplement to financial measures in accordance with PFRS. EBITDA should not be considered as alternative to net income as an indicator of our performance, nor should 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 PFRS. Unlike net income, 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 EBITDA as only one of several comparative tools, together with PFRS-based measurements, to assist in the evaluation of operating performance. Such PFRS-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 EBITDA. Our calculation of EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

Core Income and Telco Core Income

Core income for the period 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), 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. Core income results are monitored by management for each business unit separately for purposes of making decisions about resource allocation and performance assessment.

Meanwhile, telco core income for the period 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), 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 Maya Innovations Holdings, Pte. Ltd. (MIH) (formerly Voyager Innovations Holdings Pte. Ltd.) losses, asset sales, and depreciation due to change in accounting estimate. 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.

Core income and telco core income should not be considered as alternatives to income before income tax or net income determined in accordance with PFRS as an indicator of our performance. Unlike net income, core income and telco core income do not include certain items, among others, foreign exchange gains and losses, gains and losses on derivative financial instruments, impairments on non-current assets and non-recurring gains and losses. We compensate for these limitations by using core income and telco core income as few out of several comparative tools, together with PFRS-based measurements, to assist us in the evaluation of our operating performance. Such PFRS-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.

Overview

We are one of the leading telecommunications and digital services providers in the Philippines serving the fixed line, wireless and broadband markets. Through our three principal business segments, Wireless, Fixed Line and Others, we offer a diverse range of telecommunications and digital services across our extensive fiber optic backbone and wireless and fixed line networks.

As at September 30, 2024, we serve 67.9 million customers through the provision of mobile, fixed line and data services.

Our three business units are as follows:

•

Wireless  Our Wireless business segment focuses on driving the growth of our data services while managing our legacy business of voice and short messaging services (“SMS”). We generate data revenues across all segments of our wireless business, whether through the access of mobile internet via smartphones, mobile broadband using pocket WiFi or home WiFi using fixed wireless broadband devices. We provide the following mobile telecommunications services through our wireless business: (i) mobile services, (ii) fixed wireless broadband services, and (iii) other services.

•

Fixed Line  We are the leading provider of fixed line telecommunications services throughout the Philippines, servicing retail, corporate and small and medium-sized enterprises (“SME”) clients. Our Fixed Line business segment offers data, voice, data center, cloud, cyber security services, managed information technology (“IT”) and others.

•

Others  Our Other business segment consists primarily of our interests in digital platforms and other technologies, including our interest in Kayana Solutions, Inc. (“Kayana”), formerly Limitless Growth Ventures, Inc., and MIH.

Management’s Financial Review

In addition to consolidated net income, we use EBITDA, core income and telco core income to assess our operating performance. Set forth below is a reconciliation of our consolidated net income to our consolidated EBITDA, and a reconciliation of our consolidated net income to our consolidated core income and consolidated telco core income for the nine months ended September 30, 2024 and 2023.

The following table shows the reconciliation of our consolidated net income to our consolidated EBITDA for the nine months ended September 30, 2024 and 2023:


	2024			2023(1)
	(amounts in million Php)
Net income from continuing operations		28,224			28,011
Net loss from discontinued operations		—			(13	)
Consolidated net income		28,224			27,998

Add (deduct) adjustments to continuing operations:
Depreciation and amortization		37,162			36,044
Financing costs – net		10,972			10,077
Provision for income tax		8,839			9,533
Manpower rightsizing program (“MRP”)		1,442			1,897
Equity share in net losses of associates and joint ventures		1,119			2,303
Amortization of intangible assets		171			166
Impairment on noncurrent assets		67			—
Interest income		(718	)		(733	)
Gain on sale and leaseback of telecom towers – net of transaction costs		(896	)		(4,520	)
Foreign exchange gains – net		(1,389	)		(28	)
Gains on derivative financial instruments – net		(2,066	)		(2,207	)
Others		(2,209	)		(2,179	)
Total adjustments		52,494			50,353

EBITDA from continuing operations		80,718			78,364
EBITDA from discontinued operations		—			(45	)
Consolidated EBITDA		80,718			78,319

(1) To be comparable, certain items are presented in such manner that conforms with 2024.

The following table shows the reconciliation of our consolidated net income to our consolidated core income and telco core income for the nine months ended September 30, 2024 and 2023:


	2024			2023
	(amounts in million Php)
Net income from continuing operations		28,224			28,011
Net loss from discontinued operations		—			(13	)
Consolidated net income		28,224			27,998

Add (deduct) adjustments to continuing operations:
MRP		1,442			1,897
Amortization of debt discount from debt modification		138			133
Impairment on noncurrent assets		67			—
Impairment of investments		—			70
Core income adjustment on equity share in net loss (income) of associates and joint ventures		(66	)		387
Income from prescription of liability on redeemable preferred shares		(71	)		—
Net income attributable to noncontrolling interests		(154	)		(119	)
Gain on sale and leaseback of telecom towers - net of transaction costs		(896	)		(4,520	)
Foreign exchange gains – net		(1,389	)		(34	)
Gains on derivative financial instruments – net, excluding hedge costs		(2,238	)		(2,386	)
Net tax effect of aforementioned adjustments		736			1,166
Total adjustments		(2,431	)		(3,406	)

Core income from continuing operations		25,793			24,605
Core loss from discontinued operations		—			(13	)
Consolidated core income		25,793			24,592

Core income from continuing operations		25,793			24,605
Add (deduct) adjustments:
Share in MIH losses		931			1,701
Gain on deconsolidation of Kayana		(146	)		—
Gain on asset sales, net of tax		—			(230	)
Total adjustments		785			1,471
Telco core income		26,578			26,076

Results of Operations

The following table shows the contribution by each of our business segments to our consolidated revenues, expenses, other income (expense), income (loss) before income tax, provision for (benefit from) income tax, net income (loss)/segment profit (loss), EBITDA, EBITDA margin, core income and telco core income for the nine months ended September 30, 2024 and 2023. In each of the nine months ended September 30, 2024 and 2023, majority of our revenues are derived from our operations within the Philippines. Our revenues derived from outside the Philippines consist primarily of revenues from incoming international calls to the Philippines.


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

For the nine months ended September 30, 2024
Revenues		78,535			95,435			—			(13,028	)		160,942
Expenses		65,271			68,486			103			(14,773	)		119,087
Other income (expenses) – net		(2,419	)		6,165			(1,008	)		(7,530	)		(4,792	)
Income (loss) before income tax		10,845			33,114			(1,111	)		(5,785	)		37,063
Provision for income tax		2,527			5,998			(12	)		326			8,839
Net income (loss)/Segment profit (loss)		8,318			27,116			(1,099	)		(6,111	)		28,224
EBITDA		38,285			47,819			(102	)		(5,284	)		80,718
EBITDA margin(1)		53	%		50	%		—			—			52	%
Core income (loss)		6,399			26,842			(1,050	)		(6,398	)		25,793
Telco core income (loss)		6,399			26,696			(119	)		(6,398	)		26,578

For the nine months ended September 30, 2023
Revenues		77,234			89,727			—			(10,605	)		156,356
Expenses		61,342			66,281			15			(11,051	)		116,587
Other income (expenses) – net		1,370			7,629			(1,792	)		(9,432	)		(2,225	)
Income (loss) before income tax		17,262			31,075			(1,807	)		(8,986	)		37,544
Provision for income tax		4,016			5,466			—			51			9,533
Net income (loss)/Segment profit (loss)		13,246			25,609			(1,807	)		(9,037	)		27,998
Continuing operations		13,246			25,609			(1,807	)		(9,037	)		28,011
Discontinued operations		—			—			—			—			(13	)
EBITDA		40,215			45,208			(15	)		(7,044	)		78,319
Continuing operations		40,215			45,208			(15	)		(7,044	)		78,364
Discontinued operations		—			—			—			—			(45	)
EBITDA margin(1)		57	%		51	%		—			—			52	%
Core income (loss)		9,277			26,187			(1,677	)		(9,182	)		24,592
Continuing operations		9,277			26,187			(1,677	)		(9,182	)		24,605
Discontinued operations		—			—			—			—			(13	)
Telco core income		9,277			25,957			24			(9,182	)		26,076

Increase (Decrease)
Revenues		1,301			5,708			—			(2,423	)		4,586
Expenses		3,929			2,205			88			(3,722	)		2,500
Other income (expenses) – net		(3,789	)		(1,464	)		784			1,902			(2,567	)
Income (loss) before income tax		(6,417	)		2,039			696			3,201			(481	)
Provision for income tax		(1,489	)		532			(12	)		275			(694	)
Net income (loss)/Segment profit (loss)		(4,928	)		1,507			708			2,926			226
Continuing operations		(4,928	)		1,507			708			2,926			213
Discontinued operations		—			—			—			—			13
EBITDA		(1,930	)		2,611			(87	)		1,760			2,399
Continuing operations		(1,930	)		2,611			(87	)		1,760			2,354
Discontinued operations		—			—			—			—			45
Core income (loss)		(2,878	)		655			627			2,784			1,201
Continuing operations		(2,878	)		655			627			2,784			1,188
Discontinued operations		—			—			—			—			13
Telco core income (loss)		(2,878	)		739			(143	)		2,784			502

(1)

EBITDA margin for the period is measured as EBITDA from continuing operations divided by service revenues.

On a Consolidated Basis

Consolidated

Revenues

We reported consolidated revenues of Php160,942 million for the nine months ended September 30, 2024, an increase of Php4,586 million, or 3%, as compared with Php156,356 million in the same period in 2023, primarily due to higher consolidated revenues from data, SMS and voice services, partially offset by lower consolidated non-service revenues.

Our consolidated service revenues of Php154,995 million for the nine months ended September 30, 2024, increased by Php5,243 million, or 4%, from Php149,752 million in the same period in 2023. Our consolidated non-service revenues of Php5,947 million for the nine months ended September 30, 2024, decreased by Php657 million, or 10%, from Php6,604 million in the same period in 2023.

Consolidated service revenues, net of interconnection costs of Php10,102 million, amounted to Php144,893 million for the nine months ended September 30, 2024, an increase of Php2,604 million, or 2%, from Php142,289 million in the same period in 2023.

The following table shows the breakdown of our consolidated revenues by service for the nine months ended September 30, 2024 and 2023:


	Wireless		Fixed Line		Inter- segment Transactions			Consolidated
			(amounts in million Php)
For the nine months ended September 30, 2024
Service Revenues
Wireless		72,905				(611	)		72,294
Mobile		71,754				(573	)		71,181
Fixed Wireless broadband		1,113				—			1,113
Other services		38				(38	)		—
Fixed Line				95,118		(12,417	)		82,701
Voice				21,955		(1,194	)		20,761
Data				72,715		(11,025	)		61,690
Home broadband				38,466		(14	)		38,452
Corporate data and ICT				34,249		(11,011	)		23,238
Miscellaneous				448		(198	)		250
Total Service Revenues		72,905		95,118		(13,028	)		154,995
Non-Service Revenues
Sale of phone units, mobile handsets, broadband data modems, devices and others		5,630		317		—			5,947
Total Non-Service Revenues		5,630		317		—			5,947
Total Revenues		78,535		95,435		(13,028	)		160,942
For the nine months ended September 30, 2023
Service Revenues
Wireless		70,921				(511	)		70,410
Mobile		69,650				(482	)		69,168
Fixed Wireless broadband		1,242				—			1,242
Other services		29				(29	)		—
Fixed Line				89,436		(10,094	)		79,342
Voice				19,732		(1,121	)		18,611
Data				69,433		(8,778	)		60,655
Home broadband				38,073		(19	)		38,054
Corporate data and ICT				31,360		(8,759	)		22,601
Miscellaneous				271		(195	)		76
Total Service Revenues		70,921		89,436		(10,605	)		149,752
Non-Service Revenues
Sale of phone units, mobile handsets, broadband data modems, devices and others		6,313		291		—			6,604
Total Non-Service Revenues		6,313		291		—			6,604
Total Revenues		77,234		89,727		(10,605	)		156,356

The following table shows the breakdown of our consolidated revenues by business segment for the nine months ended September 30, 2024 and 2023:


													Change
	2024			%			2023			%			Amount			%
	(amounts in million Php)
Wireless		78,535			49			77,234			50			1,301			2
Fixed Line		95,435			59			89,727			57			5,708			6
Inter-segment transactions		(13,028	)		(8	)		(10,605	)		(7	)		(2,423	)		(23	)
Consolidated		160,942			100			156,356			100			4,586			3

Expenses

Consolidated expenses increased by Php2,500 million, or 2%, to Php119,087 million for the nine months ended September 30, 2024 from Php116,587 million in the same period in 2023, primarily due to higher interconnection costs, depreciation and amortization, and noncurrent asset impairment, partially offset by lower expenses related to cost of sales and services, provisions, and selling, general and administrative expenses.

The following table shows the breakdown of our consolidated expenses by business segment for the nine months ended September 30, 2024 and 2023:


													Change
	2024			%			2023			%			Amount			%
	(amounts in million Php)
Wireless		65,271			55			61,342			53			3,929			6
Fixed Line		68,486			57			66,281			57			2,205			3
Others		103			—			15			—			88			587
Inter-segment transactions		(14,773	)		(12	)		(11,051	)		(10	)		(3,722	)		(34	)
Consolidated		119,087			100			116,587			100			2,500			2

Other Income (Expenses) – Net

Consolidated other expenses – net amounted to Php4,792 million for the nine months ended September 30, 2024, an increase of Php2,567 million from Php2,225 million in the same period in 2023, primarily due to the combined effects of the following:
(i) lower other income – net by Php4,061 million mainly from our Wireless business segment's lower gain on sale and leaseback of telecom towers; (ii) higher net financing costs by Php895 million; (iii) lower gains on derivative financial instruments by Php141 million; (iv) lower equity share in net losses by Php1,184 million; and (v) higher net foreign exchange gains by Php1,361 million.

Net Income

Consolidated net income increased by Php226 million, or 1%, to Php28,224 million for the nine months ended September 30, 2024 from Php27,998 million in the same period in 2023. The increase was mainly due to the combined effects of the following:
(i) higher consolidated revenues by Php4,586 million; (ii) higher consolidated expenses by Php2,500 million; (iii) higher consolidated other expenses – net by Php2,567 million; (iv) lower provision for income tax by Php694 million; and (v) net loss from discontinued operations of Php13 million in 2023. Our consolidated basic and diluted EPS increased to Php129.71 for the nine months ended September 30, 2024 from Php128.83 in the same period in 2023. Our weighted average number of outstanding common shares was approximately 216.06 million for each of the nine months ended September 30, 2024 and 2023.

EBITDA

Our consolidated EBITDA amounted to Php80,718 million for the nine months ended September 30, 2024, an increase of Php2,399 million, or 3%, as compared with Php78,319 million in the same period in 2023.

The following table shows the breakdown of our consolidated EBITDA by business segment for the nine months ended September 30, 2024 and 2023:


													Change
	2024			%			2023			%			Amount			%
	(amounts in million Php)
Wireless		38,285			47			40,215			51			(1,930	)		(5	)
Fixed Line		47,819			59			45,208			58			2,611			6
Others		(102	)		—			(15	)		—			(87	)		(580	)
Inter-segment transactions		(5,284	)		(6	)		(7,044	)		(9	)		1,760			25
Continuing operations		80,718			100			78,364			100			2,354			3
Discontinued operations		—			—			(45	)		—			45			100
Consolidated		80,718			100			78,319			100			2,399			3

Core Income (Loss)

Our consolidated core income amounted to Php25,793 million for the nine months ended September 30, 2024, an increase of Php1,201 million, or 5%, as compared with Php24,592 million in the same period in 2023, mainly on account of higher EBITDA, lower equity share in net losses of associates and joint ventures, and lower provision for income tax, partially offset by higher depreciation and amortization, and financing costs. Our consolidated basic and diluted core EPS increased to Php119.18 for the nine months ended September 30, 2024 from Php113.62 in the same period in 2023.

The following table shows the breakdown of our consolidated core income by business segment for the nine months ended September 30, 2024 and 2023:


													Change
	2024			%			2023			%			Amount			%
	(amounts in million Php)
Wireless		6,399			25			9,277			38			(2,878	)		(31	)
Fixed Line		26,842			104			26,187			106			655			3
Others		(1,050	)		(4	)		(1,677	)		(7	)		627			37
Inter-segment transactions		(6,398	)		(25	)		(9,182	)		(37	)		2,784			30
Continuing operations		25,793			100			24,605			100			1,188			5
Discontinued operations		—			—			(13	)		—			13			100
Consolidated		25,793			100			24,592			100			1,201			5

Telco Core Income

Our consolidated telco core income amounted to Php26,578 million for the nine months ended September 30, 2024, an increase of Php502 million, or 2%, as compared with Php26,076 million in the same period in 2023, mainly due to higher EBITDA and lower provision for income tax, partially offset by higher depreciation and amortization, and financing costs.

The following table shows the breakdown of our consolidated telco core income by business segment for the nine months ended September 30, 2024 and 2023:


													Change
	2024			%			2023			%			Amount			%
	(amounts in million Php)
Wireless		6,399			24			9,277			36			(2,878	)		(31	)
Fixed Line		26,696			100			25,957			99			739			3
Others		(119	)		—			24			—			(143	)		(596	)
Inter-segment transactions		(6,398	)		(24	)		(9,182	)		(35	)		2,784			30
Consolidated		26,578			100			26,076			100			502			2

On a Business Segment Basis

Wireless

Revenues

We generated revenues of Php78,535 million from our Wireless business segment for the nine months ended September 30, 2024, an increase of Php1,301 million, or 2%, from Php77,234 million in the same period in 2023.

The following table summarizes our total revenues by service from our Wireless business segment for the nine months ended September 30, 2024 and 2023:


									Increase (Decrease)
	2024		%		2023		%		Amount			%
	(amounts in million Php)
Service Revenues:
Mobile		71,754		91		69,650		90		2,104			3
Fixed Wireless broadband		1,113		2		1,242		2		(129	)		(10	)
Other services(1)		38		—		29		—		9			31
Total Wireless Service Revenues		72,905		93		70,921		92		1,984			3
Non-Service Revenues:
Sale of mobile handsets and broadband data modems		5,630		7		6,313		8		(683	)		(11	)
Total Wireless Revenues		78,535		100		77,234		100		1,301			2

(1)

Includes facility service fees.

Service Revenues

Our wireless service revenues increased by Php1,984 million, or 3%, to Php72,905 million for the nine months ended September 30, 2024 as compared with Php70,921 million in the same period in 2023, primarily due to higher revenues from our mobile services, partially offset by lower revenues from fixed wireless broadband services. As a percentage of our total wireless revenues, service revenues accounted for 93% and 92% for the nine months ended September 30, 2024 and 2023, respectively.

Wireless service revenues, net of interconnection costs, amounted to Php72,191 million for the nine months ended September 30, 2024, an increase of Php1,880 million, or 3%, from Php70,311 million in the same period in 2023.

Mobile Services

Our mobile service revenues amounted to Php71,754 million for the nine months ended September 30, 2024, an increase of Php2,104 million, or 3%, from Php69,650 million in the same period in 2023. Mobile service revenues accounted for 98% of our wireless service revenues in each of the nine months ended September 30, 2024 and 2023.

The following table shows the breakdown of our mobile service revenues for the nine months ended September 30, 2024 and 2023:


									Increase (Decrease)
	2024		%		2023		%		Amount			%
	(amounts in million Php)
Mobile Services:
Data		58,062		81		55,361		79		2,701			5
Voice		7,071		10		8,750		13		(1,679	)		(19	)
SMS		5,092		7		4,151		6		941			23
Inbound roaming and others(1)		1,529		2		1,388		2		141			10
Total		71,754		100		69,650		100		2,104			3

(1)

Refers to other non-subscriber-related revenues consisting primarily of inbound international roaming fees.

Data Services

Mobile revenues from our data services, which include mobile internet, mobile broadband and other data services, increased by Php2,701 million, or 5%, to Php58,062 million for the nine months ended September 30, 2024 from Php55,361 million in the same period in 2023 due to higher mobile internet revenues driven mainly by the continued strength of our mobile network, and promotion of data offers such as Power All, Double Giga and Magic Data, which cater to the needs of prepaid subscribers, partially offset by lower mobile broadband revenues.

Data services accounted for 81% and 79% of our mobile service revenues for the nine months ended September 30, 2024 and 2023, respectively.

The following table shows the breakdown of our mobile data service revenues for the nine months ended September 30, 2024 and 2023:


									Increase (Decrease)
	2024		%		2023		%		Amount			%
	(amounts in million Php)
Data Services:
Mobile internet(1)		55,561		96		52,501		95		3,060			6
Mobile broadband		1,843		3		2,238		4		(395	)		(18	)
Other data		658		1		622		1		36			6
Total		58,062		100		55,361		100		2,701			5

(1)

Includes revenues from web-based services, net of discounts and content provider costs.

Mobile Internet

Mobile internet service revenues increased by Php3,060 million, or 6%, to Php55,561 million for the nine months ended September 30, 2024 from Php52,501 million in the same period in 2023, primarily due to our mobile data offerings, such as All Access+, Power All, Magic Data, TNT's Affordaloads, and Smart Postpaid's Unli 5G plans. Smart continues to drive usage and top-ups via Smart App, the Smart Online Store and its retailer network.

Smart continues to drive Smart App, which now supports more payment solutions for top-up.

Smart has also rolled out 5G offers and device financing through partnerships with credit card companies to drive more users on 5G. Smart also launched iPhones on prepaid to drive 5G adoption in the prepaid category.

Mobile internet services accounted for 77% and 75% of our mobile service revenues for the nine months ended September 30, 2024 and 2023, respectively.

Mobile Broadband

Mobile broadband revenues generated from the use of pocket WiFi, amounted to Php1,843 million for the nine months ended September 30, 2024, a decrease of Php395 million, or 18%, from Php2,238 million in the same period in 2023, primarily due to lower mobile broadband subscriber base.

Mobile broadband services accounted for 3% of our mobile service revenues in each of the nine months ended September 30, 2024 and 2023.

Other Data

Revenues from our other data services, which include value-added services (“VAS”) and domestic leased lines, increased by Php36 million, or 6%, to Php658 million for the nine months ended September 30, 2024 from Php622 million in the same period in 2023.

Voice Services

Mobile revenues from our voice services, which include all voice traffic, decreased by Php1,679 million, or 19%, to Php7,071 million for the nine months ended September 30, 2024 from Php8,750 million in the same period in 2023, due to subscribers’ shift to alternative calling options, digital teleconferencing solutions, and other OTT services. Mobile voice services accounted for 10% and 13% of our mobile service revenues for the nine months ended September 30, 2024 and 2023, respectively.

Domestic voice service revenues decreased by Php1,577 million, or 20%, to Php6,489 million for the nine months ended September 30, 2024 from Php8,066 million in the same period in 2023, mainly due to lower traffic from domestic outbound voice services.

International voice service revenues decreased by Php102 million, or 15%, to Php582 million for the nine months ended September 30, 2024 from Php684 million in the same period in 2023 resulting from the declining trend of international inbound voice traffic due to subscribers’ shift to application-based form of communications and other OTT services.

SMS Services

Mobile revenues from our SMS services, which include all SMS-related services, increased by Php941 million, or 23%, to Php5,092 million for the nine months ended September 30, 2024 from Php4,151 million in the same period in 2023, mainly due to the increase in application-to-person (“A2P”) service revenues. Mobile SMS services accounted for 7% and 6% of our mobile service revenues for the nine months ended September 30, 2024 and 2023, respectively.

Inbound Roaming and Others

Mobile revenues from inbound roaming and other services increased by Php141 million, or 10%, to Php1,529 million for the nine months ended September 30, 2024 from Php1,388 million in the same period in 2023, primarily due to higher other subscriber-related revenues.

Subscriber Base, ARPU and Churn Rates

R.A. No. 11934 or the SIM Registration Act took effect on October 28, 2022. Under this law, all end-users are required to register their SIMs with public telecommunications entities (“PTEs”) as a pre-requisite to the activation thereof. On September 18, 2023, the NTC issued Memorandum Order No. ###-##-#### providing for guidelines for PTEs in the conduct of processes to verify submitted information and data by end-users of SIMs under the SIM Registration Act and its IRR.

The following table shows our mobile subscriber base as at September 30, 2024 and 2023:


					Increase (Decrease)
	2024		2023		Amount		%
Mobile subscriber base(1)
Prepaid		58,061,522		53,105,076		4,956,446		9
Smart		22,416,116		20,494,009		1,922,107		9
TNT		35,645,406		32,611,067		3,034,339		9
Postpaid		2,209,487		2,141,054		68,433		3
Total		60,271,009		55,246,130		5,024,879		9

(1)

Includes mobile broadband subscribers.

In view of the SIM Registration Act, we recognize a prepaid mobile subscriber as active upon registration of the SIM card. Beginning the fourth quarter of 2023, we consider a prepaid mobile subscriber as churned if the subscriber does not reload within 180 days after the full usage or expiry of the last reload, and does not latch to the network within 180 days.

The average monthly churn rates for Smart Prepaid subscribers were 1.8% and 3.2% for the nine months ended September 30, 2024 and 2023, respectively, while the average monthly churn rates for TNT subscribers were 1.8% and 3.5% for the nine months ended September 30, 2024 and 2023, respectively.

The average monthly churn rates for Postpaid subscribers were 1.1% and 1.4% for the nine months ended September 30, 2024 and 2023, respectively.

Smart introduced the first prepaid eSIM in the country in July 2023 and introduced digital delivery of eSIMs in September 2023. Smart enabled physical SIM to eSIM upgrades in the second quarter of 2024 to help mitigate churn.

The following table summarizes our average monthly ARPUs for the nine months ended September 30, 2024 and 2023:


	Gross(1)		Increase (Decrease)				Net(2)		Increase (Decrease)
	2024	2023	Amount	%			2024	2023	Amount	%
	(amounts in Php)
Prepaid
Smart	134	131	3		2	%	121	115	6		5	%
TNT	113	106	7		7	%	102	95	7		7	%
Postpaid	734	726	8		1	%	693	686	7		1	%

(1)

Gross monthly ARPU is calculated by dividing gross mobile service revenues for the period, including interconnection income, but excluding inbound roaming revenues, gross of discounts, and content provider costs, by the average number of subscribers in the period.

(2)

Net monthly ARPU is calculated by dividing gross mobile service revenues for the period, including interconnection income, but excluding inbound roaming revenues, net of discounts, and content provider costs, by the average number of subscribers in the period.

Fixed Wireless Broadband

Revenues from our Fixed Wireless Broadband services amounted to Php1,113 million for the nine months ended September 30, 2024, a decrease of Php129 million, or 10%, from Php1,242 million in the same period in 2023.

Other Services

Revenues from our other services amounted to Php38 million for the nine months ended September 30, 2024, an increase of Php9 million, or 31%, from Php29 million in the same period in 2023.

Non-Service Revenues

Our wireless non-service revenues consist of sale of mobile handsets, broadband data routers, and devices. Our wireless non-service revenues decreased by Php683 million, or 11%, to Php5,630 million for the nine months ended September 30, 2024 from Php6,313 million in the same period in 2023, primarily due to a lower number of mobile handsets issued.

Expenses

Expenses associated with our Wireless business segment amounted to Php65,271 million for the nine months ended September 30, 2024, an increase of Php3,929 million, or 6%, from Php61,342 million in the same period in 2023. The increase was attributable to higher expenses related to selling, general and administrative expenses, depreciation and amortization, interconnection costs and provisions, partially offset by lower cost of sales and services. As a percentage of our total wireless revenues, expenses associated with our Wireless business segment accounted for 83% and 79% for the nine months ended September 30, 2024 and 2023, respectively.

The following table summarizes the breakdown of our total wireless-related expenses for the nine months ended September 30, 2024 and 2023 and the percentage of each expense item in relation to the total:


									Increase (Decrease)
	2024		%		2023		%		Amount			%
	(amounts in million Php)
Selling, general and administrative expenses		31,494		48		27,865		45		3,629			13
Depreciation and amortization		24,852		38		23,376		38		1,476			6
Cost of sales and services		7,563		12		8,873		15		(1,310	)		(15	)
Interconnection costs		714		1		610		1		104			17
Provisions		648		1		618		1		30			5
Total		65,271		100		61,342		100		3,929			6

Selling, general and administrative expenses increased by Php3,629 million, or 13%, to Php31,494 million, primarily due to higher expenses related to rent, repairs and maintenance, and taxes and licenses, partially offset by lower expenses related to selling and promotions, compensation and employee benefits, mainly due to lower MRP expenses, and professional and other contracted services.

Depreciation and amortization charges increased by Php1,476 million, or 6%, to Php24,852 million, mainly on account of higher depreciation of property and equipment primarily due to newly capitalized property and equipment, and higher amortization of capitalized leases arising from the sale and leaseback of telecom towers, .

Cost of sales and services decreased by Php1,310 million, or 15%, to Php7,563 million, primarily due to lower number of units issued for mobile handsets, and lower SIM registration and SIM printing costs.

Interconnection costs increased by Php104 million, or 17%, to Php714 million, primarily due to higher interconnection costs on A2P transactions.

Provisions increased by Php30 million, or 5%, to Php648 million, primarily due to higher provision for inventory obsolescence, partially offset by lower provision for contract assets.

Other Income (Expenses) – Net

The following table summarizes the breakdown of our total wireless-related other income (expenses) – net for the nine months ended September 30, 2024 and 2023:


							Change
	2024			2023			Amount			%
	(amounts in million Php)
Other Income (Expenses) – Net:
Foreign exchange gains – net		1,075			494			581			118
Gains on derivative financial instruments – net		816			664			152			23
Interest income		545			507			38			7
Financing costs – net		(7,112	)		(6,668	)		(444	)		(7	)
Other income – net		2,257			6,373			(4,116	)		(65	)
Total		(2,419	)		1,370			(3,789	)		(277	)

Our Wireless business segment’s other expenses – net amounted to Php2,419 million for the nine months ended September 30, 2024, a change of Php3,789 million as against other income – net of Php1,370 million in the same period in 2023, primarily due to the combined effects of the following: (i) lower other income – net by Php4,116 million mainly due to lower gain on sale and leaseback of telecom towers, gross of transaction costs, which decreased by Php3,843 million to Php1,165 million for the nine months ended September 30, 2024 from Php5,008 million in the same period in 2023; (ii) higher net financing costs by Php444 million mainly due to higher interest rates, higher weighted average outstanding principal amounts and lower capitalized interest; (iii) higher net foreign exchange gains by Php581 million mainly on account of revaluation of net foreign currency-denominated liabilities due to lower depreciation of the Philippine peso relative to the U.S. dollar for the nine months ended September 30, 2024 as compared with the same period in 2023; and (iv) higher gains on derivative financial instruments by Php152 million.

Provision for Income Tax

Provision for income tax amounted to Php2,527 million for the nine months ended September 30, 2024, a decrease of Php1,489 million, or 37%, from Php4,016 million in the same period in 2023, mainly due to lower net income before tax.

Net Income

As a result of the foregoing, our Wireless business segment’s net income decreased by Php4,928 million, or 37%, to Php8,318 million for the nine months ended September 30, 2024 from Php13,246 million in the same period in 2023.

EBITDA

Our Wireless business segment’s EBITDA decreased by Php1,930 million, or 5%, to Php38,285 million for the nine months ended September 30, 2024 from Php40,215 million in the same period in 2023. EBITDA margin decreased to 53% for the nine months ended September 30, 2024 from 57% in the same period in 2023.

Core Income

Our Wireless business segment’s core income decreased by Php2,878 million, or 31%, to Php6,399 million for the nine months ended September 30, 2024 from Php9,277 million in the same period in 2023, mainly on account of lower EBITDA, and higher depreciation and amortization, and financing costs, partially offset by lower provision for income tax.

Fixed Line

Revenues

Revenues generated from our Fixed Line business segment amounted to Php95,435 million for the nine months ended September 30, 2024, an increase of Php5,708 million, or 6%, from Php89,727 million in the same period in 2023.

The following table summarizes our total revenues by service from our Fixed Line business segment for the nine months ended September 30, 2024 and 2023:


									Increase (Decrease)
	2024		%		2023		%		Amount		%
	(amounts in million Php)
Service Revenues:
Data		72,715		76		69,433		78		3,282		5
Voice		21,955		23		19,732		22		2,223		11
Miscellaneous		448		1		271		—		177		65
Total Fixed Line Service Revenues		95,118		100		89,436		100		5,682		6
Non-Service Revenues:
Sale of phone units, devices and others		317		—		291		—		26		9
Total Fixed Line Revenues		95,435		100		89,727		100		5,708		6

Service Revenues

Our fixed line service revenues increased by Php5,682 million, or 6%, to Php95,118 million for the nine months ended September 30, 2024 from Php89,436 million in the same period in 2023, primarily due to higher revenues from our data, voice and miscellaneous services.

Fixed Line service revenues, net of interconnection costs, amounted to Php84,526 million for the nine months ended September 30, 2024, an increase of Php3,077 million, or 4%, from Php81,449 million in the same period in 2023.

Data Services

Our data services, which include Home broadband, corporate data, and ICT portfolio with data center, cloud, cyber security, and managed IT offerings, posted revenues of Php72,715 million for the nine months ended September 30, 2024, an increase of Php3,282 million, or 5%, from Php69,433 million in the same period in 2023, primarily due to higher revenues from corporate data and leased lines, ICT and Home broadband services. The percentage contribution of this service segment to our fixed line service revenues accounted for 76% and 78% for the nine months ended September 30, 2024 and 2023, respectively.

The following table shows information of our data service revenues for the nine months ended September 30, 2024 and 2023:


									Increase (Decrease)
	2024		%		2023		%		Amount		%
	(amounts in million Php)
Data service revenues
Home broadband		38,466		53		38,073		55		393		1
Corporate data and ICT		34,249		47		31,360		45		2,889		9
Total		72,715		100		69,433		100		3,282		5

Home Broadband

Home broadband data revenues amounted to Php38,466 million for the nine months ended September 30, 2024, an increase of Php393 million, or 1%, from Php38,073 million in the same period in 2023, mainly driven by the increasing demand for broadband services. Home broadband revenues accounted for 53% and 55% of fixed line data service revenues for the nine months ended September 30, 2024 and 2023, respectively.

Corporate Data and ICT

Corporate data services amounted to Php28,797 million for the nine months ended September 30, 2024, an increase of Php2,305 million, or 9%, as compared with Php26,492 million in the same period in 2023, mainly due to the sustained demand for broadband internet and data networking services. Corporate data revenues accounted for 40% and 38% of our total data service revenues for the nine months ended September 30, 2024 and 2023, respectively.

ICT revenues increased by Php584 million, or 12%, to Php5,452 million for the nine months ended September 30, 2024 from Php4,868 million in the same period in 2023, mainly due to higher revenues from managed IT, data center, cloud, and cyber security services. The percentage contribution of this service segment to our total data service revenues accounted for 7% in each of nine months ended September 30, 2024 and 2023.

Voice Services

Revenues from our voice services increased by Php2,223 million, or 11%, to Php21,955 million for the nine months ended September 30, 2024 from Php19,732 million in the same period in 2023, primarily due to higher revenues from international services of PLDT Global driven by higher traffic volume. The percentage contribution of voice service revenues to our fixed line service revenues accounted for 23% and 22% for the nine months ended September 30, 2024 and 2023, respectively.

Miscellaneous Services

Miscellaneous service revenues are derived mostly from management fees and other services. These service revenues increased by Php177 million, or 65%, to Php448 million for the nine months ended September 30, 2024 from Php271 million in the same period in 2023, primarily due to higher other subscriber-related revenues.

Non-service Revenues

Non-service revenues increased by Php26 million, or 9%, to Php317 million for the nine months ended September 30, 2024 from Php291 million in the same period in 2023, primarily due to higher sale of devices.

Expenses

Expenses related to our Fixed Line business segment totaled Php68,486 million for the nine months ended September 30, 2024, an increase of Php2,205 million, or 3%, as compared with Php66,281 million in the same period in 2023. The increase was primarily due to higher interconnection costs, cost of sales and services, selling, general and administrative expenses, and impairment on non-current assets, partially offset by lower depreciation and amortization, and provisions. As a percentage of our total fixed line revenues, expenses associated with our Fixed Line business segment accounted for 72% and 74% for the nine months ended September 30, 2024 and 2023, respectively.

The following table shows the breakdown of our total fixed line-related expenses for the nine months ended September 30, 2024 and 2023 and the percentage of each expense item in relation to the total:


									Increase (Decrease)
	2024		%		2023		%		Amount			%
	(amounts in million Php)

Selling, general and administrative expenses		33,625		49		33,419		51		206			1
Depreciation and amortization		19,329		28		20,158		30		(829	)		(4	)
Interconnection costs		10,592		16		7,987		12		2,605			33
Cost of sales and services		2,519		4		2,046		3		473			23
Provisions		2,353		3		2,671		4		(318	)		(12	)
Impairment on non-current assets		68		—		—		—		68			100
Total		68,486		100		66,281		100		2,205			3

Selling, general and administrative expenses increased by Php206 million, or 1%, to Php33,625 million primarily due to higher expenses related to rent, compensation and employee benefits, taxes and licenses, and insurance and security services, partially offset by lower expenses related to repairs and maintenance, and professional and other contracted services.

Depreciation and amortization charges decreased by Php829 million, or 4%, to Php19,329 million mainly due to lower amortization of subscriber contract cost to fulfill and capitalized leases, partially offset by higher depreciation of property and equipment mainly on account of capitalized expenditures for the period.

Interconnection costs increased by Php2,605 million, or 33%, to Php10,592 million, primarily due to higher international interconnection costs of PLDT Global driven by higher traffic volume.

Cost of sales and services increased by Php473 million, or 23%, to Php2,519 million, primarily due to higher cost of services, mainly from higher cost of content, and managed IT solutions and services.

Provisions decreased by Php318 million, or 12%, to Php2,353 million, primarily due to lower provision for expected credit losses, mainly on account of higher collection efficiency for Home.

Other Income (Expenses) – Net

The following table summarizes the breakdown of our total fixed line-related other income (expenses) – net for the nine months ended September 30, 2024 and 2023:


							Change
	2024			2023			Amount			%
	(amounts in million Php)
Other Income (Expenses) – Net:
Gains on derivative financial instruments – net		1,250			1,543			(293	)		(19	)
Foreign exchange gains (losses) – net		323			(492	)		815			166
Interest income		182			247			(65	)		(26	)
Equity share in net losses of associates and joint ventures		(145	)		(585	)		440			75
Financing costs – net		(5,188	)		(5,067	)		(121	)		(2	)
Other income – net		9,743			11,983			(2,240	)		(19	)
Total		6,165			7,629			(1,464	)		(19	)

Our Fixed Line business segment’s other income – net amounted to Php6,165 million for the nine months ended September 30, 2024, a decrease of Php1,464 million, or 19% from Php7,629 million in the same period in 2023, primarily due to the combined effects of the following: (i) lower other income – net by Php2,240 million mainly due to lower dividend income recognized from the subsidiaries of our Wireless business segment; (ii) lower net gains on derivative financial instruments by Php293 million; (iii) higher net financing costs by Php121 million mainly due to higher interest rates, and accretion on lease liabilities, partially offset by higher capitalized interest; (iv) lower equity share in net losses of associates and joint ventures by Php440 million; and (v) net foreign exchange gains of Php323 million for the nine months ended September 30, 2024 as against net foreign exchange losses of Php492 million in the same period in 2023 mainly on account of revaluation of net foreign currency-denominated liabilities due mainly to lower depreciation of the Philippine peso relative to the U.S. dollar for the nine months ended September 30, 2024 as compared with the same period in 2023.

Provision for Income Tax

Provision for income tax amounted to Php5,998 million for the nine months ended September 30, 2024, an increase of Php532 million, or 10%, from Php5,466 million in the same period in 2023, mainly due to higher net income before tax.

Net Income

As a result of the foregoing, our Fixed Line business segment registered a net income of Php27,116 million for the nine months ended September 30, 2024, an increase of Php1,507 million, or 6%, as compared with Php25,609 million in the same period in 2023.

EBITDA

Our Fixed Line business segment’s EBITDA increased by Php2,611 million, or 6%, to Php47,819 million for the nine months ended September 30, 2024 from Php45,208 million in the same period in 2023. EBITDA margin decreased to 50% for the nine months ended September 30, 2024 from 51% in the same period in 2023.

Core Income

Our Fixed Line business segment’s core income increased by Php655 million, or 3%, to Php26,842 million for the nine months ended September 30, 2024 from Php26,187 million in the same period in 2023, primarily due to higher EBITDA and other miscellaneous income, and lower depreciation and amortization expenses, partially offset by higher provision for income tax and financing costs.

Others

Revenues

Revenues generated from our Other business segment amounted to nil for each of the nine months ended September 30, 2024 and 2023.

Expenses

Expenses related to our Other business segment increased by Php88 million to Php103 million for the nine months ended September 30, 2024 from Php15 million in the same period in 2023.

Other Income (Expenses) – Net

The following table summarizes the breakdown of other income (expenses) – net for Other business segment for the nine months ended September 30, 2024 and 2023:


							Change
	2024			2023			Amount		%
	(amounts in million Php)
Other Income (Expenses) – Net:
Interest income		12			6			6		100
Foreign exchange losses – net		(78	)		(83	)		5		6
Equity share in net losses of associates and joint ventures		(974	)		(1,718	)		744		43
Other income – net		32			3			29		967
Total		(1,008	)		(1,792	)		784		44

Our Other business segment’s other expenses – net amounted to Php1,008 million for the nine months ended September 30, 2024, a decrease of Php784 million, or 44%, from Php1,792 million in the same period in 2023, primarily due to lower equity share in net losses of associates and joint ventures by Php744 million mainly on account of lower equity share in net losses in MIH.

Net Loss

As a result of the foregoing, our Other business segment registered a net loss of Php1,099 million for the nine months ended September 30, 2024, a decrease of Php708 million, or 39%, from Php1,807 million in the same period in 2023.

Core Loss

Our Other business segment’s core loss amounted to Php1,050 million for the nine months ended September 30, 2024, a decrease of Php627 million, or 37%, from Php1,677 million in the same period in 2023.

Liquidity and Capital Resources

The following table shows our consolidated cash flows for the nine months ended September 30, 2024 and 2023, as well as our consolidated capitalization and other consolidated selected financial data as at September 30, 2024 and December 31, 2023:


	Nine months ended September 30,
	2024			2023
	(amounts in million Php)
Cash Flows
Net cash flows provided by operating activities		68,118			65,838
Net cash flows used in investing activities		(47,207	)		(51,858	)
Payment for purchase of property and equipment, including capitalized interest		(48,676	)		(66,827	)
Net cash flows used in financing activities		(26,132	)		(17,530	)
Net decrease in cash and cash equivalents		(3,871	)		(3,739	)


	September 30,		December 31,
	2024		2023
	(amounts in million Php)
Capitalization
Long-term portion of interest-bearing financial liabilities – net of current portion:
Long-term debt		251,476		243,152

Current portion of interest-bearing financial liabilities:
Long-term debt maturing within one year		19,107		11,646
Total interest-bearing financial liabilities		270,583		254,798
Total equity attributable to equity holders of PLDT		111,683		105,218
		382,266		360,016

Other Selected Financial Data
Total assets		619,995		609,519
Property and equipment		308,216		287,103
Cash and cash equivalents		12,306		16,177
Short-term investments		102		391

Our consolidated cash and cash equivalents and short-term investments totaled Php12,408 million as at September 30, 2024. Principal sources of consolidated cash and cash equivalents in 2024 were cash flows from operating activities amounting to Php68,118 million, proceeds from availment of long-term debt of Php25,300 million, proceeds from disposal of property and equipment of Php3,480 million, mainly proceeds from the sale and leaseback of telecom towers, interest received of Php700 million and proceeds from redemption of investment in debt securities of Php200 million. These funds were used principally for: (1) purchase of property and equipment, including capitalized interest, of Php48,676 million; (2) cash dividends paid of Php20,744 million; (3) long-term debt principal and interest payments of Php10,084 million and Php7,285 million, respectively;
(4) settlement of obligations under lease liabilities of Php8,994 million; (5) payment for redemption of perpetual notes of Php4,200 million; and (6) payments for acquisition of investments in associates and joint ventures of Php3,692 million, mainly PLDT's respective investments in Radius Telecom Inc. (“Radius”) and Kayana, and PCEV's additional investment in MIH.

Our consolidated cash and cash equivalents and short-term investments totaled Php21,744 million as at September 30, 2023. Principal sources of consolidated cash and cash equivalents in 2023 were cash flows from operating activities amounting to Php65,838 million, proceeds from availment of long-term debt of Php35,000 million, proceeds from disposal of property of equipment of Php14,263 million, mainly proceeds from the sale and leaseback of telecom towers, interest received of Php706 million and proceeds from maturity of short-term investments of Php440 million. These funds were used principally for:
(1) purchase of property and equipment, including capitalized interest, of Php66,827 million; (2) cash dividends paid of Php23,313 million; (3) long-term debt principal and interest payments of Php8,975 million and Php6,831 million, respectively;
(4) settlement of obligations under lease liabilities of Php7,993 million; (5) payment of short-term debt of Php4,000 million; and (6) settlement of derivative financial instruments of Php1,042 million.

Operating Activities

Our consolidated net cash flows provided by operating activities increased by Php2,280 million, or 3%, to Php68,118 million for the nine months ended September 30, 2024 from Php65,838 million in the same period in 2023 primarily due to lower prepayments, higher operating income and lower payments on pension and other employee benefits, partially offset by lower level of collection of receivables.

Cash flows provided by operating activities of our Wireless business segment decreased by Php11,339 million, or 23%, to Php38,388 million for the nine months ended September 30, 2024 from Php49,727 million in the same period in 2023, primarily due to higher level of settlement of accounts payable, lower level of collection of receivables and lower operating income, partially offset by lower level of settlement of accrued expenses and other current liabilities, and lower prepayments. Cash flows provided by operating activities of our Fixed Line business segment increased by Php1,568 million, or 4%, to Php36,758 million for the nine months ended September 30, 2024 from Php35,190 million in the same period in 2023, primarily due to higher operating income, lower settlement of accrued expenses and other current liabilities, and lower payment of pension and other employee benefits, partially offset by lower level of collection of accounts receivable, higher level of settlement of accounts payable and higher prepayments. Cash flows provided by operating activities of our Other business segment amounted to Php2,161 million for the nine months ended September 30, 2024, a change of Php3,146 million from cash flows used in operating activities of Php985 million in the same period in 2023, primarily due to lower level of settlement of accounts payable and higher level of collection of receivables.

Investing Activities

Consolidated net cash flows used in investing activities amounted to Php47,207 million for the nine months ended September 30, 2024, a decrease of Php4,651 million, or 9%, from Php51,858 million in the same period in 2023, primarily due to the combined effects of the following: (1) lower payment for purchase of property and equipment, including capitalized interest, by Php18,151 million; (2) proceeds from redemption of investment in debt securities of Php200 million in 2024; (3) lower net proceeds from maturity of short-term investments by Php93 million; (4) higher payments for acquisition of investments in associates and joint ventures by Php3,620 million, mainly PLDT's respective investments in Radius and Kayana, and PCEV's additional investment in MIH; and (5) lower proceeds from disposal of property and equipment by Php10,783 million, mainly lower proceeds from the sale and leaseback of telecom towers.

Our consolidated payment for purchase of property and equipment, including capitalized interest, for the nine months ended September 30, 2024 totaled Php48,676 million, a decrease of Php18,151 million, or 27%, as compared with Php66,827 million in the same period in 2023. Smart’s payment for purchase of property and equipment, including capitalized interest, decreased by Php16,405 million, or 41%, to Php23,397 million for the nine months ended September 30, 2024 from Php39,802 million in the same period in 2023. PLDT’s payment for purchase of property and equipment, including capitalized interest, decreased by Php4,711 million, or 19%, to Php19,977 million for the nine months ended September 30, 2024 from Php24,688 million in the same period in 2023. The balance represents other subsidiaries’ capital spending.

As part of our growth strategy, we may from time to time, continue to make acquisitions and investments in companies or businesses.

Financing Activities

On a consolidated basis, cash flows used in financing activities amounted to Php26,132 million for the nine months ended September 30, 2024, an increase of Php8,602 million, or 49%, from Php17,530 million in the same period in 2023, primarily due to the combined effects of the following: (1) lower proceeds from availment of long-term debt by Php9,700 million; (2) payment for redemption of perpetual notes of Php4,200 million in 2024; (3) higher payment of long-term debt by Php1,109 million;
(4) higher settlement of obligations under capital lease by Php1,001 million; (5) payment of short-term debt of Php4,000 million in 2023; (6) lower cash dividends paid by Php2,569 million; and (7) collection from derivative financial instruments of Php84 million in 2024 as against settlement of Php1,042 million in 2023.

Debt Financing

Proceeds from availment of long-term debt for the nine months ended September 30, 2024 amounted to Php25,300 million mainly from PLDT, Smart and ePLDT's drawings related to refinancing of maturing debt obligations, financing of capital expenditure requirements, and redemption of Smart's perpetual notes. Payments of principal on long-term debt amounted to Php10,084 million, while payments of interest on our total debt amounted to Php7,242 million for the nine months ended September 30, 2024.

Our consolidated long-term and short-term debts increased by Php15,785 million, or 6%, to Php270,583 million as at September 30, 2024 from Php254,798 million as at December 31, 2023 primarily due to drawings from our long-term facilities and the revaluation of foreign currency-denominated debt, partially offset by debt amortizations. As at September 30, 2024, PLDT’s long-term and short-term debt level increased by Php8,732 million, or 6%, to Php164,604 million from Php155,872 million as at December 31, 2023, Smart’s long-term and short-term debt level increased by Php5,619 million, or 6%, to Php99,581 million as at September 30, 2024 from Php93,962 million as at December 31, 2023, and ePLDT's long-term debt level increased by Php1,434 million, or 29%, to Php6,398 million from Php4,964 million as at December 31, 2023.

See Note 20 – Interest-bearing Financial Liabilities – Long-term Debt to the accompanying unaudited consolidated financial statements for a more detailed discussion of our long-term and short-term debts.

Debt Covenants

Our consolidated debt instruments contain restrictive covenants, including covenants that require us to comply with specified financial ratios and other financial tests, calculated in conformity with PFRS, at relevant measurement dates, principally at the end of each quarterly period. We have complied with all of our maintenance financial ratios as required under our loan covenants and other debt instruments.

As at September 30, 2024 and December 31, 2023, we are in compliance with all of our debt covenants.

See Note 20 – Interest-bearing Financial Liabilities – Compliance with Debt Covenants to the accompanying unaudited consolidated financial statements for a more detailed discussion of our debt covenants.

Financing Requirements

We believe that our available cash, including cash flows from operations, will provide sufficient liquidity to fund our projected operating, investment, capital expenditures and debt service requirements for the next 12 months; however, we may finance a portion of these from external sources if we consider it prudent to do so.

The following table shows the dividends declared to shareholders for the nine months ended September 30, 2024 and 2023:

Date

Amount

Class

Approved

Record

Payable

Per Share

Total

(in million Php, except per share amount)

For the nine months ended September 30, 2024

Common

Regular Dividend

March 7, 2024

March 21, 2024

April 5, 2024

9,938

August 13, 2024

August 27, 2024

September 11, 2024

10,804

Preferred

Series IV Cumulative Non-convertible
Redeemable Preferred Stock(1)

January 30, 2024

February 14, 2024

March 15, 2024

—

May 9, 2024

May 24, 2024

June 15, 2024

—

August 13, 2024

August 28, 2024

September 15, 2024

—

Voting Preferred Stock

March 21, 2024

April 5, 2024

April 15, 2024

—

June 11, 2024

June 28, 2024

July 15, 2024

—

August 13, 2024

September 16, 2024

October 15, 2024

—

Charged to Retained Earnings

20,786

For the nine months ended September 30, 2023

Common

Regular Dividend

March 23, 2023

April 11, 2023

April 24, 2023

9,722

August 3, 2023

August 17, 2023

September 4, 2023

10,587

Special Dividend

March 23, 2023

April 11, 2023

April 24, 2023

3,025

Preferred

Series IV Cumulative Non-convertible
Redeemable Preferred Stock(1)

January 31, 2023

February 27, 2023

March 15, 2023

—

May 4, 2023

May 19, 2023

June 15, 2023

—

August 3, 2023

August 19, 2023

September 15, 2023

—

Voting Preferred Stock

March 2, 2023

March 17, 2023

April 15, 2023

—

June 13, 2023

June 28, 2023

July 15, 2023

—

August 29, 2023

September 13, 2023

October 15, 2023

—

Charged to Retained Earnings

23,378

(1)

Dividends were declared based on total amount paid up.

Our dividends declared after September 30, 2024 are as follows:

Date

Amount

Class

Approved

Record

Payable

Per Share

Total

(in million Php, except per share amount)

Preferred

Series IV Cumulative Non-convertible
Redeemable Preferred Stock(1)

November 12, 2024

November 28, 2024

December 15, 2024

—

Charged to Retained Earnings

(1)

Dividends were declared based on total amount paid up.

See Note 19 – Equity to the accompanying unaudited consolidated financial statements for further details.

Changes in Financial Conditions

Assets

Our total assets amounted to Php619,995 million as at September 30, 2024, an increase of Php10,476 million, or 2%, from Php609,519 million as at December 31, 2023, primarily due to higher noncurrent assets by Php15,788 million, or 3%, partially offset by lower current assets by Php5,312 million, or 8%.

Noncurrent Assets

Property and equipment increased by Php21,113 million, or 7%, mainly due to capital expenditures, partially offset by depreciation and disposal for the period including sale to tower companies.

Right-of-use assets increased by Php4,593 million, or 14%, mainly due to the leaseback of telecom assets sold to tower companies, partially offset by depreciation for the period.

Investments in associates and joint ventures increased by Php2,269 million, or 5%, mainly due to investments in Radius, Kayana and MIH, partially offset by equity share in net losses of MIH and other associates and joint ventures.

Deferred income tax assets decreased by Php4,296 million, or 24%, mainly due to lower deferred tax on unearned revenues and unamortized past service pension costs.

Other noncurrent assets decreased by Php7,891 million, or 5%, mainly due to lower advances to suppliers and contractors.

Current Assets

Cash and cash equivalents decreased by Php3,871 million, or 24%, mainly due to the combined effects of cash flows provided by operating activities of Php68,118 million, cash flows used in investing activities of Php47,207 million, and cash flows used in financing activities of Php26,132 million.

Trade and other receivables increased by Php2,510 million, or 10%, mainly due to higher receivables from retail and corporate subscribers, and receivables from dealers, agents and others.

Inventories and supplies decreased by Php1,355 million, or 41%, mainly due to net issuances of commercial inventories.

Other current assets decreased by Php2,596 million, or 11%, mainly due to lower assets classified as held-for-sale.

Liabilities

Our total liabilities amounted to Php507,064 million as at September 30, 2024, an increase of Php7,931 million, or 2%, from Php499,133 million as at December 31, 2023, primarily due to higher noncurrent liabilities by Php11,184 million, or 4%, partially offset by lower current liabilities by Php3,253 million, or 2%.

Noncurrent and current interest-bearing financial liabilities increased by Php15,785 million, or 6%, primarily due to drawings from our long-term facilities and the revaluation of foreign currency-denominated debt, partially offset by debt amortizations.

Other noncurrent liabilities increased by Php2,860 million, or 5%, primarily due to higher lease liabilities – net of current portion, partially offset by lower pension and other employee benefits.

Accounts payable decreased by Php6,060 million, or 7%, primarily due to lower payables to suppliers and contractors.

Other current liabilities decreased by Php4,654 million, or 4%, primarily due to lower income tax payable and accrued expenses and other current liabilities.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have any current or future effect on our financial position, results of operations, cash flows, changes in stockholders’ equity, liquidity, capital expenditures or capital resources that are material to investors.

Equity Financing

The PLDT Board of Directors approved the amendment of our dividend policy on August 2, 2016, reducing our dividend payout rate to 60% of our core earnings per share as regular dividends. This was in view of our elevated capital expenditures to build-out a robust, superior network to support the continued growth of data traffic, plans to invest in new adjacent businesses that will complement the current business and provide future sources of profits and dividends, and management of our cash and gearing

levels. We began basing our dividend payout on telco core income in 2019. In declaring dividends, we take into consideration the interest of our shareholders, as well as our working capital, capital expenditures and debt servicing requirements. The retention of earnings may be necessary to meet the funding requirements of our business expansion and development programs. Depending on business funding requirements and investment opportunities, we may consider the option of returning additional cash to our shareholders in the form of special dividends of up to the balance of our core earnings or to undertake share buybacks. We were able to pay out approximately 100% of our core earnings for seven consecutive years from 2007 to 2013, approximately 90% of our core earnings for 2014, 75% of our core earnings for 2015, 60% of our core earnings from 2016 to 2018, and 60% of our telco core income from 2019 to 2023. In addition, we paid special dividends of 28% of our telco core earnings in 2022, bringing the total payout ratio to 88% for that year. The accumulated equity in the net earnings of our subsidiaries, which form part of our retained earnings, are not available for distribution unless realized in the form of dividends from such subsidiaries. Dividends are generally paid in Philippine pesos. In the case of shareholders residing outside the Philippines, PLDT’s transfer agent in Manila, Philippines, as the dividend-disbursing agent, converts the Philippine peso dividends into U.S. dollars at the prevailing exchange rate and remits the dollar dividends abroad, net of any applicable withholding tax and fees, in the case of the American Depositary Shares (“ADS”).

Our subsidiaries pay dividends subject to the requirements of applicable laws and regulations and availability of unrestricted retained earnings, without any restriction imposed by the terms of contractual agreements. Notwithstanding the foregoing, the subsidiaries of PLDT may, at any time, declare and pay such dividends depending upon the results of operations and future projects and plans, the respective subsidiary’s earnings, cash flow, financial condition, capital investment requirements and other factors.

Consolidated cash dividend payments amounted to Php20,744 million for the nine months ended September 30, 2024 as compared with Php23,313 million paid to shareholders in the same period in 2023.

Contractual Obligations and Commercial Commitments

Contractual Obligations

Various Trade and Other Obligations

PLDT Group has various obligations to suppliers for the acquisition of network equipment, contractors for services rendered on various projects, foreign administrations and domestic carriers for the access charges, shareholders for unpaid dividends distributions, employees for benefits and other related obligations, and various business and operational related agreements. Total obligations under these various agreements amounted to approximately Php140,850 million and Php151,062 million as at September 30, 2024 and December 31, 2023, respectively. See Note 22 – Accounts Payable and Note 23 – Accrued Expenses and Other Current Liabilities to the accompanying unaudited consolidated financial statements.

Commercial Commitments

Major Network Vendors

Since the last quarter of 2022, we have engaged in discussions with major network vendors regarding the status of the PLDT Group’s capital expenditure commitments and related outstanding balances. These discussions resulted in a number of Settlement and Mutual Release Agreements, or SMRAs, signed between us and the vendors, taking into consideration our program priorities and current business requirements. The significant commitment in respect of major network vendors amounted to about Php33,000 million, net of advances, as a result of the signing of the SMRAs in March 2023. As at September 30, 2024, such commitment has been reduced to Php4,200 million, net of advances and deliveries.

Moreover, new purchase orders relating to the same major network vendors issued in 2023 and 2024 amounted to Php16,600 million, net of advances and deliveries.

Other Capital Expenditure Vendors

Commitments related to non-major capital expenditure vendors amounted to Php19,600 million, net of advances and deliveries as of September 30, 2024.

We have no outstanding commercial commitments, in the form of letters of credit, as at September 30, 2024 and December 31, 2023.

Quantitative and Qualitative Disclosures about Market Risks

The main risks arising from our financial instruments are liquidity risk, foreign currency exchange risk, interest rate risk and credit risk. The importance of managing those risks has significantly increased in light of the considerable change and volatility in both the Philippine and international financial markets. Our Board of Directors reviews and approves policies for managing each of these risks. We also monitor the market price risk arising from all financial instruments.

For further discussions of these risks, see Note 27 – Financial Assets and Liabilities to the accompanying unaudited consolidated financial statements.

The following table sets forth the estimated consolidated fair values of our financial assets and liabilities recognized as at September 30, 2024 and December 31, 2023 other than those whose carrying amounts are reasonable approximations of fair values:


	Fair Values
	September 30,		December 31,
	2024		2023
	(amounts in million Php)
Noncurrent Financial Assets
Debt instruments at amortized cost		366		387
Other financial assets – net of current portion		2,687		3,184
Total noncurrent financial assets		3,053		3,571
Noncurrent Financial Liabilities
Interest-bearing financial liabilities		241,755		232,195
Customers’ deposits		1,439		1,425
Deferred credits and other noncurrent liabilities		177		225
Total noncurrent financial liabilities		243,371		233,845

The following table sets forth the amount of gains (losses) recognized for the financial assets and liabilities for the nine months ended September 30, 2024 and six months ended June 30, 2024:


	September 30,			June 30,
	2024			2024
	(amounts in million Php)
Profit and Loss
Interest income		718			497
Gains on derivative financial instruments – net		2,066			3,404
Accretion on financial liabilities		(275	)		(181	)
Interest on loans and other related items		(9,870	)		(6,429	)
Other Comprehensive Income
Net fair value losses on cash flow hedges – net of tax		(910	)		(762	)

Impact of Inflation and Changing Prices

Inflation can be a significant factor in the Philippine economy and we are continually seeking ways to minimize its impact. The average inflation rate in the Philippines for the nine months ended September 30, 2024 and 2023 were 3.4% and 6.6%, respectively. The BSP’s latest estimates indicate that the average inflation will be at 3% to 4% in 2024. The risks to the inflation outlook are continuing constraints in the supply of key food items, the adverse impact of climate change on food and electricity prices, and the effects of potential increases in transport fares and minimum wages. Alternatively, a weaker global economic recovery may cause inflation for 2024 to be lower than the forecasts.

PART II – OTHER INFORMATION

Green Loan and Social Loan Facilities

On March 6 and May 7, 2024, PLDT secured Php1.0 billion and Php4.0 billion Green Loan Facilities from HSBC Philippines and Metropolitan Bank & Trust Company, respectively, to partially fund the company’s ongoing nationwide modernization and expansion of its fiber network. The upgrade of the network to fiber and the resultant energy-efficient operations support the PLDT Group decarbonization roadmap, which aims to reduce its Scope 1 and Scope 2 greenhouse gas emissions by 40% by 2030, from a 2019 baseline.

On October 23, 2024, PLDT secured a Php2.0 billion Social Loan Facility from HSBC Philippines to partially fund the company’s network fiber expansion to reach the country's fourth to sixth class municipalities. This initiative aligns with the government’s focus on enhancing connectivity in Geographically Isolated and Disadvantaged Areas.

Investment in Kayana

In February 2024, PLDT invested in Kayana to serve as a digital entity designed to harness the data assets of the MVP Group of Companies (“MVP Group”) and provide a platform for a Group-wide digitalization initiative. This collaboration marks the first step in a collective effort aimed at creating new growth opportunities and value within the MVP Group.

Kayana will leverage a technology platform capable of enabling the MVP Group to scale operations and achieve seamless integration of services and capabilities. Additionally, payments and rewards systems are expected to play a pivotal role in enhancing the overall user experience.

As of September 27, 2024, PLDT has invested Php840 million in Kayana representing 840 million common shares, or 60% equity interest, including subscription payable of Php288 million.

On September 30, 2024, Kayana entered into share subscription agreements with its shareholders, wherein PLDT subscribed to additional shares valued at Php46.5 million. As a result, PLDT’s equity ownership in Kayana stood at 45%, leading to its reclassification as an investment in associate.

Investment in Radius

On April 30, 2024, PLDT Inc. invested Php2,116 million in 2,491,516 common shares, or 34.9% equity interest in Radius. This strategic investment aims to enhance PLDT’s market share through an integrated alignment of solution capabilities and expanded market coverage.

Investment in Class C2 Convertible Preference Shares in MIH

On April 5, 2024, PCEV paid the subsequent consideration of US$15.3 million or Php857 million for 6.7 million MIH Class C2 convertible preferred shares and received warrants for 2.7 million MIH Class C2 convertible preferred shares valued at Php152 million, resulting in an increase of PCEV’s ownership in MIH from 36.97% to 37.66%.

Investment of PCEV in Maya Bank

On February 15, 2024, PCEV entered into additional subscription agreements with Voyager Finserve Corporation (“VFC”) and Paymaya Finserve Corporation (“PFC”) (collectively known as Bank Holdcos) to subscribe to 5.3 million Common B Shares each at a subscription price of Php0.10 per share, representing 60% voting rights and 1.48% economic interest in the Bank HoldCos.

On April 19 and 26, 2024, PCEV entered into two new subscription agreements with VFC and PFC to subscribe a total of 25.1 million Common B Shares each at a subscription price of Php0.10 per share, representing 60% voting rights and 1.48% economic interest in the Bank HoldCos.

Class Action Suit Against PLDT

On February 6, 2023, Sophia Olsson, an investor in PLDT ADSs, filed a putative class action in the United States District Court for the Central District of California (the “Court”) against PLDT and certain current and former directors and officers on behalf of herself and all other persons similarly situated who purchased or otherwise acquired ADSs between January 1, 2019 and December 19, 2022 (“U.S. Class Action”). On April 7, 2023, Ms. Olsson and another individual, Kevin Douglas, submitted separate motions to the Court to serve as lead plaintiff in the U.S. Class Action. On May 1, 2023, the Court granted Mr. Douglas’s (“Plaintiff”) motion to serve as the lead plaintiff.

On July 7, 2023, Plaintiff filed an amended complaint. The amended complaint alleges that PLDT and certain of its current and former directors and officers made materially false and misleading statements regarding PLDT’s capital expenditures and internal controls (among other matters) during the period April 23, 2020 through December 19, 2022. On October 10, 2023, PLDT and defendants Manuel V. Pangilinan, Alfredo S. Panlilio, and Marilyn A. Victorio-Aquino (together, “Defendants”) moved for dismissal of the amended complaint in its entirety.

On December 1, 2023, Defendants and Plaintiff notified the Court that they had reached an agreement in principle to settle the U.S. Class Action. The notification indicated that, accordingly, Defendants and Plaintiff jointly sought to vacate the schedule for further briefing on PLDT’s pending motion to dismiss to allow the parties to finalize the settlement. On December 4, 2023, the Court granted the request to vacate the briefing schedule.

On February 16, 2024, PLDT entered into a Stipulation of Settlement to resolve the U.S. Class Action, and on the same day Plaintiff submitted a motion seeking preliminary approval of the proposed settlement. Under the proposed settlement, which is subject to approval by the Court following notice to the settlement class, the settlement class will receive payment of a settlement amount of $3,000,000. The proposed settlement agreement contains no admission of liability, fault or wrongdoing by the Company or any of the named defendants. On March 7, 2024, the Court entered an order preliminarily approving the proposed settlement and scheduling a hearing for August 5, 2024 to determine whether to finally approve the settlement.

On June 6, 2024, the Court rescheduled the final approval hearing from August 5, 2024 to August 9, 2024. On August 9, 2024, following Plaintiff’s filing of a motion for final approval of the settlement (together with other motions relating to Plaintiff’s proposed plan for allocating settlement proceeds, attorneys’ fees for counsel for the class, litigation expenses and an award for Plaintiff), the Court held a hearing to address whether to grant final approval of the settlement. After counsel for the class orally presented these motions, the Court reserved judgment.

On September 17, 2024, the Court granted final approval to PLDT's case-ending settlement of securities class action litigation. The Judgment and Order of the Court provides that the Court will retain jurisdiction over (among other matters) implementation of the settlement and the distribution and disposition of the settlement fund. There is a 30-day period to appeal but any such appeal by a class member on the Plan of Allocation or the amount of attorney's fees will not affect the finality of the Judgment and Order as to the approval of the Settlement vis-a-vis PLDT and the individual defendants. Given that the 30-day period expired with no appeal on record, the case is now considered closed and terminated.

Sale of Interest in Multisys

On January 5, 2024, Philippine Global Investment Holdings, Inc. (“PGIH”) entered into a Share Purchase Agreement for the sale of 227 common shares of Multisys, representing a 4.99% equity interest, for a total consideration of Php270 million. The sale transaction was completed and fully paid on January 12, 2024. Following this sale, PGIH retained ownership of 2,080 common shares representing 45.73% equity interest in Multisys. Pursuant to the Third Restated Shareholders’ and related Amendment Agreement signed on January 30, 2024 and March 1, 2024, respectively, PGIH remains entitled to nominate three out of the five directors in Multisys who manage and control the operations of Multisys. Consequently, the results of operations and financial position of Multisys will continue to be consolidated with the PLDT Group.

For updates on matters relating to the (1) Sale and Leaseback of Telecom Towers, see Note 9 – Property and Equipment and
Note 10 – Leases; (2) Notice of Material Breach and Demand for Payment on Dito, see Note 26 – Provisions and Contingencies;
(3) Department of Labor and Employment (“DOLE”) Compliance Order to PLDT, and other pending cases, see Note 26 – Provisions and Contingencies; and (4) Petition against the Philippine Competition Commission, see Note 11 – Investment in Associates and Joint Ventures, to the accompanying unaudited consolidated financial statements.

Related Party Transactions

For a detailed discussion of the related party transactions, see Note 24 – Related Party Transactions to the accompanying unaudited consolidated financial statements.

ANNEX I – AGING OF ACCOUNTS RECEIVABLE

The following table shows the aging of our consolidated receivables as at September 30, 2024:


Type of Accounts Receivable	Total		Current		31-60 Days		61-90 Days		Over 91 Days
	(amounts in million Php)
Retail subscribers		21,038		10,236		623		98		10,081
Corporate subscribers		18,319		5,056		3,681		873		8,709
Foreign administrations		1,068		655		249		19		145
Domestic carriers		297		155		75		29		38
Dealers, agents and others		7,066		3,573		146		172		3,175
Total		47,788		19,675		4,774		1,191		22,148
Less: Allowance for expected credit losses		19,192
Total Receivables – net		28,596

A-1

ANNEX II – Financial Soundness Indicators

The following table shows our financial soundness indicators as at September 30, 2024 and December 31, 2023:


	2024			2023
Current Ratio(1)	0.34:1.0			0.36:1.0
Acid Test Ratio(2)	0.21:1.0			0.22:1.0
Solvency Ratio(3)	0.34:1.0			0.35:1.0
Net Debt to Equity Ratio(4)	2.33:1.0			2.28:1.0
Net Debt to EBITDA Ratio(5)	2.44:1.0			2.30:1.0
Total Debt to EBITDA Ratio(6)	2.56:1.0			2.46:1.0
Asset to Equity Ratio(7)	5.55:1.0			5.79:1.0
Total Debt to Equity Ratio(8)	82:18			82:18
Interest Coverage Ratio(9)	4.28:1.0			4.50:1.0
Net Profit Margin(10)		13	%		13	%
Return on Assets(11)		4	%		4	%
Return on Equity(12)		25	%		25	%
EBITDA Margin(13)		52	%		52	%

(1)

Current ratio is measured as current assets divided by current liabilities.

(2)

Acid test ratio is measured as total of cash and cash equivalents, short-term investments and trade and other receivables divided by total current liabilities.

(3)

Solvency ratio is measured by adding back non-cash expenses to the net income after tax divided by total debt (long-term debt, including current portion.)

(4)

Net Debt to equity ratio is measured as total debt (principal amount of long-term debt, including current portion, i.e., excluding debt issuance cost) less cash and cash equivalents, short-term investments and debt instruments at amortized cost divided by total equity attributable to equity holders of PLDT.

(5)

Net Debt to EBITDA ratio is measured as total debt (principal amount of long-term debt, including current portion, i.e., excluding debt issuance cost) less cash and cash equivalents, short-term investments and debt instruments at amortized cost divided by EBITDA for the last 12 months.

(6)

Total Debt to EBITDA ratio is measured as total debt (principal amount of long-term debt, including current portion, i.e., excluding debt issuance cost) divided by EBITDA for the last 12 months.

(7)

Asset to equity ratio is measured as total assets divided by total equity attributable to equity holders of PLDT.

(8)

Total debt to equity ratio is the ratio between total liabilities to total equity, including non-controlling interest.

(9)

Interest coverage ratio is measured by EBIT, or earnings before interest and taxes for the last 12 months, divided by total financing cost less interest income for the last 12 months.

(10)

Net profit margin is derived by dividing net income for the last 12 months with total revenues for the last 12 months.

(11)

Return on assets is measured as net income attributable to equity holders of PLDT for the last 12 months divided by average total assets.

(12)

Return on Equity is measured as net income attributable to equity holders of PLDT for the last 12 months divided by average total equity attributable to equity holders of PLDT.

(13)

EBITDA margin is measured as EBITDA for the last 12 months divided by service revenues for the last 12 months.

EBITDA for the period is measured as net income for the period excluding depreciation and amortization, amortization of intangible assets, asset impairment on noncurrent assets, financing cost, 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, MRP and non-recurring income (expenses) for the period.

A-2

SIGNATURES

Pursuant to the requirements of the Securities Regulation Code, the registrant has duly caused this report for the third quarter of 2024 to be signed on its behalf by the undersigned thereunto duly authorized.


Registrant: PLDT Inc.


Signature and Title:	/s/ Manuel V. Pangilinan
	Manuel V. Pangilinan
	Chairman, President and Chief Executive Officer


Signature and Title:	/s/ Danny Y. Yu
	Danny Y. Yu
	Senior Vice President and PLDT Group Chief Financial Officer
	(Principal Financial Officer)


Signature and Title:	/s/ Gil Samson D. Garcia
	Gil Samson D. Garcia
	First Vice President
	(Principal Accounting Officer)
Date: November 12, 2024

S-1

PLDT INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS AT SEPTEMBER 30, 2024 (UNAUDITED) AND DECEMBER 31, 2023 (AUDITED)

AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (UNAUDITED)

F-1

PLDT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at September 30, 2024 and December 31, 2023

(in million pesos)


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
ASSETS
Noncurrent Assets
Property and equipment (Notes 2, 9 and 21)		308,216			287,103
Right-of-use assets (Note 10)		37,310			32,717
Investments in associates and joint ventures (Note 11)		52,577			50,308
Financial assets at fair value through profit or loss (Note 27)		1,139			578
Debt instruments at amortized cost – net of current portion (Note 12)		370			395
Investment properties (Note 13)		846			1,315
Goodwill and intangible assets (Note 14)		64,334			64,335
Deferred income tax assets – net (Note 7)		13,876			18,172
Derivative financial assets – net of current portion (Note 27)		232			96
Prepayments and other nonfinancial assets – net of current portion (Notes 2, 18, 24 and 25)		72,903			80,365
Contract assets – net of current portion (Note 5)		546			531
Other financial assets – net of current portion (Note 27)		2,835			3,481
Total Noncurrent Assets		555,184			539,396
Current Assets
Cash and cash equivalents (Note 15)		12,306			16,177
Short-term investments (Note 27)		102			391
Trade and other receivables (Note 16)		28,596			26,086
Inventories and supplies (Note 17)		1,985			3,340
Current portion of contract assets (Note 5)		1,502			1,387
Current portion of derivative financial assets (Note 27)		11			—
Current portion of debt instruments at amortized cost (Note 12)		25			200
Current portion of prepayments and other nonfinancial assets (Notes 18 and 24)		12,249			13,215
Current portion of other financial assets (Notes 19 and 27)		847			320
		57,623			61,116
Assets classified as held-for-sale (Notes 9 and 10)		7,188			9,007
Total Current Assets		64,811			70,123
TOTAL ASSETS		619,995			609,519

EQUITY AND LIABILITIES
Equity
Non-voting serial preferred stock (Note 19)		360			360
Voting preferred stock (Note 19)		150			150
Common stock (Note 19)		1,093			1,093
Treasury stock (Note 19)		(6,505	)		(6,505	)
Capital in excess of par value (Note 19)		130,312			130,312
Retained earnings (Note 19)		29,304			22,020
Other comprehensive loss (Note 6)		(43,031	)		(42,212	)
Total Equity Attributable to Equity Holders of PLDT		111,683			105,218
Noncontrolling interests (Note 19)		1,248			5,168
TOTAL EQUITY		112,931			110,386

See accompanying Notes to Consolidated Financial Statements.

F-2

PLDT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (continued)

As at September 30, 2024 and December 31, 2023

(in million pesos)


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
Noncurrent Liabilities
Interest-bearing financial liabilities – net of current portion (Note 20)		251,476		243,152
Lease liabilities – net of current portion (Note 10)		45,477		41,625
Deferred income tax liabilities – net (Note 7)		30		165
Derivative financial liabilities – net of current portion (Note 27)		—		12
Customers’ deposits (Note 27)		2,255		2,238
Pension and other employee benefits (Note 25)		4,578		5,661
Deferred credits and other noncurrent liabilities (Notes 5 and 21)		9,828		9,607
Total Noncurrent Liabilities		313,644		302,460
Current Liabilities
Accounts payable (Note 22)		74,954		81,014
Accrued expenses and other current liabilities (Notes 23 and 26)		85,849		88,750
Current portion of interest-bearing financial liabilities (Note 20)		19,107		11,646
Current portion of lease liabilities (Note 10)		7,098		5,921
Dividends payable (Note 19)		2,004		1,912
Current portion of derivative financial liabilities (Note 27)		413		1,021
Income tax payable		2,267		4,630
		191,692		194,894
Liabilities associated with assets classified as held-for-sale (Note 10)		1,728		1,779
Total Current Liabilities		193,420		196,673
TOTAL LIABILITIES		507,064		499,133
TOTAL EQUITY AND LIABILITIES		619,995		609,519

See accompanying Notes to Consolidated Financial Statements.

F-3

PLDT INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

For the Nine Months Ended September 30, 2024 and 2023

(in million pesos, except earnings per common share amounts which are in pesos)


	For the Nine Months Ended					For the Three Months Ended
	September 30,					September 30,
	2024		2023			2024		2023
	(Unaudited)					(Unaudited)
CONTINUING OPERATIONS
REVENUES FROM CONTRACTS WITH CUSTOMERS
Service revenues (Note 5)		154,995		149,752			51,552		50,501
Non-service revenues (Note 5)		5,947		6,604			1,807		1,817
		160,942		156,356			53,359		52,318
EXPENSES
Selling, general and administrative expenses (Notes 5 and 18)		58,735		58,889			18,990		19,056
Depreciation and amortization (Notes 9, 10 and 18)		37,162		36,044			12,881		12,094
Cost of sales and services (Note 5)		10,019		10,902			3,174		3,212
Asset impairment (Note 5)		3,069		3,289			1,020		1,142
Interconnection costs		10,102		7,463			3,556		2,743
		119,087		116,587			39,621		38,247
		41,855		39,769			13,738		14,071

OTHER EXPENSES – NET (Note 5)		4,792		2,225			978		1,301

INCOME BEFORE INCOME TAX FROM CONTINUING OPERATIONS		37,063		37,544			12,760		12,770

PROVISION FOR INCOME TAX (Note 7)		8,839		9,533			3,053		3,295
NET INCOME FROM CONTINUING OPERATIONS (Note 4)		28,224		28,011			9,707		9,475

NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS (Notes 2, 4 and 8)		—		(13	)		—		16
NET INCOME (Note 4)		28,224		27,998			9,707		9,491
ATTRIBUTABLE TO:
Equity holders of PLDT (Note 8)		28,070		27,879			9,657		9,428
Noncontrolling interests		154		119			50		63
		28,224		27,998			9,707		9,491
Earnings Per Share Attributable to Common Equity Holders of PLDT (Notes 4 and 8)
Basic		129.71		128.83			44.62		43.56
Diluted		129.71		128.83			44.62		43.56
Earnings Per Share from Continuing Operations Attributable to Common Equity Holders of PLDT (Notes 4 and 8)
Basic		129.71		128.89			44.62		43.49
Diluted		129.71		128.89			44.62		43.49

See accompanying Notes to Consolidated Financial Statements.

F-4

PLDT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2024 and 2023

(in million pesos)


	For the Nine Months Ended						For the Three Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
NET INCOME		28,224			27,998			9,707			9,491
OTHER COMPREHENSIVE INCOME (LOSS) – NET OF TAX (Note 6)
Foreign currency translation differences of subsidiaries		66			—			62			(90	)
Net transactions on cash flow hedges:		(910	)		(1,245	)		(148	)		(505	)
Net fair value losses on cash flow (Note 27)		(1,214	)		(1,660	)		(198	)		(673	)
Income tax related to fair value adjustments charged directly to equity (Note 7)		304			415			50			168
Net other comprehensive loss to be reclassified to profit or loss in subsequent years		(844	)		(1,245	)		(86	)		(595	)
Actuarial gains (losses) on defined benefit obligations:		(10	)		155			1			67
Remeasurement in actuarial gains (losses) on defined benefit obligations (Note 25)		(42	)		155			—			67
Income tax related to remeasurement adjustments (Note 7)		32			—			1			—
Net other comprehensive income (loss) not to be reclassified to profit or loss in subsequent years		(10	)		155			1			67
Total Other Comprehensive Loss – Net of Tax		(854	)		(1,090	)		(85	)		(528	)
TOTAL COMPREHENSIVE INCOME		27,370			26,908			9,622			8,963
ATTRIBUTABLE TO:
Equity holders of PLDT		27,251			26,791			9,573			8,897
Noncontrolling interests		119			117			49			66
		27,370			26,908			9,622			8,963

See accompanying Notes to Consolidated Financial Statements.

F-5

PLDT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Nine Months Ended September 30, 2024 and 2023

(in million pesos)


	Preferred Stock		Common Stock		Treasury Stock			Capital in Excess of Par Value		Retained Earnings			Other Comprehensive Loss			Total Equity Attributable to Equity Holders of PLDT			Noncontrolling Interests			Total Equity
Balances as at January 1, 2024		510		1,093		(6,505	)		130,312		22,020			(42,212	)		105,218			5,168			110,386
Cash dividends (Note 19)		—		—		—			—		(20,786	)		—			(20,786	)		(50	)		(20,836	)
Total comprehensive income (loss):		—		—		—			—		28,070			(819	)		27,251			119			27,370
Net income (Note 8)		—		—		—			—		28,070			—			28,070			154			28,224
Other comprehensive loss (Note 6)		—		—		—			—		—			(819	)		(819	)		(35	)		(854	)
Acquisition and dilution of noncontrolling interests		—		—		—			—		—			—			—			235			235
Perpetual notes settlement (Note 19)		—		—		—			—		—			—			—			(4,200	)		(4,200	)
Distribution charges on perpetual notes (Note 19)		—		—		—			—		—			—			—			(59	)		(59	)
Transaction costs from settlement of perpetual notes (Note 19)		—		—		—			—		—			—			—			35			35
Balances as at September 30, 2024 (Unaudited)		510		1,093		(6,505	)		130,312		29,304			(43,031	)		111,683			1,248			112,931

Balances as at January 1, 2023		510		1,093		(6,505	)		130,312		18,799			(35,482	)		108,727			5,234			113,961
Cash dividends (Note 19)		—		—		—			—		(23,378	)		—			(23,378	)		(25	)		(23,403	)
Total comprehensive income (loss):		—		—		—			—		27,879			(1,088	)		26,791			117			26,908
Net income (Note 8)		—		—		—			—		27,879			—			27,879			119			27,998
Other comprehensive loss (Note 6)		—		—		—			—		—			(1,088	)		(1,088	)		(2	)		(1,090	)
Distribution charges on perpetual notes (Note 19)		—		—		—			—		—			—			—			(177	)		(177	)
Balances as at September 30, 2023 (Unaudited)		510		1,093		(6,505	)		130,312		23,300			(36,570	)		112,140			5,149			117,289

See accompanying Notes to Consolidated Financial Statements.

F-6

PLDT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2024 and 2023

(in million pesos)


	For the Nine Months Ended
	September 30,
	2024			2023
	(Unaudited)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Income before income tax and noncontrolling interest from continuing operations		37,063			37,544
Loss before income tax and noncontrolling interest from discontinued operations (Note 2)		—			(13	)
Net income before income tax (Note 4)		37,063			37,531
Adjustments for:
Depreciation and amortization (Notes 9, 10 and 18)		37,162			36,065
Interest on loans and other related items – net (Note 5)		7,744			7,359
Asset impairment (Note 5)		3,069			3,292
Accretion on lease liabilities (Notes 5 and 10)		2,900			2,372
Equity share in net losses of associates and joint ventures (Notes 5 and 11)		1,119			2,303
Pension benefit costs (Notes 5 and 25)		1,110			903
Incentive plan (Notes 5 and 25)		857			668
Accretion on financial liabilities (Notes 5 and 20)		275			270
Amortization of intangible assets (Notes 5 and 14)		171			166
Impairment of investments (Note 11)		—			70
Gains on disposal of property and equipment (Notes 5 and 9)		(79	)		(389	)
Interest income (Note 5)		(718	)		(734	)
Gain on sale and leaseback of telecom towers (Note 9)		(1,165	)		(5,008	)
Foreign exchange gains – net (Notes 5 and 27)		(1,389	)		(34	)
Gains on derivative financial instruments – net (Notes 5 and 27)		(2,066	)		(2,207	)
Others		(334	)		(284	)
Operating income before changes in assets and liabilities		85,719			82,343
Decrease (increase) in:
Prepayments		8,813			2,009
Inventories and supplies		1,354			1,301
Contract assets		(264	)		73
Trade and other receivables		(9,659	)		(2,203	)
Other financial and non-financial assets		(1,138	)		303
Increase (decrease) in:
Customers' deposits		17			(83	)
Accrued expenses and other current liabilities		(2,346	)		(3,021	)
Pension and other employee benefits		(3,096	)		(3,909	)
Accounts payable		(8,812	)		(8,569	)
Other noncurrent liabilities		96			(45	)
Net cash flows generated from operations		70,684			68,199
Income taxes paid		(2,566	)		(2,361	)
Net cash flows from operating activities		68,118			65,838

See accompanying Notes to Consolidated Financial Statements.

F-7

PLDT INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the Nine Months Ended September 30, 2024 and 2023

(in million pesos)


	For the Nine Months Ended
	September 30,
	2024			2023
	(Unaudited)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Proceeds from:
Disposal of property and equipment (Note 9)		3,480			14,263
Redemption of investment in debt securities (Note 12)		200			—
Maturity of short-term investments		21			440
Interest received		700			706
Payments for:
Purchase of short-term investments		(3	)		(329	)
Purchase of financial assets at fair value through profit or loss		(152	)		—
Interest capitalized to property and equipment (Notes 5 and 9)		(2,126	)		(1,628	)
Acquisition of investments in associates and joint ventures (Note 11)		(3,692	)		(72	)
Purchase of property and equipment (Note 9)		(46,550	)		(65,199	)
Decrease (Increase) in other financial and non-financial assets		915			(39	)
Net cash flows used in investing activities		(47,207	)		(51,858	)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from:
Availments of long-term debt (Notes 20 and 28)		25,300			35,000
Collection from derivative financial instruments - net (Notes 27 and 28)		84			—
Payments for:
Settlements of derivative financial instruments - net (Notes 27 and 28)		—			(1,042	)
Short-term debt (Notes 20 and 28)		—			(4,000	)
Distribution charges on perpetual notes (Note 19)		(59	)		(177	)
Debt issuance costs (Notes 20 and 28)		(150	)		(199	)
Redemption of perpetual notes (Note 19)		(4,200	)		—
Interest – net of capitalized portion (Notes 5, 20 and 28)		(7,285	)		(6,831	)
Obligations under lease liabilities (Notes 10 and 28)		(8,994	)		(7,993	)
Long-term debt (Notes 20 and 28)		(10,084	)		(8,975	)
Cash dividends (Notes 19 and 28)		(20,744	)		(23,313	)
Net cash flows used in financing activities		(26,132	)		(17,530	)
NET EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		1,350			(189	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(3,871	)		(3,739	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD (Note 15)		16,177			25,211
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD (Note 15)		12,306			21,472

See accompanying Notes to Consolidated Financial Statements.

F-8

PLDT INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Corporate Information

PLDT Inc., which we refer to as PLDT or the Parent Company, was incorporated under the Corporation Law of the Philippines (Act 1459, as amended) on November 28, 1928, following the merger of four telephone companies under common U.S. ownership. PLDT holds a perpetual corporate term under Section 11 of the Revised Corporation Code of the Philippines (Republic Act No. 11232), which grants existing corporations perpetual existence unless a majority vote of stockholders elects to retain a specified corporate term.

In 1967, effective control of PLDT was transferred from General Telephone and Electronics Corporation, a major shareholder since PLDT’s incorporation, to a group of Filipino investors. In 1981, as part of the Philippine government’s policy to integrate the country’s telecommunications industry, PLDT acquired substantially all assets and liabilities of the Republic Telephone Company, then the second largest telephone provider in the Philippines.

In 1998, certain subsidiaries of First Pacific Company Limited, or First Pacific, and its Philippine affiliates (collectively the First Pacific Group and its Philippine affiliates), acquired a significant interest in PLDT. On March 24, 2000, NTT Communications Corporation, or NTT Communications, through its wholly-owned subsidiary NTT Communications Capital (UK) Ltd., became a strategic partner of PLDT initially holding approximately a 15% economic and voting interest in PLDT’s common stock. Concurrent with NTT Communications’ investment, PLDT acquired 100% of Smart Communications, Inc., or Smart.

On March 14, 2006, NTT DOCOMO, Inc., or NTT DOCOMO, acquired approximately 7% of PLDT’s then outstanding common shares from NTT Communications, which retained ownership of about 7% of PLDT’s common shares. Since then, NTT DOCOMO has made additional purchases of PLDT shares, bringing the combined beneficial ownership of NTT DOCOMO and NTT Communications (both part of Nippon Telegraph and Telephone Corporation) to approximately 20% of PLDT’s outstanding common stock as at September 30, 2024.

On February 28, 2007, Metro Pacific Asset Holdings, Inc., a Philippine affiliate of First Pacific, completed an acquisition of approximately 46% interest in Philippine Telecommunications Investment Corporation, or PTIC, a shareholder of PLDT. This investment in PTIC represented an attributable interest of approximately 6% of PLDT’s outstanding common shares at the time and raised the First Pacific Group’s and its Philippine affiliates’ beneficial ownership to approximately 28% of PLDT’s outstanding common stock as of that date. Since then, the First Pacific Group’s beneficial ownership interest in PLDT has decreased by approximately 2%, mainly due to the holders of Exchangeable Notes issued in 2005 by a subsidiary of First Pacific, which were fully exchanged into PLDT shares. The First Pacific Group and its Philippine affiliates held beneficial ownership of approximately 26% of PLDT’s outstanding common stock as at September 30, 2024.

On October 26, 2011, PLDT completed the acquisition of a controlling interest in Digital Telecommunications Phils., Inc., or Digitel, from JG Summit Holdings, Inc., or JGSHI, and its affiliates, or collectively, the JG Summit Group. As consideration for the assets acquired, PLDT issued approximately 27.7 million common shares. In November 2011, JGSHI sold
5.81 million and 4.56 million PLDT shares to a Philippine affiliate of First Pacific and NTT DOCOMO, respectively, under separate option agreements entered into between JGSHI with the Philippine affiliate of First Pacific and NTT DOCOMO, respectively. As at September 30, 2024, the JG Summit Group beneficially owned approximately 11.27% of PLDT’s outstanding common stock.

On October 16, 2012, BTF Holdings, Inc., or BTFHI, a wholly-owned company of the Board of Trustees for the Account of the Beneficial Trust Fund, or PLDT Beneficial Trust Fund, created pursuant to PLDT’s Benefit Plan, subscribed to
150 million newly issued shares of Voting Preferred Stock of PLDT, or Voting Preferred Shares, at a subscription price of Php1.00 per share for a total subscription price of Php150 million. This subscription was made pursuant to a subscription agreement between BTFHI and PLDT dated October 15, 2012. Consequently, the issuance of these Voting Preferred Shares reduced the voting power of the NTT Group (comprising of NTT DOCOMO and NTT Communications), the First Pacific Group and its Philippine affiliates, and JG Summit Group to 9.68%, 15% and 6.65%, respectively, as at September 30, 2024. See Note 19 – Equity – Preferred Stock – Voting Preferred Stock.

The common shares of PLDT are listed and traded on the Philippine Stock Exchange, Inc., or PSE. On October 19, 1994, an American Depositary Receipt, or ADR, facility was established, under which Citibank N.A., as the depositary, issued American Depositary Shares, or ADSs, with each ADS representing one PLDT common share with a par value of
Php5.00 per share. Effective February 10, 2003, PLDT appointed JP Morgan Chase Bank as the successor depositary for its ADR facility. The ADSs are listed on the New York Stock Exchange, or NYSE, in the United States and are traded on the NYSE under the symbol “PHI”. As of September 30, 2024, there were approximately 16.6 million ADSs outstanding.

F-9

PLDT and our Philippine-based fixed line and wireless subsidiaries operate under the jurisdiction of the Philippine National Telecommunications Commission, or NTC. The NTC’s jurisdiction includes, among other responsibilities, the approval of major services offered and certain rates charged to customers.

We are the largest and most diversified telecommunications company in the Philippines, providing nationwide data and
multi-media services. Our business is organized into distinct units based on our products and services, with three reportable operating segments that form the bases for management’s decision to allocate resources and evaluate operating performance. Our principal activities are discussed in Note 4 – Operating Segment Information.

Our registered office address is Ramon Cojuangco Building, Makati Avenue, Makati City, Philippines. Information on our structure is provided in Note 2 – Summary of Material Accounting Policies – Basis of Consolidation. Information on other related party relationships of the PLDT Group is provided in Note 24 – Related Party Transactions.

Our consolidated financial statements as at September 30, 2024 and December 31, 2023, and for the nine months ended
September 30, 2024 and 2023 were approved and authorized by the Board of Directors on November 12, 2024 as reviewed by the Audit Committee on November 11, 2024.

F-10

Summary of Material Accounting Policies

Basis of Preparation

Our consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRSs, as issued by the International Accounting Standards Board, or IASB.

Our consolidated financial statements have been prepared under the historical cost basis, except for financial instruments at fair value through profit or loss, or FVPL, and investment properties that are measured at fair values.

Our consolidated financial statements are presented in Philippine Peso, PLDT’s functional currency, and all values are rounded to the nearest million, except when otherwise indicated.

Our consolidated financial statements provide comparative information in respect of the previous period.

F-11

Basis of Consolidation

Our consolidated financial statements include the financial statements of PLDT and the following subsidiaries (collectively, the “PLDT Group”) as at September 30, 2024 and
December 31, 2023:


			September 30, 2024				December 31, 2023
			(Unaudited)				(Audited)
	Place of		Percentage of Ownership
Name of Subsidiary	Incorporation	Principal Business Activity	Direct		Indirect		Direct		Indirect
Wireless
Smart:	Philippines	Cellular mobile services		100.0		—		100.0		—
Smart Broadband, Inc., or SBI, and Subsidiary	Philippines	Internet broadband distribution services		—		100.0		—		100.0
Primeworld Digital Systems, Inc., or PDSI	Philippines	Internet broadband distribution services		—		100.0		—		100.0
I-Contacts Corporation(a)	Philippines	Operations support servicing business		—		100.0		—		100.0
Far East Capital Limited, or FECL(a)	Cayman Islands	Cost effective offshore financing and risk management activities for Smart		—		100.0		—		100.0
PH Communications Holdings Corporation(a)	Philippines	Investment company		—		100.0		—		100.0
Connectivity Unlimited Resource Enterprise, Inc.(a)	Philippines	Cellular mobile services		—		100.0		—		100.0
Francom Holdings, Inc.(a)	Philippines	Investment company		—		100.0		—		100.0
Chikka Holdings Limited, or Chikka, and Subsidiaries, or Chikka Group(a)	British Virgin Islands	Content provider, mobile applications development and services		—		100.0		—		100.0
Wifun, Inc.(a)	Philippines	Software developer and selling of WiFi access equipment		—		100.0		—		100.0
PLDT Global, Inc.(a)	Philippines	Cross-border digital platforms and other allied services		100.0		—		100.0		—
ACeS Philippines Cellular Satellite Corporation, or ACeS Philippines(a)	Philippines	Satellite information and messaging services		88.5		11.5		88.5		11.5
Digitel Mobile Philippines, Inc., or DMPI, (a wholly-owned subsidiary of Digitel)	Philippines	Cellular mobile services		—		99.6		—		99.6
Fixed Line
PLDT Clark Telecom, Inc., or ClarkTel	Philippines	Telecommunications services		100.0		—		100.0		—
PLDT Subic Telecom, Inc., or SubicTel(a)	Philippines	Telecommunications services		100.0		—		100.0		—
PLDT Global Corporation, or PLDT Global, and Subsidiaries	British Virgin Islands	Telecommunications services		100.0		—		100.0		—
PLDT-Philcom, Inc., or Philcom, and Subsidiaries, or Philcom Group(a)	Philippines	Telecommunications services		100.0		—		100.0		—
Talas Data Intelligence, Inc.(a)	Philippines	Business infrastructure and solutions; intelligent data processing and implementation services and data analytics insight generation		100.0		—		100.0		—
Multisys Technologies Corporation, or Multisys	Philippines	Software development and IT solutions services		—		45.7		—		50.7

(a)

Ceased commercial operations.

F-12


			September 30, 2024				December 31, 2023
			(Unaudited)				(Audited)
	Place of		Percentage of Ownership
Name of Subsidiary	Incorporation	Principal Business Activity	Direct		Indirect		Direct		Indirect

ePLDT, Inc., or ePLDT:	Philippines	Information and communications infrastructure for internet-based services, e-commerce, customer relationship management and IT related services		100.0		—		100.0		—
IP Converge Data Services, Inc., or IPCDSI, and Subsidiary, or IPCDSI Group	Philippines	Information and communications infrastructure for internet-based services, e-commerce, customer relationship management and IT related services		—		100.0		—		100.0
Curo Teknika, Inc., or Curo(a)	Philippines	Managed IT outsourcing		—		100.0		—		100.0
ABM Global Solutions, Inc., or AGS, and Subsidiaries, or AGS Group(a)	Philippines	Internet-based purchasing, IT consulting and professional services		—		100.0		—		100.0
ePDS, Inc., or ePDS(a)	Philippines	Bills printing and other related value-added services, or VAS		—		100.0		—		100.0
netGames, Inc.(a)	Philippines	Gaming support services		—		57.5		—		57.5
MVP Rewards Loyalty Solutions, Inc., or MRSI(a)	Philippines	Full-services customer rewards and loyalty programs		—		100.0		—		100.0
VITRO, Inc., or Vitro	Philippines	Information and communications infrastructure for internet-based services, e-commerce, customer relationship management and IT related services		—		100.0		—		100.0
ePLDT Capital Investment Pte. Ltd. or ePLDT Capital(b)	Singapore	Investment holding and acquisition of companies		—		100.0		—		—
Digitel	Philippines	Telecommunications services		99.6		—		99.6		—
Digitel Information Technology Services, Inc.(a)	Philippines	Internet services		—		99.6		—		99.6
PLDT-Maratel, Inc., or Maratel(a)	Philippines	Telecommunications services		98.0		—		98.0		—
Bonifacio Communications Corporation, or BCC	Philippines	Telecommunications, infrastructure and related VAS		75.0		—		75.0		—
Pilipinas Global Network Limited, or PGNL, and Subsidiaries	British Virgin Islands	International distributor of Filipino channels and content		64.6		—		64.6		—
Others
PLDT Global Investments Holdings, Inc., or PGIH	Philippines	Investment company		100.0		—		100.0		—
PLDT Digital Investments Pte. Ltd., or PLDT Digital, and Subsidiaries	Singapore	Investment company		100.0		—		100.0		—
PLDT Communications and Energy Ventures, Inc., or PCEV	Philippines	Investment company		—		99.9		—		99.9

(a) Ceased commercial operations.

(b) On January 3, 2024, the Accounting and Corporate Regulatory Authority of Singapore approved the incorporation of ePLDT Capital, a wholly-owned subsidiary of ePLDT.

F-13

The financial statements of our subsidiaries are prepared for the same reporting period as PLDT. We prepare our consolidated financial statements using uniform accounting policies for like transactions and other events with similar circumstances.

Investment of PGIH in PCEV

On March 22, 2022, the Board of Directors of PGIH approved an investment of US$20 million in the common stock of PCEV at a subscription price of Php13 thousand per share, to support the growth of Maya Innovations Holdings Pte. Ltd., or MIH (formerly Voyager Innovations Holdings Pte. Ltd.). Following this approval, PGIH remitted US$20 million, or
Php1,031 million, to PCEV as deposit for future stock subscription on April 11, 2022. On February 16, 2024, the Philippine SEC approved the capital increase of PCEV.

Investment in Class C2 Convertible Preference Shares in MIH

On December 13, 2023, PCEV, along with other existing shareholders KKR, Tencent, SIG, First Pacific Ventures and Jumel Holdings, entered into a new subscription agreement with MIH to subscribe to US$80 million Class C2 convertible preferred shares of MIH. On the same date, PCEV paid a consideration of US$28 million or Php1,563 million for 12.3 million MIH Class C2 convertible preferred shares and received warrants for 4.9 million shares valued at Php281 million, thereby increasing PCEV’s ownership in MIH from 36.63% to 36.97%.

On April 5, 2024, PCEV paid the subsequent consideration of US$15.3 million or Php857 million for 6.7 million MIH Class C2 convertible preferred shares and received warrants for 2.7 million shares valued at Php152 million, resulting in an increase of PCEV’s ownership in MIH from 36.97% to 37.66%.

Sale of Interest in Multisys

On January 5, 2024, PGIH entered into a Share Purchase Agreement for the sale of 227 common shares of Multisys, representing a 4.99% equity interest, for a total consideration of Php270 million. The transaction was completed and fully paid on January 12, 2024. Following this sale, PGIH retained ownership of 2,080 common shares representing 45.73% equity interest in Multisys. Pursuant to the Third Restated Shareholders’ and related Amendment Agreement signed on
January 30, 2024 and March 1, 2024, respectively, PGIH remains entitled to nominate three out of the five directors in Multisys, who manage and control the operations of Multisys. Consequently, the results of operation and financial position of Multisys will continue to be consolidated with the PLDT Group.

Investment in Kayana Solutions Inc., or Kayana (formerly Limitless Growth Ventures, Inc.)

In February 2024, PLDT invested in Kayana, to serve as a digital entity designed to harness the data assets of the MVP Group of Companies (MVP Group) and provide a platform for a Group-wide digitalization initiative. This collaboration marks the first step in a collective effort aimed at creating new growth opportunities and value within the MVP Group.

Kayana will leverage a technology platform capable of enabling the MVP Group to scale operations and achieve seamless integration of services and capabilities. Additionally, payments and rewards systems are expected play a pivotal role in enhancing the overall user experience.

As of September 27, 2024, PLDT has invested Php840 million in Kayana representing 840 million common shares, or 60% equity interest, including subscription payable of Php288 million.

On September 30, 2024, Kayana entered into share subscription agreements with its shareholders, wherein PLDT subscribed to additional shares valued at Php46.5 million. As a result, PLDT’s equity ownership in Kayana stood at 45%, leading PLDT to account for its remaining interest as an investment in associate. A gain on deconsolidation amounting to Php146 million was recognized.

The following summarizes the subscription agreements entered into by PLDT with Kayana:


Date		Number of Shares Acquired
		(in millions)
March 1, 2024		754.5
September 27, 2024		85.5
September 30, 2024		46.5

F-14

As at September 30, 2024, PLDT’s investment in Kayana amounted to Php886.5 million, including subscription payable of Php334.5 million, with carrying value of Php872 million. See Note 11 – Investment in Associates and Joint Venture – Investment in Associates.

Investment in Radius Telecom, Inc., or Radius

On April 30, 2024, PLDT Inc. invested Php2,116 million for 2,491,516 common shares, or 34.9% equity interest in Radius. This strategic investment aims to enhance PLDT’s market share through an integrated alignment of solution capabilities and expanded market coverage. See Note 11 – Investment in Associates and Joint Venture – Investment in Associates.

Reduction of Capital in PLDT Capital Pte Ltd., or PLDT Capital

On May 6, 2024, the Directors of PLDT Capital approved the reduction of the company’s issued and paid-up share capital from Php891 million, comprising 26,773,606 ordinary shares, to Php1 million, comprising 30,058 fully paid ordinary shares. The Accounting and Corporate Regulatory Authority of Singapore approved the reduction capital of PLDT Capital on
July 12, 2024.

Discontinued Operations

In 2023, ePLDT completed the winding down of operations of certain subsidiaries. As a result, the operations of these discontinued ePLDT subsidiaries were classified as discontinued operations in the consolidated income statements.

The results of the operations of the discontinued ePLDT subsidiaries, net of intercompany transactions, for the nine months ended September 30, 2023 are as follows:


	September 30, 2023
	(Unaudited)
	(in million pesos)
Revenues		107
Expenses:
Selling, general and administrative expenses		149
Depreciation and amortization		21
Cost of services		3
		173
Net operating loss		(66	)

Other income (expenses):
Foreign exchange gains – net		6
Interest income		1
Financing costs		(1	)
Others		47
		53
Loss before and after tax from discontinued operations		(13	)
Loss per share (Note 8):
Basic/Diluted – Loss from discontinued operations		(0.06	)

As at December 31, 2023, below are the assets and liabilities of the discontinued ePLDT subsidiaries, net of intercompany transactions, which are included in our consolidated statements of financial position:


	December 31, 2023
	(Audited)
	(in million pesos)
Assets:
Cash and cash equivalents		109
Short-term investments		9
Other assets		236
		354
Liabilities:
Accrued expenses and other current liabilities		224
Income tax payable		3
Accounts payable		2
Other liabilities		10
		239
Net assets directly associated with disposal group		115

F-15

The net cash flows generated by (used in) the discontinued ePLDT subsidiaries, net of intercompany transactions, for the nine months ended September 30, 2023 are as follows:


	September 30, 2023
	(Unaudited)
	(in million pesos)
Operating activities		(56	)
Investing activities		25
Financing activities		(49	)
Net effect of foreign exchange rate changes on cash and cash equivalents		8
Net cash outflows		(72	)

Amended Standards

Effective beginning on or after January 1, 2024

The following amendments are effective for annual reporting periods beginning on or after January 1, 2024.

•

Amendments to IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments: Disclosures, Supplier Finance Arrangements

The amendments clarified the characteristics of supplier finance arrangements which involve one or more finance providers paying amounts an entity owes to its suppliers. Different terms are used to describe these arrangements, such as supply chain finance, payables finance and reverse factoring arrangements. Arrangements that are solely credit enhancements for the entity or instruments used by the entity to settle the amounts owed directly with a supplier, for example, credit cards, are not supplier finance arrangements.

The amendments required an entity to provide information about the impact of supplier finance arrangements on liabilities and cash flows, including:

Terms and conditions;

Carrying amount of supplier finance arrangement financial liabilities and the line items in which those liabilities are presented;

Carrying amounts of financial liabilities and the line items, for which the finance providers have already settled the corresponding trade payables;

The range of payment due dates for financial liabilities owed to the finance providers and for comparable trade payables that are not part of those arrangements; and

The type and effect of non-cash changes in the carrying amounts of supplier finance arrangement financial liabilities, which prevent the carrying amounts of the financial liabilities from being comparable.

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Amendments to IAS 1, Classification of Liabilities as Current or Noncurrent

The amendments to paragraphs 69 to 76 of IAS 1 specified the requirements for classifying liabilities as current or non-current. The amendments clarify:

What is meant by a right to defer settlement;

That a right to defer must exist at the end of the reporting period;

That classification is unaffected by the likelihood that an entity will exercise its deferral right; and

That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification.

In addition, a requirement has been introduced to require disclosure when a liability arising from a loan agreement is classified as non-current and the entity’s right to defer settlement is contingent on compliance with future covenants within twelve months. The amendments must be applied retrospectively.

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Amendments to IFRS 16, Lease Liability in a Sale and Leaseback

The amendments to IFRS 16 specified the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognize any amount of the gain or loss that relates to the right of use it retains. The amendments must be applied retrospectively.

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The amendments do not have a material impact on the Group’s financial statements.

Summary of Material Accounting Policies

The following is the summary of material accounting policies we applied in preparing our consolidated financial statements. These policies have been consistently applied to all the periods presented, unless otherwise stated.

Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value, and the amount of any noncontrolling interest in the acquiree. For each business combination, we elect whether to measure the components of the noncontrolling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred and included in selling, general and administrative expenses.

When we acquire a business, we assess the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognized in profit or loss. The fair value of previously held equity interest is then included in the amount of total consideration transferred.

Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability that is a financial instrument within the scope of IFRS 9 is measured at fair value with the changes in fair value recognized in profit or loss. In accordance with IFRS 9, the contingent consideration that is not within the scope of IFRS 9 is measured at fair value at each reporting date with changes in fair value recognized in profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for noncontrolling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, we reassess whether we correctly identified all of the assets acquired and all of the liabilities assumed and review the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain on a bargain purchase is recognized in profit or loss.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, we report in our consolidated financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, which is no longer than one year from the acquisition date, the provisional amounts recognized at acquisition date are retrospectively adjusted to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. During the measurement period, we also recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date and, if known, would have resulted in the recognition of those assets and liabilities as of that date.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of our
cash-generating units, or CGUs, that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill acquired in a business combination has yet to be allocated to identifiable CGUs because the initial accounting is incomplete, such provisional goodwill is not tested for impairment unless indicators of impairment exist and we can reliably allocate the carrying amount of goodwill to a CGU or group of CGUs that are expected to benefit from the synergies of the business combination.

Where goodwill has been allocated to a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the disposed operation and the portion of the CGU retained.

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Investments in Associates

Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost. The cost of the investments includes directly attributable transaction costs. The details of our investments in associates are disclosed in Note 11 – Investments in Associates and Joint Ventures – Investments in Associates.

Where there has been a change recognized directly in the equity of the associate, we recognize our share in such change and disclose this, when applicable, in our consolidated statements of comprehensive income and consolidated statements of changes in equity. Unrealized gains and losses resulting from our transactions with and among our associates are eliminated to the extent of our interests in those associates.

Our share in the profits or losses of our associates is included under “Other income (expenses)” in our consolidated income statements. This is the profit or loss attributable to equity holders of the associate and net of the noncontrolling interest in the subsidiaries of the associate.

Joint Arrangements

When necessary, adjustments are made to bring the accounting policies of the joint venture in line with our policies. The details of our investments in joint ventures are disclosed in Note 11 – Investments in Associates and Joint Ventures – Investments in Joint Ventures.

Foreign Currency Transactions and Translations

Our consolidated financial statements are presented in Philippine Peso, which is also the Parent Company’s functional currency. The Philippine Peso is the currency of the primary economic environment in which we operate. This is also the currency that mainly influences the revenue from and cost of rendering products and services. Each entity in our Group determines its own functional currency and items included in the separate financial statements of each entity are measured using that functional currency.

The functional and presentation currency of the entities under the PLDT Group (except for the subsidiaries discussed below) is the Philippine Peso.

Transactions in foreign currencies are initially recorded by entities under our Group at the respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange prevailing at the end of the reporting period. All differences arising on settlement or translation of monetary items are recognized in our consolidated income statements except for foreign exchange differences that qualify as capitalizable borrowing costs for qualifying assets. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The gain or loss arising from transactions of non-monetary items measured at fair value is treated in line with the recognition of this gain or loss on the change in fair value of the items (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or profit, or loss are also recognized in other comprehensive income or profit or loss, respectively).

The functional currency of PLDT Global and certain of its subsidiaries, and PGNL and certain of its subsidiaries is the U.S. Dollar. As at the reporting date, the assets and liabilities of these subsidiaries are translated into Philippine Peso at the rate of exchange prevailing at the end of the reporting period, and income and expenses of these subsidiaries are translated monthly using the weighted average exchange rate for the month. The exchange differences arising on translation are recognized as a separate component of other comprehensive income as cumulative translation adjustments. Upon disposal of these subsidiaries, the amount of deferred cumulative translation adjustments recognized in other comprehensive income relating to subsidiaries is recognized in our consolidated income statements.

Foreign exchange gains or losses of the Parent Company and our Philippine-based subsidiaries are treated as taxable income or deductible expenses in the period such exchange gains or losses are realized.

Assets Classified as Held-for-Sale

We classify assets as held-for-sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Assets classified as held-for-sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax expense.

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The criteria for held-for-sale classification is regarded as met only when the sale is highly probable, and the asset is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification.

Property and equipment and intangible assets are not depreciated or amortized once classified as held-for-sale.

Assets and liabilities classified as held-for-sale are presented separately as current items in the consolidated statements of financial position.

Additional disclosures are provided in Note 9 – Property and Equipment – Sale and Leaseback of Telecom Towers and
Note 10 – Leases. All other notes to the financial statements include amounts for continuing operations, unless indicated otherwise.

Financial Instruments

Financial Instruments – Initial recognition and subsequent measurement

Classification of financial assets

Financial assets are classified in their entirety based on the contractual cash flows characteristics of the financial assets and our business model for managing the financial assets. We classify our financial assets into the following measurement categories:

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Financial assets measured at amortized cost;

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Financial assets measured at FVPL;

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Financial assets measured at financial instruments at fair value through other comprehensive income, or FVOCI, where cumulative gains or losses previously recognized are reclassified to profit or loss; and

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Financial assets measured at FVOCI, where cumulative gains or losses previously recognized are not reclassified to profit or loss.

Contractual cash flows characteristics

In order for us to identify the measurement of our debt financial assets, a solely payments of principal and interest, or SPPI, test needs to be initially performed in order to determine whether the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Once a debt financial asset passed the SPPI test, business model assessment, which identifies our objective of holding the financial assets – hold to collect or hold to collect and sell, will be performed. Otherwise, if the debt financial asset failed the test, such will be measured at FVPL.

In making the assessment, we determine whether the contractual cash flows are consistent with a basic lending arrangement, i.e., interest includes consideration only for the time value of money, credit risk and other basic lending risks and costs associated with holding the financial asset for a particular period of time. In addition, interest can include a profit margin that is consistent with a basic lending arrangement. The assessment as to whether the cash flows meet the SPPI test is made in the currency in which the financial asset is denominated. Any other contractual terms that introduce exposure to risks or volatility in the contractual cash flows that is unrelated to a basic lending arrangement, such as exposure to changes in equity prices or commodity prices, do not give rise to contractual cash flows that are solely payments of principal and interest on the principal amount outstanding.

Business model

Our business model is determined at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. Our business model does not depend on management’s intentions for an individual instrument.

Our business model refers to how we manage our financial assets in order to generate cash flows. Our business model determines whether cash flows will result from collecting contractual cash flows, collecting contractual cash flows and selling financial assets or neither.

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Financial assets at amortized cost

These financial assets are initially recognized at fair value plus directly attributable transaction costs and subsequently measured at amortized cost using the effective interest rate, or EIR, method, less any impairment in value. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part of the EIR. The amortization is included in ‘Other income (expenses) – net’ in our consolidated income statements and is calculated by applying the EIR to the gross carrying amount of the financial asset, except for (i) purchased or originated credit-impaired financial assets and (ii) financial assets that have subsequently become credit-impaired, where, in both cases, the EIR is applied to the amortized cost of the financial asset. Losses arising from impairment are recognized in ‘Asset impairment’ in our consolidated income statements.

Our financial assets at amortized cost include debt instruments at amortized cost, cash and cash equivalents, portions of short-term investments, trade and other receivables, and portions of other financial assets as at September 30, 2024 and
December 31, 2023. See Note 12 – Debt Instruments at Amortized Cost, Note 15 – Cash and Cash Equivalents,
Note 16 – Trade and Other Receivables and Note 27 – Financial Assets and Liabilities.

Financial assets at FVPL

Financial assets at FVPL are measured at fair value. Included in this classification are derivative financial assets, equity investments held for trading and debt instruments with contractual terms that do not represent solely payments of principal and interest. Financial assets held at FVPL are initially recognized at fair value, with transaction costs recognized in our consolidated income statements as incurred. Subsequently, they are measured at fair value and any gains or losses are recognized in our consolidated income statements.

Additionally, even if the asset meets the amortized cost or the FVOCI criteria, we may choose at initial recognition to designate the financial asset at FVPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency (an accounting mismatch) that would otherwise arise from measuring financial assets on a different basis.

Trading gains or losses are calculated based on the results arising from trading activities of the PLDT Group, including all gains and losses from changes in fair value for financial assets and financial liabilities at FVPL, and the gains or losses from disposal of financial investments.

Our financial assets at FVPL include portions of short-term investments, derivative financial assets, equity investments and redemption trust fund as at September 30, 2024 and December 31, 2023. See Note 27 – Financial Assets and Liabilities.

Classification of financial liabilities

Financial liabilities are classified, at initial recognition, as financial liabilities at FVPL, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Financial liabilities are subsequently measured at amortized cost, except for the following:

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Financial liabilities measured at FVPL;

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Financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when we retain continuing involvement;

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Financial guarantee contracts;

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Commitments to provide a loan at a below-market interest rate; and

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Contingent consideration recognized by an acquirer in accordance with IFRS 3.

A financial liability may be designated at FVPL if it eliminates or significantly reduces a measurement or recognition inconsistency (an accounting mismatch) or:

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If a host contract contains one or more embedded derivatives; or

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If a group of financial liabilities or financial assets and liabilities is managed and its performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

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Where a financial liability is designated at FVPL, the movement in fair value attributable to changes in our own credit quality is calculated by determining the changes in credit spreads above observable market interest rates and is presented separately in other comprehensive income.

Our financial liabilities at FVPL include derivative financial liabilities and liability from redemption of preferred stock as at September 30, 2024 and December 31, 2023. See Note 19 – Equity – Redemption of Preferred Stock,
Note 23 – Accrued Expenses and Other Current Liabilities and Note 27 – Financial Assets and Liabilities.

Our other financial liabilities include interest-bearing financial liabilities, lease liabilities, customers’ deposits, dividends payable, certain accounts payable, certain accrued expenses and other current liabilities and certain deferred credits and other noncurrent liabilities, (except for statutory payables) as at September 30, 2024 and December 31, 2023. See
Note 10 – Leases, Note 20 – Interest-bearing Financial Liabilities, Note 21 – Deferred Credits and Other Noncurrent Liabilities, Note 22 – Accounts Payable, Note 23 – Accrued Expenses and Other Current Liabilities and
Note 27 – Financial Assets and Liabilities.

Reclassifications of financial instruments

We reclassify our financial assets when, and only when, there is a change in the business model for managing the financial assets. Reclassifications shall be applied prospectively and any previously recognized gains, losses or interest shall not be restated. We do not reclassify our financial liabilities.

We do not reclassify our financial assets when:

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A financial asset that was previously a designated and effective hedging instrument in a cash flow hedge or net investment hedge no longer qualifies as such;

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A financial asset becomes a designated and effective hedging instrument in a cash flow hedge or net investment hedge; and

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There is a change in measurement on credit exposures measured at FVPL.

Offsetting of Financial Instruments

Financial assets and liabilities are offset, and the net amount is reported in the consolidated statements of financial position if, and only if, there is a currently enforceable legal right to offset the recognized amounts; and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously. We assess that it has a currently enforceable right of offset if the right is not contingent on a future event and is legally enforceable in the normal course of business, event of default, and event of insolvency or bankruptcy of the Group and all of the counterparties.

Impairment of Financial Assets

We recognize expected credit losses, or ECL for debt instruments that are measured at amortized cost and FVOCI.

No ECL is recognized on financial assets at FVPL.

ECLs are measured in a way that reflects the following:

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An unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

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The time value of money; and

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Reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

Financial assets migrate through the following three stages based on the change in credit quality since initial recognition:

Stage 1: 12-month ECL – not credit-impaired

For credit exposures where there have not been significant increases in credit risk since initial recognition and that are not credit-impaired upon origination, the portion of lifetime ECLs representing the ECLs that result from all possible default events within the 12-months after the reporting date are recognized.

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Stage 2: Lifetime ECL – not credit-impaired

For credit exposures where there have been significant increases in credit risk since initial recognition on an individual or collective basis but are not credit-impaired, lifetime ECLs representing the ECLs that result from all possible default events over the expected life of the financial asset are recognized.

Stage 3: Lifetime ECL – credit-impaired

Financial assets are credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of those financial assets have occurred. For these credit exposures, lifetime ECLs are recognized and interest revenue is calculated by applying the credit-adjusted EIR to the amortized cost of the financial asset.

Loss Allowances

Loss allowances are recognized based on 12-month ECL for debt instruments that are assessed to have low credit risk at the reporting date. A financial asset is considered to have low credit risk if:

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The financial instrument has a low risk of default;

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The counterparty has a strong capacity to meet its contractual cash flow obligations in the near term; and

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Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the counterparty to fulfill its contractual cash flow obligations.

We consider a debt instrument to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘investment grade’, or when the exposure is less than 30 days past due.

The loss allowances recognized in the period is impacted by a variety of factors, as described below:

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Transfers between Stage 1 and Stage 2 and 3 due to the financial instruments experiencing significant increases (or decreases) of credit risk or becoming credit-impaired in the period, and the consequent “step up” (or “step down”) between 12-month and lifetime ECL;

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Additional allowances for new financial instruments recognized during the period, as well as releases for financial instruments derecognized in the period;

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Impact on the measurement of ECL due to changes in probability of defaults, or PDs, loss given defaults, or LGDs, and exposure at defaults, or EADs, in the period, arising from regular refreshing of inputs to models;

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Impacts on the measurement of ECL due to changes made to models and assumptions;

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Unwinding of discount within ECL due to passage of time, as ECL is measured on a present value basis; and

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Financial assets derecognized during the period and write-offs of allowances related to assets that were written off during the period.

Write-off Policy

We write-off a financial asset measured at amortized cost, in whole or in part, when the asset is considered uncollectible, and we have exhausted all practical recovery efforts and concluded that we have no reasonable expectations of recovering the financial asset in its entirety or a portion thereof. We write-off an account when all of the following conditions are met:

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The asset is in past due for over 90 days, or is already an item-in-litigation with any of the following:

No properties of the counterparty could be attached

The whereabouts of the client cannot be located

It would be more expensive for the Group to follow-up and collect the amount, hence we have ceased enforcement activity, and

Collections can no longer be made due to insolvency or bankruptcy of the counterparty;

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Expanded credit arrangement is no longer possible;

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Filing of legal case is not possible; and

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The account has been classified as ‘Loss’.

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Simplified Approach

The simplified approach, where changes in credit risk are not tracked and loss allowances are measured at amounts equal to lifetime ECL, is applied to ‘Trade and other receivables’ and ‘Contract assets’. We have established a provision matrix for billed trade receivables and a vintage analysis for contract assets and unbilled trade receivables that is based on historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Derecognition of Financial Assets and Liabilities

Financial assets

A financial asset (or where applicable as part of a financial asset or part of a group of similar financial assets) is primarily derecognized when: (1) the right to receive cash flows from the asset has expired; or (2) we have transferred the right to receive cash flows from the asset or have assumed an obligation to pay the received cash flows in full without material delay to a third party under a “pass-through” arrangement; and either: (a) we have transferred substantially all the risks and rewards of the asset; or (b) we have neither transferred nor retained substantially all the risks and rewards of the asset, but have transferred control of the asset.

When we have transferred the right to receive cash flows from an asset or have entered into a “pass-through” arrangement and have neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, a new asset is recognized to the extent of our continuing involvement in the asset.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that we could be required to repay.

When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of our continuing involvement is the amount of the transferred asset that we may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of our continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or has expired.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in consolidated income statements.

The financial liability is also derecognized when equity instruments are issued to extinguish all or part of the financial liability. The equity instruments issued are recognized at fair value if it can be reliably measured, otherwise, it is recognized at the fair value of the financial liability extinguished. Any difference between the fair value of the equity instruments issued and the carrying value of the financial liability extinguished is recognized in consolidated income statements.

Derivative Financial Instruments and Hedge Accounting

Initial recognition and subsequent measurement

We use derivative financial instruments, such as long-term currency swaps, foreign currency options, forward currency contracts and interest rate swaps to hedge our risks associated with foreign currency fluctuations and interest rates. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of long-term currency swaps, foreign currency options, forward currency contracts and interest rate swap contracts is determined using applicable valuation techniques. See Note 27 – Financial Assets and Liabilities.

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Any gains or losses arising from changes in fair value on derivatives during the period that do not qualify for hedge accounting are taken directly to the “Other income (expense) – Gains (losses) on derivative financial instruments – net” in our consolidated income statements.

Hedges which meet the criteria for hedge accounting are accounted for as follows:

Fair value hedges

The change in the fair value of a hedging instrument is recognized in our consolidated income statements as financing cost. The change in the fair value of the hedged item attributable to the risk hedged is recorded as part of the carrying value of the hedged item and is also recognized in our consolidated income statements.

For fair value hedges relating to items carried at amortized cost, any adjustment to carrying value is amortized through profit or loss over the remaining term of the hedge using the EIR method. EIR amortization may begin as soon as adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged.

If the hedged item is derecognized, the unamortized fair value is recognized immediately in our consolidated income statements.

When an unrecognized firm commitment is designated as a hedged item, the subsequent cumulative change in the fair value of the firm commitment attributable to the hedged risk is recognized as an asset or liability with a corresponding gain or loss recognized in our consolidated income statements.

Cash flow hedges

The effective portion of the gain or loss on the hedging instrument is recognized in other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. See Note 27 – Financial Assets and Liabilities for more details.

Amounts taken to other comprehensive income are transferred to our consolidated income statements when the hedged transaction affects our consolidated income statements, such as when the hedged financial income or financial expense is recognized or when a forecast transaction occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts taken to other comprehensive income are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognized in other comprehensive income are transferred to our consolidated income statements. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognized in other comprehensive income remain in other comprehensive income until the forecast transaction or firm commitment occurs.

We use an interest rate swap agreement to hedge our interest rate exposure and a long-term principal only-currency swap, and long-term foreign currency options agreement to hedge our foreign exchange exposure on certain outstanding loan balances. See Note 27 – Financial Assets and Liabilities.

Property and Equipment

Property and equipment, except for land, is stated at cost less accumulated depreciation and amortization and any accumulated impairment losses. Land is stated at cost less any impairment in value. The initial cost of property and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the property and equipment to its working condition and location for its intended use. Such cost includes the cost of replacing component parts of the property and equipment when the cost is incurred, if the recognition criteria are met. When significant parts of property and equipment are required to be replaced at intervals, we recognize such parts as individual assets with specific useful lives and depreciate them accordingly. Likewise, when a major inspection is performed, its cost is recognized in the carrying amount of the property and equipment as a replacement if the recognition criteria are satisfied. All other repairs and maintenance costs are recognized as expense as incurred. The present value of the expected cost for the decommissioning of the asset after use is included in the cost of the asset if the recognition criteria for a provision are met.

Depreciation and amortization commence once the property and equipment are available for their intended use and are calculated on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives used in depreciating our property and equipment are disclosed in Note 9 – Property and Equipment.

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The residual values, the estimated useful lives, and methods of depreciation and amortization are reviewed at least at each financial year-end and adjusted prospectively, if appropriate.

An item of property and equipment and any significant part initially recognized are derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in our consolidated income statements when the asset is derecognized.

Property under construction is stated at cost less any impairment in value. This includes cost of construction, plant and equipment, capitalizable borrowing costs and other direct costs associated with construction. Property under construction is not depreciated until such time that the relevant assets are completed and available for its intended use.

Property under construction is transferred to the related property and equipment when the construction or installation and related activities necessary to prepare the property and equipment for their intended use have been completed, and the property and equipment are ready for operational use.

Asset Retirement Obligations

We are legally required under various lease agreements to dismantle the installation in leased sites and restore such sites to their original condition at the end of the contract lease term. We recognize the liability measured at the present value of the estimated costs of these obligations and capitalize such costs as part of the balance of the related item of property and equipment and right-of-use asset. The amount of asset retirement obligations is accreted, and such accretion is recognized as interest expense. See Note 10 – Leases and Note 21 – Deferred Credits and Other Noncurrent Liabilities.

Intangible Assets

Intangible assets acquired separately are measured at cost on initial recognition. The cost of intangible assets acquired from business combinations is initially recognized at fair value on the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. The useful lives of intangible assets are assessed at the individual asset level as either finite or indefinite.

Intangible assets with finite lives are amortized over the economic useful life using the straight-line method and assessed for impairment whenever there is an indication that the intangible assets may be impaired. At the minimum, the amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in our consolidated income statements.

Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually either individually or at the CGU level. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.

The estimated useful lives used in amortizing our intangible assets are disclosed in Note 14 – Goodwill and Intangible Assets.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in our consolidated income statements when the asset is derecognized.

Internally generated intangibles are not capitalized, and the related expenditures are charged against operations in the period in which the expenditures are incurred.

Inventories and Supplies

Inventories and supplies, which include cellular and landline phone units, materials, spare parts, terminal units and accessories, are valued at the lower of cost and net realizable value.

Costs incurred in bringing inventories and supplies to its present location and condition are accounted for using the weighted average cost method. Net realizable value is determined by either estimating the selling price in the ordinary course of business, less the estimated cost to sell or determining the prevailing replacement costs.

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Impairment of Non-Financial Assets

We assess at each reporting period whether there is an indication that an asset may be impaired. If any indication exists, or when the annual impairment testing for an asset is required, we make an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use, or VIU. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent from those of other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing the VIU, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining the fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. Impairment losses are recognized in our consolidated income statements.

For assets, excluding goodwill and intangible assets with indefinite useful life, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, we make an estimate of the recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset is increased to its recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in our consolidated income statements. After such reversal, the depreciation and amortization charges are adjusted in future years to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining economic useful life.

The following assets have specific characteristics for impairment testing:

Property and equipment, right-of-use, or ROU, assets, and intangible assets with finite useful lives

For property and equipment and ROU assets, we assess for impairment on the basis of impairment indicators such as evidence of internal obsolescence or physical damage. For intangible assets with finite useful lives, we assess for impairment whenever there is an indication that the intangible assets may be impaired. See Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Impairment of non-financial assets, Note 9 – Property and Equipment,
Note 10 – Leases and Note 14 – Goodwill and Intangible Assets for further disclosures relating to impairment of non-financial assets.

Investments in associates and joint ventures

We determine at the end of each reporting period whether there is any objective evidence that our investments in associates and joint ventures are impaired. If this is the case, the amount of impairment is calculated as the difference between the recoverable amount of the investments in associates and joint ventures, and its carrying amount. The amount of impairment loss is recognized in our consolidated income statements. See Note 11 – Investments in Associates and Joint Ventures for further disclosures relating to impairment of non-financial assets.

Goodwill

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU, or group of CGUs, to which the goodwill relates. When the recoverable amount of the CGU, or group of CGUs, is less than the carrying amount of the CGU, or group of CGUs, to which goodwill has been allocated, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

See Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Impairment of non-financial assets and Note 14 – Goodwill and Intangible Assets for further disclosures relating to impairment of non-financial assets.

Intangible asset with indefinite useful life

Intangible asset with indefinite useful life is not amortized but is tested for impairment annually either individually or at the CGU level, as appropriate. We calculate the amount of impairment as being the difference between the recoverable amount of the intangible asset or the CGU, and its carrying amount and recognize the amount of impairment in our consolidated income statements. Impairment losses relating to intangible assets can be reversed in future periods.

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Fair Value Measurement

We measure financial instruments such as derivatives, financial assets at FVPL, assets classified as held-for-sale and
non-financial assets such as investment properties and pension plan assets, at fair value at each reporting date. The fair values of investment properties are disclosed in Note 13 – Investment Properties. The fair values of the pension plan assets are disclosed in Note 25 – Pension and Other Employee Benefits. The fair values of financial instruments measured at amortized cost are disclosed in Note 27 – Financial Assets and Liabilities.

Fair value is the estimated price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: (i) in the principal market for the asset or liability; or
(ii) in the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to us.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

We use valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in our consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: (i) Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities; (ii) Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and (iii) Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in our consolidated financial statements on a recurring basis, we determine whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

We determine the policies and procedures for both recurring fair value measurement, such as investment properties and unquoted FVPL financial assets, and for non-recurring measurement, such as assets held for distribution in discontinued operation.

External valuers are involved for valuation of significant assets, such as investment properties. Involvement of external valuers is decided upon annually. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. At each reporting date, we analyze the movements in the values of assets and liabilities which are required to be remeasured or reassessed as per our accounting policies. For this analysis, we verify the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents.

We, in conjunction with our external valuers, also compare the changes in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. This includes a discussion of the major assumptions used in the valuations. For the purpose of fair value disclosures, we have determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

Revenues from contracts with customers

The disclosures of significant accounting judgments, estimates and assumptions relating to revenues from contracts with customers are provided in Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Identifying performance obligations.

Our revenues are principally derived from providing the following telecommunications services: cellular voice, SMS and data services in the wireless business; and local exchange, international and national long distance, data and other network, and information and communications services in the fixed line business.

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Services may be rendered separately or bundled with goods or other services. The specific recognition criteria are as follows:

Single Performance Obligation (POB) Contracts

Postpaid service arrangements include fixed monthly charges (including excess of consumable fixed monthly service fees) generated from cellular voice, short messaging services, or SMS, and data services through the postpaid plans of Smart Signature and Infinity brands, from local exchange services primarily through landline and related services, and from fixed line and other network services primarily through broadband and leased line services, which we recognize on a
straight-line basis over the customer’s subscription period. Services provided to postpaid subscribers are billed throughout the month according to the billing cycles of subscribers. Services availed by subscribers in addition to these fixed fee arrangements are charged separately at their stand-alone selling prices and recognized as the additional service is provided or as availed by the subscribers.

Our prepaid service revenues arise from the usage of airtime load from channels and prepaid cards provided from Prepaid Home WiFi, Sulit Talk, Landline Plus products, Smart, TNT and SmartBro. Proceeds from over-the-air reloading channels and prepaid cards are initially recognized as contract liability and realized upon actual usage of the airtime value for voice, SMS, mobile data and other VAS, prepaid unlimited and bucket-priced SMS and call subscriptions, net of bonus credits from load packages purchased, such as free additional call minutes, SMS, data allocation or airtime load, or upon expiration, whichever comes earlier.

We also consider recognizing revenue from the expected expiry of airtime load in proportion to the pattern of rights exercised by the customer if we expect to be entitled to that expired amount. If we do not expect to be entitled to an expired amount based on historical experience with the customers, then we recognize the expected expired amount as revenue when the likelihood of the prepaid customer exercising its remaining rights becomes remote.

Interconnection fees and charges arising from the actual usage of airtime value or subscriptions are recorded as incurred.

Revenue from international and national long-distance calls carried via our network is generally based on rates which vary with distance and type of service (direct dial or operator-assisted, paid or collected, etc.). Revenue from both wireless and fixed line long distance calls is recognized as the service is provided. In general, non-refundable upfront fees, such as activation fees, that do not relate to the transfer of a promised good or service, are deferred and recognized as revenue throughout the estimated average length of the customer relationship, and the related incremental costs incurred are similarly deferred and recognized as expense over the same period, if such costs generate or enhance resources of the entity and are expected to be recovered.

Activation fees for both voice and data services are also considered as a single performance obligation together with monthly service fees, recognized over the customer subscription period.

ii. Bundled Contracts

In revenue arrangements, which involve bundled sales of mobile devices and accessories (non-service component) and telecommunication services (service component), the total transaction price is allocated based on the relative stand-alone selling prices of each distinct performance obligation. Stand-alone selling price is the price at which we sell the good or service separately to a customer. However, if goods or services are not currently offered separately, we use the adjusted market or cost-plus margin method to determine the stand-alone selling price to be used in the transaction price allocation. We adjust the transaction price for the effects of the time value of money if the timing of the payment and delivery of goods or services do not coincide, effects of which are considered as containing a significant financing component.

Activation services and installation services for voice and data services that are not a distinct performance obligation are considered together with monthly voice and data services as a single performance obligation, recognized over the customer subscription period since the subscriber cannot benefit from the installation services on its own or together with other resources that are readily available to the subscriber. The related incremental costs are recognized in the same manner in our consolidated income statements, if such costs are expected to be recovered. On the other hand, custom-built installation services provided to data services subscribers are considered a distinct separate performance obligation and is recognized when services are rendered.

Revenues from the sale of non-service component are recognized at the point in time when the goods are delivered while revenues from telecommunication services component are recognized on a straight-line basis over the contract period when the services are provided to subscribers.

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Significant Financing Component

The non-service component included in contracts with customers have significant financing component considering the period between the time of the transfer of control over the mobile device and the customer’s payment of the price of the mobile device, which is more than one year.

The transaction price for such contracts is determined by discounting the amount of promised consideration using the appropriate discount rate. We concluded that there is a significant financing component for those contracts where the customer elects to pay in arrears considering the length of time between the transfer of mobile device to the customer and the customer’s payment, as well as the prevailing interest rates in the market adjusted with customer credit spread.

Customer Loyalty Program

Through our customer loyalty program called Giga Points, points are earned through subscription of promo, purchase of load, and payment of bill for postpaid subscribers. Points are also earned through other activities such as daily login in the Giga App. These points can be used to redeem items such as giga promos, bill rebates, content subscription, discounts, exclusive tickets, and more.

Our contract with customers for revenue-related activity includes a promise to provide future telco services or rights to third-party services in the form of earning points. We consider these revenue-related earnings as performance obligation and the transaction price is allocated to each performance obligation. For earnings on non-revenue activity, we recognize a financial liability upon redemption of the points from third party partners.

iii. International and Domestic Long Distance Contracts

Interconnection revenues for call termination, call transit and network usages are recognized in the period in which the traffic occurs. Revenues related to local, long distance, network-to-network, roaming and international call connection services are recognized when the call is placed, or connection is provided, and the equivalent amounts charged to us by other carriers are recorded under interconnection costs in our consolidated income statements. Inbound revenue and outbound charges are based on agreed transit and termination rates with other foreign and local carriers.

Variable consideration

We assessed that a variable consideration exists in certain interconnection agreements where there is a monthly aggregation period and the rates applied for the total monthly traffic will depend on the total traffic for the month. We also consider whether contracts with carriers contain volume commitment or tiering arrangement whereby the rate being charged will change upon meeting certain volume of traffic. We estimate the amount of variable consideration to which we are entitled and include in the transaction price some or all of the amount of variable consideration estimated arising from these agreements, unless the impact is not material.

iv. Others

Revenues from VAS include streaming and downloading of games, music, video contents, loan services, messaging services, applications and other digital services which are only arranged for by us on behalf of third-party content providers. The amount of revenue recognized is net of content provider’s share in revenue. Revenue is recognized at a point in time upon service availment. We act as an agent for certain VAS arrangements.

Revenue from server hosting, co-location services and customer support services are recognized over the period that the services are performed.

Subscriber Contract Costs

Costs to obtain a contract with customers, such as commission, and costs to fulfill the contract, such as installation and Customer Premises Equipment (CPE) costs, are capitalized if we expect to recover those costs. These subscriber contract costs are stated at cost net of accumulated amortization and impairment losses. Subscriber contract costs are amortized on a systematic basis consistent with the pattern of transfer of goods and services to which the assets relates.

The amortization of costs to obtain and costs to fulfill are presented as part of selling, general and administrative expenses, and depreciation and amortization, respectively, in the consolidated income statements.

Impairment losses are recognized to the extent that the carrying amount of the subscriber contract costs exceed the net of (i) remaining amount of consideration that we expect to receive in exchange for the goods or services to which the asset relates, less (ii) any costs that relate directly to providing those goods or services that have not yet been recognized as expenses.

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Retirement Benefits

PLDT and certain of its subsidiaries are covered under Republic Act No. 7641 otherwise known as “The Philippine Retirement Law”.

Defined benefit pension plans

PLDT has separate and distinct retirement plans for itself and some of its Philippine-based operating subsidiaries, administered by the respective Funds’ Trustees, covering permanent employees. Retirement costs are separately determined using the projected unit credit method. This method reflects services rendered by employees to the date of valuation and incorporates assumptions concerning employees’ projected salaries.

Retirement costs consist of the following:

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Service cost;

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Net interest on the net defined benefit asset or obligation; and

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Remeasurements of net defined benefit asset or obligation.

Service cost (which includes current service costs, past service costs and gains or losses on curtailments and non-routine settlements) is recognized as part of “Selling, general and administrative expenses – Compensation and employee benefits” account in our consolidated income statements. These amounts are calculated periodically by an independent qualified actuary.

Net interest on the net defined benefit asset or obligation is the change during the period in the net defined benefit asset or obligation that arises from the passage of time which is determined by applying the discount rate based on the government bonds to the net defined benefit asset or obligation. Net defined benefit asset is recognized as part of “Prepayments, net of current portion” and net defined benefit obligation is recognized as part of “Pension and other employee benefits” in our consolidated statements of financial position.

Remeasurements, comprising actuarial gains and losses, return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit obligation) are recognized immediately in other comprehensive income in the period in which they occur. Remeasurements are not classified to profit or loss in subsequent periods.

The net defined benefit asset or obligation comprises the present value of the defined benefit obligation (using a discount rate based on government bonds, as explained in Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Estimating pension benefit costs and other employee benefits), net of the fair value of plan assets out of which the obligations are to be settled directly. Plan assets are assets held by a long-term employee benefit fund or qualifying insurance policies and are not available to our creditors nor can they be paid directly to us. Fair value is based on market price information and in the case of quoted securities, the published bid price and in the case of unquoted securities, the discounted cash flow using the income approach. The value of any defined benefit asset recognized is restricted to the asset ceiling which is the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan. See Note 25 – Pension and Other Employee Benefits – Defined Benefit Pension Plans for more details.

Defined contribution plans

Smart maintains a defined contribution plan that covers all regular full-time employees under which it pays fixed contributions based on the employees’ monthly salaries and for qualified employees to receive a defined benefit minimum guarantee. The defined benefit minimum guarantee is equivalent to a certain percentage of the monthly salary payable to an employee at normal retirement age with the required credited years of service based on the provisions of Republic Act
No. 7641.

Accordingly, Smart accounts for its obligation under the higher of the defined benefit obligation related to the minimum guarantee and the obligation arising from the defined contribution plan.

For the defined benefit minimum guarantee plan, the liability is determined based on the present value of the excess of the projected defined benefit obligation over the projected defined contribution obligation at the end of the reporting period. The defined benefit obligation is calculated annually by a qualified independent actuary using the projected unit credit method. Smart and certain of its subsidiaries determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense (income) and other expenses (income) related to the defined benefit plan are recognized in our consolidated income statements.

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The defined contribution liability, on the other hand, is measured at the fair value of the defined contribution assets upon which the defined contribution benefits depend, with an adjustment for margin on asset returns, if any, where this is reflected in the defined contribution benefits.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in our other comprehensive income.

When the benefits of the plan are changed or when the plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in our profit or loss. Gains or losses on the settlement of the defined benefit plan are recognized when the settlement occurs. See Note 25 – Pension and Other Employee Benefits – Defined Contribution Plans for more details.

Employee benefit costs include current service cost, net interest on the net defined benefit obligation, and remeasurements of the net defined benefit obligation. Past service costs and actuarial gains and losses are recognized immediately in our consolidated income statements.

The long-term employee benefit liability comprises the present value of the defined benefit obligation (using a discount rate based on government bonds) at the end of the reporting period and is determined using the projected unit credit method. See Note 25 – Pension and Other Employee Benefits – Other Long-term Employee Benefits for more details.

Leases

We assess at contract inception whether the contract is, or contains, a lease that is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration.

As a Lessee. We apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. We recognize lease liabilities to make lease payments and ROU assets representing the right to use the underlying assets.

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ROU assets

We recognize ROU assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). ROU assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of ROU assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless it is reasonably certain that we obtain ownership of the leased asset at the end of the lease term, the recognized ROU assets are depreciated on a straight-line basis over the shorter of its estimated useful life, or EUL, and the lease term. ROU assets are subject to impairment. Refer to the accounting policies in impairment of non-financial assets section.

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Lease liabilities

At the commencement date of the lease, we recognize lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option if reasonably certain to be exercised and payments of penalties for terminating a lease, if the lease term reflects exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, we use the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

As a Lessor. Leases in which we do not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income is accounted for on a straight-line basis over the lease term and is included in revenue in our consolidated income statements due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the bases as rental income.

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Sale and Leaseback. If we transfer an asset to another entity (the buyer-lessor) and leases that asset back from the buyer-lessor, we account for the transfer contract and the lease by applying the requirements of IFRS 16. We first apply the requirements for determining when a performance obligation is satisfied in IFRS 15 to determine whether the transfer of an asset is accounted for as a sale of that asset.

For transfer of an asset that satisfies the requirements of IFRS 15 to be accounted for as a sale of the asset, we measure the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained by us. Accordingly, we recognize only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor.

If the transfer of an asset does not satisfy the requirements of IFRS 15 to be accounted for as a sale of the asset, we continue to recognize the transferred asset and recognize a financial liability equal to the transfer proceeds. We account for the financial liability applying IFRS 9.

Income Taxes

Current income tax

Current income tax assets and liabilities for the current and prior years are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted as at the end of the reporting period where we operate and generate taxable income.

Current income tax relating to items recognized directly in equity is recognized in equity and not in our consolidated income statements. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred income tax

Deferred income tax is provided on all temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the end of the reporting period.

Contingencies

Contingent liabilities are not recognized in our consolidated financial statements. Unless the possibility of an outflow of resources embodying economic benefits is probable and measurable, they are disclosed in the notes to our consolidated financial statements. On the other hand, contingent assets are not recognized in our consolidated financial statements but are disclosed in the notes to our consolidated financial statements when an inflow of economic benefits is probable.

Segment Information

PLDT and its subsidiaries are organized into three business segments. Such business segments are the bases upon which we report our primary segment information. Financial information on business segments is presented in Note 4 – Operating Segment Information.

Events After the End of the Reporting Period

Post reporting period events up to the date of approval of the Board of Directors that provide additional information about our financial position at the end of the reporting period (adjusting events) are reflected in our consolidated financial statements. Post reporting period events that are classified as non-adjusting events are disclosed in the notes to our consolidated financial statements when material.

Equity

Preferred and common stocks are measured at par value for all shares issued. Incremental costs incurred directly attributable to the issuance of new shares are shown in equity as a deduction from proceeds, net of tax. Proceeds and/or fair value of considerations received in excess of par value are recognized as capital in excess of par value in our consolidated statements of changes in equity and consolidated statements of financial position.

Treasury stocks are our own equity instruments which are reacquired and recognized at cost and presented as reduction in equity. No gain or loss is recognized in our consolidated income statements on the purchase, sale, reissuance or cancellation

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of our own equity instruments. Any difference between the carrying amount and the consideration upon reissuance or cancellation of shares is recognized as capital in excess of par value in our consolidated statements of changes in equity and consolidated statements of financial position.

Change in the ownership interest of a subsidiary, without loss of control, is accounted for as an equity transaction and any impact is presented as part of capital in excess of par value in our consolidated statements of changes in equity.

Retained earnings represent our net accumulated earnings less cumulative dividends declared.

Other comprehensive income comprises of income and expense, including reclassification adjustments, that are not recognized in our consolidated income statements as required or permitted by IFRS.

Standards Issued But Not Yet Effective

Effective beginning on or after January 1, 2025

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Amendments to IAS 21, Lack of Exchangeability

The amendments specify when a currency is considered exchangeable. A currency is exchangeable if it can be exchanged for another currency through markets or mechanisms that create enforceable rights and obligations without undue delay. When a currency is not exchangeable, the amendments provide guidance on estimating the spot exchange rate. This rate should reflect the rate that would have applied in an orderly transaction between market participants at the measurement date. Entities are required to disclose information that helps users understand the impact of a currency’s lack of exchangeability on financial performance, financial position, and cash flows.

Earlier application is permitted. If an entity applies the amendments for an earlier period, it is required to disclose that fact. In applying the amendments, an entity is not permitted to restate comparative information.

The amendments will have no significant impact on our consolidated financial statements.

Effective beginning on or after January 1, 2026

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Amendments to IFRS 9 and IFRS 7, Amendments to the Classification and Measurement of Financial Instruments

The amendments to IFRS 9 provide guidance on the derecognition of a financial liability settled in cash using electronic payment system before settlement date if the specified criteria are met:

No practical ability to withdraw, stop or cancel the payment instruction

No practical ability to access the cash to be used for settlement as a result of the payment instruction; and

The settlement risk associated with the electronic payment system is insignificant.

In addition, the amendments introduced an additional SPPI test on the classification of financial assets with ESG (environment, social and governance)-linked features.

Amendments to IFRS 7 include additional disclosures on investments in equity instruments designated at FVOCI. An entity would be required to disclose the fair value gain or loss presented in OCI during the period, showing separately the fair value gain or loss that relates to investments derecognized in the period and the fair value gain or loss that relates to investments held at the end of the period. If an entity derecognizes investments in equity instruments measured at FVOCI during the reporting period, it is now required, under the amendments, to disclose any transfers of the cumulative gain or loss within equity during the reporting period related to the investments derecognized during that reporting period.

In addition, the amendments require disclosure of contractual terms that could change the timing or amount of contractual cash flows on the occurrence (or non-occurrence) of a contingent event that does not relate directly to changes in a basic lending risks and costs. The requirements apply to each class of financial asset measured at amortized cost or FVOCI and each class of financial liability measured at amortized cost.

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Effective beginning on or after January 1, 2027

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IFRS 18, Presentation and Disclosure in Financial Statements

IFRS 18 is a new accounting standard for presentation and disclosure in financial statements. This new standard replaces
IAS 1 Presentation of Financial Statements while carrying forward many of the requirements of IAS 1 IFRS 18 introduces new requirements to:

Present specified categories and defined subtotals in the Statement of Profit or Loss

Provide disclosures on Management-defined Performance Measures (MPMs)

Improve aggregation and disaggregation

Consequential to this new standard are minor amendments to IAS 7 and IAS 33.

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Amendments to IAS 7, Statement of Cash Flows

Amendments to IAS 7 include the changing of starting point for determining cash flows from operations under the indirect method, from “profit or loss” to “operating profit or loss”.

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Amendments to IAS 33, Earnings per Share

Entities may report additional EPS based on any component of the statement of comprehensive income. These additional EPS figures can only be disclosed in the notes if the numerator is a total or subtotal identified in IFRS 18 or an MPM.

Earlier application is permitted but it is required to disclose that fact. It applies retrospectively, requiring restatement of comparative periods in interim and annual financial statements, along with a reconciliation of the statement of profit or loss for the preceding comparative period.

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IFRS 19, Subsidiaries without Public Accountability: Disclosures

IFRS 19 is a new accounting standard disclosure for subsidiaries without public accountability. This new accounting standard will allow subsidiaries to keep only one set of accounting records to meet both parent company and user needs and reduce disclosure requirements, permitting disclosures more suited to user needs.

A subsidiary is eligible for the reduced disclosures if it does not have public accountability, and its parent produces publicly available IFRS-compliant consolidated financial statements. A subsidiary does not have public accountability if it has no listed equities or debt and does not hold assets in a fiduciary capacity for a broad group of outsiders.

Earlier application is permitted but it is required to disclose that fact.

Management’s Use of Accounting Judgments, Estimates and Assumptions

The preparation of our consolidated financial statements in conformity with IFRS requires us to make judgments, estimates and assumptions that affect the reported amounts of our revenues, expenses, assets and liabilities and disclosure of contingent liabilities at the end of each reporting period. The uncertainties inherent in these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the assets or liabilities affected in the future years.

Judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Judgments, key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting period are consistent with those applied in the most recent annual financial statements. Selected critical judgments and estimates applied in the preparation of the consolidated financial statements are discussed below:

Judgments

In the process of applying our accounting policies, management has made judgments, apart from those involving estimations, which have the most significant effect on the amounts recognized in our consolidated financial statements.

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Revenue Recognition

Identifying performance obligations

We identify performance obligations by considering whether the promised goods or services in the contract are distinct goods or services. A good or service is distinct when the customer can benefit from the good or service on its own or together with other resources that are readily available to the customer and our promise to transfer the good or service to the customer is separately identifiable from the other promises in the contract.

Revenues earned from multiple-deliverable arrangements offered by our fixed line and wireless businesses are split into separately identifiable performance obligations based on their relative stand-alone selling price in order to reflect the substance of the transaction. The transaction price represents the best evidence of stand-alone selling price for the services we offer since this is the observable price we charge if our services are sold separately. We account for customer contracts in accordance with IFRS 15 and have concluded that the service (telecommunication service) and non-service components (handset or equipment) may be accounted for as separate performance obligations. The handset or equipment is delivered first, followed by the telecommunication service (which is provided over the contract/lock-in period of generally three years for fixed line and two years for wireless). Revenue attributable to the separate performance obligations are based on the allocation of the transaction price relative to the stand-alone selling price.

Installation fees for voice and data services that are not custom-built for the subscribers are considered as a single performance obligation together with monthly service fees, recognized over the customer subscription period since the subscriber cannot benefit from the installation services on its own or together with other resources that are readily available to the subscriber. On the other hand, installation fees of data services that are custom-built for the subscribers are considered as a separate performance obligation and is recognized upon completion of the installation services. Activation fees for both voice and data services are also considered as a single performance obligation together with monthly service fees, recognized over the customer subscription period.

Principal versus agent consideration

We enter into contracts with our customers involving multiple deliverable arrangements. We determined that we control the goods before they are transferred to customers, and we have the ability to direct the use of the inventory. The following factors indicate that we control the goods before they are being transferred to customers:

We are primarily responsible for fulfilling the promise to provide the specified equipment;

We bear inventory risk on our inventory before it has been transferred to the customer; and

We have discretion in establishing the prices for the other party’s goods or services and, therefore, the benefit that we can receive from those goods or services is not limited. It is incumbent upon us to establish the price of our services to be offered to our subscribers.

Based on the foregoing, we are considered the principal in our contracts with other service providers except for certain VAS arrangements. We have the primary obligation to provide the services to the subscriber.

Timing of revenue recognition

We recognize revenues from contracts with customers over time or at a point in time depending on our evaluation of when the customer obtains control of the promised goods or services and based on the extent of progress towards completion of the performance obligation. For the telecommunication service which is provided over the contract period of two or more years, revenue is recognized monthly as we provide the service because control is transferred over time. For the device, which is sold at the inception of the contract, revenue is recognized at the time of delivery because control is transferred at a point in time.

Identifying methods for measuring progress of revenue recognized over time

We determine the appropriate method of measuring progress which is either through the use of input or output methods. Input method recognizes revenue on the basis of the entity’s efforts or inputs to the satisfaction of a performance obligation while output method recognizes revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date.

Revenue from telecommunication services is recognized through the use of input method wherein recognition is over time based on the customer subscription period since the customer simultaneously receives and consumes the benefits as the seller renders the services.

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Significant financing component

We concluded that the handset component included in contracts with customers has a significant financing component considering the period between the time of the transfer of control over the handset and the customer’s payment of the price of the handset, which is more than one year.

In determining the interest to be applied to the amount of consideration, we concluded that the interest rate is the market interest rate adjusted with credit spread to reflect the customer credit risk that is commensurate with the rate that would be reflected in a separate financing transaction between us and our customer at contract inception.

Estimation of stand-alone selling price

We assessed that the service and non-service components represent separate performance obligations, thus, the amount of revenues should be recognized based on the allocation of the transaction price to the different performance obligations based on their stand-alone selling prices. The stand-alone selling price is the price at which we sell the good or service separately to a customer. However, if goods or services are not currently offered separately, we use the adjusted market or cost-plus margin method to determine the stand-alone selling price to be used in the revenue allocation.

In terms of allocation of transaction price between performance obligations, we assessed that allocating the transaction price using the stand-alone selling prices of the services and handset will result in more revenue allocated to non-service component. The stand-alone selling price is based on the price in which we regularly sell the non-service and service component in a separate transaction.

Financial Instruments

Evaluation of business models in managing financial instruments

We determine our business model at the level that best reflects how we manage groups of financial assets to achieve our business objective. Our business model is not assessed on an instrument-by-instrument basis, but a higher level of aggregated portfolios and is based on observable factors such as:

How the performance of the business model and the financial assets held within that business model are evaluated and reported to the entity’s key management personnel;

The risks that affect the performance of the business model (and the financial assets held within that business model) and, in particular, the way those risks are managed; and

The expected frequency, value and timing of sales are also important aspects of our assessment.

The business model assessment is based on reasonably expected scenarios without taking ‘worst case’ or ‘stress case’ scenarios into account. If cash flows after initial recognition are realized in a way that is different from our original expectations, we do not change the classification of the remaining financial assets held in that business model but incorporates such information when assessing newly originated or newly purchased financial assets going forward.

We have determined that for cash and cash equivalents, short-term investments, investment in debt securities and other long-term investments, and trade and other receivables, the business model is to collect the contractual cash flows until maturity.

IFRS 9, however, emphasizes that if more than an infrequent number of sales are made out of a portfolio and those sales are more than insignificant in value, of financial assets carried at amortized cost, we should assess whether and how such sales are consistent with the objective of collecting contractual cash flows.

Definition of default and credit-impaired financial assets

We define a financial instrument as in default, which is fully aligned with the definition of credit-impaired, when it meets one or more of the following criteria:

•

Quantitative criteria

For trade receivables and all other financial assets subject to impairment, default occurs when the receivable becomes 90 days past due, except for trade receivables from corporate subscribers, which are determined to be in default when the receivables become 120 days past due.

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•

Qualitative criteria

The counterparty meets unlikeliness to pay criteria, which indicates the counterparty is in significant financial difficulty. These are instances where:

The counterparty is experiencing financial difficulty or is insolvent;

The counterparty is in breach of financial covenant(s);

An active market for that financial assets has disappeared because of financial difficulties;

Concessions have been granted by us, for economic or contractual reasons relating to the counterparty’s financial difficulty;

It is becoming probable that the counterparty will enter bankruptcy or other financial reorganization; and

Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.

The criteria above have been applied to all financial instruments, except FVPL, held by us and are consistent with the definition of default used for internal credit risk management purposes. The default definition has been applied consistently to the ECL models throughout our expected loss calculation.

Significant increase in credit risk

At each reporting date, we assess whether there has been a significant increase in credit risk for financial assets since initial recognition by comparing the risk of default occurring over the expected life between the reporting date and the date of initial recognition. We consider reasonable and supportable information that is relevant and available without undue cost or effort for this purpose. This includes quantitative and qualitative information and forward-looking analysis.

An exposure will migrate through the ECL stages as asset quality deteriorates. If, in a subsequent period, asset quality improves and also reverses any previously assessed significant increase in credit risk since origination, then the loss allowance measurement reverts from lifetime ECL to 12-month ECL.

Using our judgment and, where possible, relevant historical experience, we may determine that an exposure has undergone a significant increase in credit risk based on particular qualitative indicators that we consider are indicative of such and whose effect may not otherwise be fully reflected in its quantitative analysis on a timely basis.

As a backstop, we consider that a significant increase in credit risk occurs no later than when an asset is more than 30 days past due. Days past due are determined by counting the number of days since the earliest elapsed due date in respect of which full payment has not been received. Due dates are determined without considering any grace period that might be available to the counterparty.

Exposures that have not deteriorated significantly since origination, or where the deterioration remains within our investment grade criteria, or which are less than 30 days past due, are considered to have a low credit risk. The provision for credit losses for these financial assets is based on a 12-month ECL. The low credit risk exemption has been applied on debt investments that meet the investment grade criteria of the PLDT Group.

Determination of functional currency

The functional currencies of the entities under the PLDT Group are the currency of the primary economic environment in which each entity operates. It is the currency that mainly influences the revenue from and cost of rendering products and services.

The presentation currency of the PLDT Group is the Philippine Peso. Based on the economic substance of the underlying circumstances relevant to the PLDT Group, the functional currency of all entities under the PLDT Group is the Philippine Peso, except for PLDT Global and certain of its subsidiaries, and PGNL and certain of its subsidiaries which use the U.S. Dollar.

Determining the lease term of contracts with renewal and termination options – Company as a Lessee

Upon adoption of IFRS 16, we applied a single recognition and measurement approach for all leases, except for short-term leases and leases of ‘low-value’ assets. See Section Leases for the accounting policy.

We determine the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

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We, as the lessee, have the option, under some of our lease agreements to lease the assets for additional terms. We apply judgment in evaluating whether it is reasonably certain to exercise the option to renew. That is, we consider all relevant factors that create an economic incentive for us to exercise the renewal. After the commencement date, we reassess the lease term if there is a significant event or change in circumstances that is within our control and affects our ability to exercise or not to exercise the option to renew or to terminate (e.g., a change in business strategy).

We included the renewal period as part of the term for leases such as poles and leased circuits due to the significance of these assets to our operations. These leases have a non-cancellable period (i.e., one to 30 years) and there will be a significant negative effect on our provision of services if a replacement is not readily available. Furthermore, the periods covered by termination options are included as part of the lease term only when they are reasonably certain not to be exercised.

See Note 10 – Leases for information on potential future payments relating to periods following the exercise date of extension and termination options that are not included in the lease term.

Total depreciation of ROU assets from continuing operations recognized in our consolidated income statements amounted to Php5,255 million and Php4,937 million for the nine months ended September 30, 2024 and 2023, respectively, while that from discontinued operations amounted to nil and Php19 million for the nine months ended September 30, 2024 and 2023, respectively. Total lease liabilities amounted to Php52,575 million and Php47,546 million as at September 30, 2024 and December 31, 2023, respectively. See Note 2 - Summary of Material Accounting Policies - Discontinued Operations,
Note 10 – Leases and Note 27 – Financial Assets and Liabilities.

Sale and Leaseback of Telecom Towers

The accounting for sale and leaseback transaction depends on whether the transfer of the asset qualifies as a sale. We applied judgment to determine whether the transfer of asset is accounted for as a sale based on the requirements for determining when a performance obligation is satisfied in IFRS 15. We also applied estimates and judgment in determining many aspects, among others, the passive telecom assets and land lease as unit of accounts, the fair value of the towers sold, the measurement of the ROU assets retained by us and determining an appropriate discount rate to calculate the present value of the minimum lease payments.

Assets classified as held-for-sale

Smart and DMPI entered into sale and purchase agreements with certain tower companies in connection with the sale of telecom towers and related passive telecom infrastructure. The closing of the agreements will be on a staggered basis depending on the satisfaction of closing conditions based on the number of towers transferred and is expected to be completed within the year. With this agreement, we believe that certain conditions were met that qualified the related assets to be reclassified as held-for-sale.

See related discussion in Note 9 – Property and Equipment and Note 10 – Leases.

Accounting for investments in MediaQuest Holdings, Inc., or MediaQuest, through Philippine Depositary Receipts, or PDRs

ePLDT made various investments in PDRs issued by MediaQuest in relation to its direct interest in Satventures, Inc., or Satventures, and indirect interest in Cignal TV, Inc., or Cignal TV.

Based on our judgment, at the PLDT Group level, ePLDT’s investments in PDRs gives ePLDT a significant influence over Satventures and Cignal TV as evidenced by provision of essential technical information and material transactions among PLDT, Smart, Satventures and Cignal TV, and thus are accounted for as investments in associates using the equity method.

See related discussion in Note 11 – Investments in Associates and Joint Ventures – Investments in Associates – Investment of ePLDT in MediaQuest PDRs.

Accounting for investment of PCEV in Maya Bank, Inc., or Maya Bank

The shareholders’ agreement of Voyager Finserve Corporation, or VFC, and Paymaya Finserve Corporation, or PFC, (collectively known as the Bank HoldCos) requires affirmative vote of at least one director nominated by both PCEV and MIH to direct the relevant activities of the Bank HoldCos. The Bank HoldCos were incorporated for the sole purpose of

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holding shares or equity investments in Maya Bank. Because of the contractual arrangement between the parties, the investments in the Bank HoldCos are accounted for as joint venture.

See Note 11 – Investments in Associates and Joint Ventures – Investments in Associates – Investment of PCEV in Maya Bank.

Accounting for investments in Vega Telecom Inc., or VTI, Bow Arken Holdings Company, or Bow Arken, and Brightshare Holdings, Inc., or Brightshare

PLDT acquired a 50% equity interest in each of VTI, Bow Arken and Brightshare on May 30, 2016. See related discussion on Note 11 – Investments in Associates and Joint Ventures – Investments in Joint Ventures – Investments of PLDT in VTI, Bow Arken and Brightshare. Based on the Memorandum of Agreement, PLDT and Globe Telecom, Inc., or Globe, each has the right to appoint half the members of the Board of Directors of each of VTI, Bow Arken and Brightshare, as well as the
(i) co-Chairman of the Board; (ii) co-Chief Executive Officer and President; and (iii) co-Controller where any matter requiring their approval shall be deemed passed or approved if the consents of both co-officers holding the same position are obtained. All decisions of each Board of Directors may only be approved if at least one director nominated by each of PLDT and Globe votes in favor of it.

Based on these rights, PLDT and Globe have joint control over VTI, Bow Arken and Brightshare, which is defined in
IFRS 11, Joint Arrangements, as a contractually agreed sharing of control of an arrangement and exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Consequently, PLDT and Globe classified the joint arrangement as a joint venture in accordance with IFRS 11 given that PLDT and Globe each has the right to 50% of the net assets of VTI, Bow Arken and Brightshare and their respective subsidiaries.

Accordingly, PLDT accounted for the investment in VTI, Bow Arken and Brightshare using the equity method of accounting in accordance with IAS 28. Under the equity method of accounting, the investment is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor’s share of the investee’s net assets. See Note 11 – Investments in Associates and Joint Ventures – Investment in Joint Ventures – Investments of PLDT in VTI, Bow Arken and Brightshare.

Assessment of loss of control over Kayana

PLDT assesses the consequences of changes in the ownership interest in a subsidiary that may result in a loss of control as well as the consequence of losing control of a subsidiary during the reporting period. Whether or not PLDT retains control over the subsidiary depends on an evaluation of a number of factors that indicate if there are changes to one or more of the three elements of control. When PLDT has less than majority of the voting rights or similar rights to an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including, among others, representation on its board of directors, voting rights, and other rights of other investors, including their participation in significant decisions made in the ordinary course of business.

The September 30, 2024 subscription agreement resulted to PLDT’s owning 45% interest and MPIC and Meralco ownership at 27.5% each. Consequently, as at September 30, 2024, PLDT lost its control over Kayana and accounted for its remaining interest as investment in associate.

Material partly-owned subsidiaries

Our consolidated financial statements include additional information about subsidiaries that have non-controlling interest, or NCI, that are material to us, see Note 6 – Components of Other Comprehensive Loss. We determined material partly-owned subsidiaries as those with balance of NCI greater than 5% of the total equity as at September 30, 2024 and December 31, 2023.

Material associates and joint ventures

Our consolidated financial statements include additional information about associates and joint ventures that are material to us. See Note 11 – Investments in Associates and Joint Ventures. We determined material associates and joint ventures are those investees where our carrying amount of investments is greater than 5% of the total investments in associates and joint ventures as at September 30, 2024 and December 31, 2023.

Determining Taxable Profit, Tax Bases, Unused Tax Losses, Unused Tax Credits and Tax Rates

We assess whether we have any uncertain tax position and applies significant judgment in identifying uncertainties over our income tax treatments. We determined based on our assessment that it is probable that our income tax treatments (including those for the subsidiaries) will be accepted by the taxation authorities.

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Estimates and Assumptions

The key estimates and assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities recognized in our consolidated financial statements within the next financial year are discussed below. We based our estimates and assumptions on parameters available when our consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising beyond our control. Such changes are reflected in the assumptions when they occur.

Subscriber contract costs

Subscriber contract costs are costs to obtain (i.e., commissions) and costs to fulfill (i.e., installation and CPE costs) in relation to the services we provide to our subscribers. We assessed that these subscriber contract costs are incremental in obtaining and fulfilling our performance obligations. Accordingly, we capitalized subscriber contract costs and amortized as expense over the average customer relationship period.

We apply judgment to estimate the amortization period of subscriber contract costs. As part of our annual evaluation of the average customer relationship period, our reassessment in 2023 resulted to a shorter amortization period with a range of 3-6 years for certain types of subscriber contracts brought by the effect of Corona Virus Disease, or COVID-19 Pandemic, given the dynamic nature of subscriber behavior and market condition.

The change in the amortization period reflects the expected timing of transfer of the services to our subscribers. This was accounted for prospectively as a change in accounting estimate, thereby resulting in additional charges to profit or loss amounting to Php13,924 million for the full year 2023. Further details on subscriber contract costs are disclosed in
Note 18 – Prepayments and Other Non-Financial Assets.

Leases – Estimating the incremental borrowing rate, or IBR

In calculating the present value of lease payments, we use the IBR at the lease commencement date if the interest rate implicit in the lease is not readily determinable. IBR is the rate of interest that a lessee would have to pay to borrow over a similar term, similar security, the funds necessary to obtain an asset of a similar value to the ROU asset in a similar economic environment.

We use benchmark rates from partner banks based on the tenor of our loan borrowings plus a spread adjustment based on our credit worthiness.

Our lease liabilities amounted to Php52,575 million and Php47,546 million as at September 30, 2024 and December 31, 2023, respectively. See Note 10 – Leases.

Impairment of non-financial assets

IAS 36 requires that an impairment review be performed when certain impairment indicators are present. In the case of goodwill and intangible assets with indefinite useful life, at a minimum, such assets are subject to an impairment test annually and whenever there is an indication that such assets may be impaired. This requires an estimation of the VIU of the CGUs to which these assets are allocated. The VIU calculation requires us to make an estimate of the expected future cash flows from the CGU and to choose a suitable discount rate in order to calculate the present value of those cash flows. See
Note 14 – Goodwill and Intangible Assets – Impairment Testing of Goodwill for the key assumptions used to determine the VIU of the relevant CGUs.

Determining the recoverable amount of property and equipment, ROU assets, investments in associates and joint ventures, goodwill and intangible assets, prepayments and other noncurrent assets, requires us to make estimates and assumptions in the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such assets. Future events could cause us to conclude that property and equipment, ROU assets, investments in associates and joint ventures, intangible assets and other noncurrent assets associated with an acquired business are impaired. Any resulting impairment loss could have a material adverse impact on our financial position and financial performance.

The preparation of estimated future cash flows involves significant estimations and assumptions of future market conditions. While we believe that our assumptions are appropriate and reasonable, significant changes in our assumptions may materially affect our assessment of recoverable values and may lead to future impairment charges.

See Note 4 – Operating Segment Information, Note 5 – Income and Expenses – Asset Impairment, and Note 9 – Property and Equipment.

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The carrying values of our property and equipment, ROU assets, investments in associates and joint ventures, investment properties, goodwill and intangible assets, and prepayments are separately disclosed in Note 9 – Property and Equipment, Note 10 – Leases, Note 11 – Investments in Associates and Joint Ventures, Note 13 – Investment Properties,
Note 14 – Goodwill and Intangible Assets and Note 18 – Prepayments, respectively.

Estimating useful lives of property and equipment

We estimate the useful lives of each item of our property and equipment based on the periods over which our assets are expected to be available for use. Our estimation of the useful lives of our property and equipment is also based on our collective assessment of industry practice, internal technical evaluation and experience with similar assets. The estimated useful lives of each asset are reviewed at least every year-end and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limitations on the use of our assets. It is possible, however, that future results of operations could be materially affected by changes in our estimates brought about by changes in the factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of our property and equipment would increase our recorded depreciation and decrease the carrying amount of our property and equipment.

In 2023, PLDT and Smart increased the EUL of Information Technology assets and general computers and peripherals, due to technological advancement allowing extended warranty and Maintenance Agreement for hardware and services from vendor. Had the affected assets been depreciated using the original EUL, the depreciation would have been higher by Php546 million for PLDT and Php50 million for Smart for the full year 2023.

In 2023, Smart increased the EUL of Self-Supporting Tower due to cost-effective structure to transport, which allows future expansion and upgrades of mounting antennas and is designed for durability and resistance to withstand the elements, hence extending the vendor’s warranty. Had the affected assets been depreciated using the original EUL, the depreciation would have been higher by Php338 million for the full year 2023.

The total depreciation and amortization of property and equipment from continuing operations amounted to
Php26,387 million and Php31,107 million for the nine months ended September 30, 2024 and 2023, respectively, while that from discontinued operations amounted to nil and Php2 million for the nine months ended September 30, 2024 and 2023, respectively. Total carrying values of property and equipment, net of accumulated depreciation and amortization, amounted to Php308,216 million and Php287,103 million as at September 30, 2024 and December 31, 2023, respectively. See
Note 2 - Summary of Material Accounting Policies - Discontinued Operations, Note 4 – Operating Segment Information and Note 9 – Property and Equipment.

Estimating useful lives of intangible assets with finite lives

Intangible assets with finite lives are amortized over their expected useful lives using the straight-line method of amortization. At a minimum, the amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in our consolidated income statements.

The total amortization of intangible assets with finite lives amounted to Php171 million and Php166 million for the nine months ended September 30, 2024 and 2023, respectively. Total carrying values of intangible assets with finite lives amounted to Php1,173 million and Php1,174 million as at September 30, 2024 and December 31, 2023, respectively. See
Note 5 – Income and Expenses – Selling, General and Administrative Expenses and Note 14 – Goodwill and Intangible Assets.

Investment Properties

We carry our investment properties at fair value, with changes in fair value being recognized in the consolidated income statements. Investment properties have been determined based on appraisal performed by an independent firm of appraisers, an industry specialist in valuing these types of investment properties.

The valuation for land was based on a market approach valuation technique while the valuation for building and land improvements was based on a cost approach valuation technique using current material and labor costs for improvements based on external and independent reviewers. See Note 13 – Investment Properties.

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Recognition of deferred income tax assets

We review the carrying amounts of deferred income tax assets at the end of each reporting period and reduce these to the extent that these are no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax assets to be utilized. Our assessment on the recognition of deferred income tax assets on deductible temporary differences is based on the level and timing of forecasted taxable income of the subsequent reporting years. This forecast is based on our past results and future expectations on revenues and expenses as well as future tax planning strategies. Based on this, management expects that we will generate sufficient taxable income to allow all or part of our deferred income tax assets to be utilized.

Based on the above assessment, our consolidated unrecognized deferred income tax assets amounted to Php704 million and Php817 million as at September 30, 2024 and December 31, 2023, respectively. Total consolidated provision for deferred income tax amounted to Php4,504 million and Php4,749 million for the nine months ended September 30, 2024 and 2023, respectively. Total consolidated recognized net deferred income tax assets amounted to Php13,876 million and
Php18,172 million as at September 30, 2024 and December 31, 2023, respectively. See Note 4 – Operating Segment Information and Note 7 – Income Taxes.

Estimating allowance for ECLs

Measurement of ECLs

ECLs are derived from unbiased and probability-weighted estimates of expected loss, and are measured as follows:

•

Financial assets that are not credit-impaired at the reporting date: as the present value of all cash shortfalls over the expected life of the financial asset discounted by the EIR. The cash shortfall is the difference between the cash flows due to us in accordance with the contract and the cash flows that we expect to receive; and

•

Financial assets that are credit-impaired at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows discounted by the EIR.

We leverage existing risk management indicators (e.g., internal credit risk classification and restructuring triggers), credit risk rating changes and reasonable and supportable information which allow us to identify whether the credit risk of financial assets has significantly increased.

Inputs, assumptions and estimation techniques

•

General approach for cash in bank, short-term investments, debt securities, financial assets at FVOCI and advances and other noncurrent assets

The ECL is measured on either a 12-month or lifetime basis depending on whether a significant increase in credit risk has occurred since initial recognition. We consider the probability of our counterparty to default on its obligation and the expected loss at default after considering the effects of collateral, any potential value when realized and time value of money. Based on our assessment, there is no significant increase in credit risk and the ECL for these financial assets under a general approach is measured on a 12-month basis.

The assumptions underlying the ECL calculation are monitored and reviewed on a quarterly basis.

•

Simplified approach for trade and other receivables and contract assets

The simplified approach does not require the tracking of changes in credit risk, but instead requires the recognition of lifetime ECL. For trade receivables and contract assets, we use the simplified approach for calculating ECL. We have considered similarities in underlying credit risk characteristics and behavior in determining the groupings of various customer segments.

We used historically observed default rates and adjusted these historical credit loss experiences with forward-looking information. At every reporting date, the historical default rates are updated and changes in the forward-looking estimates are analyzed.

There have been no significant changes in the estimation techniques used for calculating ECL on trade and other receivables and contract assets.

•

Incorporation of forward-looking information

We incorporated forward-looking information into both our assessment of whether the credit risk of an instrument has

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increased significantly since its initial recognition and our measurement of ECL.

To do this, management considered a range of relevant forward-looking macroeconomic assumptions and probability weights for the determination of unbiased general industry adjustments and any related specific industry adjustments that support the calculation of ECLs.

The macroeconomic factors are aligned with information used by us for other purposes such as strategic planning and budgeting.

The probability weights used in the calculation of ECLs cover a range of possible outcomes based on the current and projected economic conditions.

We have identified and documented key drivers of credit risk and credit losses of each portfolio of financial instruments and, using an analysis of historical data, has estimated relationships between macroeconomic variables and credit risk and credit losses.

Predicted relationship between the key indicators and default and loss rates on various portfolios of financial assets have been developed based on analyzing historical data over the past three to eight years. The methodologies and assumptions including any forecasts of future economic conditions are reviewed regularly.

Due to lack of reasonable and supportable information, we have not identified any uncertain event that was assessed to be relevant to the risk of default occurring, thus we are not able to estimate the impact on ECL.

Total provision for expected credit losses for trade and other receivables from continuing operations amounted to
Php2,712 million and Php3,019 million for the nine months ended September 30, 2024 and 2023, respectively, while that from discontinued operations amounted to nil and Php3 million for the nine months ended September 30, 2024 and 2023, respectively. Trade and other receivables, net of allowance for expected credit losses, amounted to Php28,596 million and Php26,086 million as at September 30, 2024 and December 31, 2023, respectively. See Note 5 – Income and Expenses and Note 16 – Trade and Other Receivables.

Total impairment losses on contract assets amounted to Php134 million and Php180 million for the nine months ended
September 30, 2024 and 2023, respectively. Contract assets, net of allowance for expected credit losses, amounted to
Php2,048 million and Php1,918 million as at September 30, 2024 and December 31, 2023, respectively. See Note 5 – Income and Expenses – Contract Balances.

•

Grouping of instruments for losses measured on collective basis

A broad range of forward-looking information was considered as economic inputs such as the gross domestic product, or GDP, inflation rate, unemployment rates, export rates, The Group of Twenty, or G20 GDP and G20 inflation rates. For expected credit loss provisions modelled on a collective basis, grouping of exposures is performed on the basis of shared risk characteristics, such that risk exposures within a group are homogeneous. In performing this grouping, there must be sufficient information for the PLDT Group to be statistically acceptable. Where sufficient information is not available internally, then we have considered benchmarking internal/external supplementary data to use for modelling purposes. The characteristics and any supplementary data used to determine groupings are outlined below.

Trade receivables – Groupings for collective measurement

Retail subscribers;

Corporate subscribers;

Foreign administrations and domestic carriers; and

Dealers, agents and others

The following credit exposures are assessed individually:

•

All stage 3 assets, regardless of the class of financial assets; and

•

The cash and cash equivalents, investment in debt securities and financial assets at FVOCI, and other financial assets.

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Estimating pension benefit costs and other employee benefits

The cost of defined benefit and present value of the pension obligation are determined using the projected unit credit method. An actuarial valuation includes making various assumptions which consist, among other things, discount rates, rates of compensation increases and mortality rates. Further, our accrued benefit cost is affected by the fair value of the plan assets. Key assumptions used to estimate fair value of the unlisted equity investments included in the plan assets consist of revenue growth rate, direct costs, capital expenditures, discount rates and terminal growth rates. See Note 25 – Pension and Other Employee Benefits. Due to complexity of valuation, the underlying assumptions and its long-term nature, a defined benefit obligation is highly sensitive to changes in assumptions. While we believe that our assumptions are reasonable and appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our cost for pension and other retirement obligations. All assumptions are reviewed every year-end.

The net consolidated pension benefit costs from continuing operations amounted to Php1,110 million and Php903 million for the nine months ended September 30, 2024 and 2023, respectively. The prepaid benefit costs amounted to Php976 million and Php917 million as at September 30, 2024 and December 31, 2023, respectively. The accrued benefit costs amounted to Php1,625 million and Php3,541 million as at September 30, 2024 and December 31, 2023, respectively. See
Note 5 – Income and Expenses – Compensation and Employee Benefits, Note 18 – Prepayments and
Note 25 – Pension and Other Employee Benefits.

Long-term Incentive Plan, LTIP

The Executive Compensation Committee (ECC) of the PLDT Board of Directors approved the LTIP covering the years 2022 to 2026, on December 23, 2021. It covers two cycles and is intended to provide incentive compensation in the form of cash to key officers, executives and other eligible participants who are consistent performers, compliant with codes of conduct and contributors to our strategic and financial goals, with defined metrics based on the achievement of telco core income, customer experience and sustainability. The target metrics for Sustainability are expected to capture the Company’s performance in various environmental, social, and governance (ESG) materiality areas, including but not limited to, climate action such as initiatives to reduce energy consumption and greenhouse gas (GHG) emissions, employee and customer welfare, diversity and inclusion, cyber security and data privacy, and business ethics. Cycle 1 covers the performance period from 2022 to 2024 and payout will be based on the achievement of performance targets. Cycle 2 covers the performance period from 2025 to 2026 and is subject to the ECC’s further evaluation and approval of the final terms.

This long-term employee benefit liability was recognized and measured using the projected unit credit method and was amortized on a straight-line basis over the vesting period.

The expense accrued for the LTIP amounted to Php857 million and Php668 million for the nine months ended
September 30, 2024 and 2023, respectively.

The accrued incentive payable amounted to Php3,039 million and Php2,182 million as at September 30, 2024 and
December 31, 2023, respectively. See Note 5 – Income and Expenses – Compensation and Employee Benefits and
Note 25 – Pension and Other Employee Benefits – Other Long-term Employee Benefits.

Provision for asset retirement obligations

Provision for asset retirement obligations is recognized in the period in which this is incurred if a reasonable estimate can be made. This requires an estimation of the cost to restore or dismantle on a per square meter basis, depending on the location, and is based on the best estimate of the expenditure required to settle the obligation at the future restoration or dismantlement date, discounted using a pre-tax rate that reflects the current market assessment of the time value of money and, where appropriate, the risk specific to the liability. Total provision for asset retirement obligations amounted to Php1,213 million and Php1,164 million as at September 30, 2024 and December 31, 2023, respectively. See Note 21 – Deferred Credits and Other Noncurrent Liabilities.

Provision for legal contingencies and tax assessments

We are currently involved in various legal proceedings and tax assessments. Our estimates 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 are based upon our analysis of potential results. Based on management’s assessment, appropriate provisions were made. We currently do not believe these proceedings could materially reduce our revenues and profitability. It is possible, however, that future financial position and performance could be materially affected by changes in our estimates or the effectiveness of our strategies relating to these proceedings and assessments. See Note 26 – Provisions and Contingencies.

F-44

Determination of fair values of financial assets and financial liabilities

When the fair value of financial assets and financial liabilities recorded in our consolidated statements of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flows model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

Other than those whose carrying amounts are reasonable approximations of fair values, total fair values of noncurrent financial assets and noncurrent financial liabilities as at September 30, 2024 amounted to Php3,053 million and
Php243,371 million, respectively, while the total fair values of noncurrent financial assets and noncurrent financial liabilities as at December 31, 2023 amounted to Php3,571 million and Php233,845 million, respectively. See
Note 27 – Financial Assets and Liabilities.

Operating Segment Information

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;

•

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 through ePLDT and its subsidiaries; 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 Material Accounting Policies for further discussion.

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

F-45

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 nine months ended September 30, 2024 and 2023, and as at September 30, 2024 and December 31, 2023 are as follows:


	Wireless		Fixed Line			Others			Inter- segment Transactions			Consolidated
	(in million pesos)
September 30, 2024 (Unaudited)
Revenues
External customers		77,924		83,018			—			—			160,942
Service revenues		72,294		82,701			—			—			154,995
Non-service revenues		5,630		317			—			—			5,947
Inter-segment transactions		611		12,417			—			(13,028	)		—
Service revenues		611		12,417			—			(13,028	)		—
Non-service revenues		—		—			—			—			—
Total revenues		78,535		95,435			—			(13,028	)		160,942
Results
Depreciation and amortization		24,852		19,329			—			(7,019	)		37,162
Asset impairment		648		2,421			—			—			3,069
Interest income		545		182			12			(21	)		718
Equity share in net losses of associates and joint ventures		—		(145	)		(974	)		—			(1,119	)
Financing costs – net		7,112		5,188			—			(1,328	)		10,972
Provision for (benefit from) income tax		2,527		5,998			(12	)		326			8,839
Net income (loss) / Segment profit (loss)		8,318		27,116			(1,099	)		(6,111	)		28,224

Assets and liabilities
Operating assets		337,964		281,802			17,371			(83,595	)		553,542
Investments in associates and joint ventures		41		44,680			7,856			—			52,577
Deferred income tax assets – net		6,401		7,484			65			(74	)		13,876
Total assets		344,406		333,966			25,292			(83,669	)		619,995
Operating liabilities		291,592		291,871			3,525			(79,954	)		507,034
Deferred income tax liabilities		8		21			—			1			30
Total liabilities		291,600		291,892			3,525			(79,953	)		507,064
Other segment information
Capital expenditures, including capitalized interest (Note 9)(1)(2)		19,129		33,023			185			—			52,337

(1) Net of additions subject to sale and leaseback from tower companies.

(2) Includes capitalization of subscriber contract cost to fulfill.

F-46


	Wireless		Fixed Line			Others			Inter- segment Transactions			Consolidated
	(in million pesos)
September 30, 2023 (Unaudited)
Revenues
External customers		76,723		79,633			—			—			156,356
Service revenues		70,410		79,342			—			—			149,752
Non-service revenues		6,313		291			—			—			6,604
Inter-segment transactions		511		10,094			—			(10,605	)		—
Service revenues		511		10,094			—			(10,605	)		—
Non-service revenues		—		—			—			—			—
Total revenues		77,234		89,727			—			(10,605	)		156,356

Results
Depreciation and amortization		23,376		20,158			—			(7,490	)		36,044
Asset impairment		618		2,671			—			—			3,289
Interest income		507		247			6			(27	)		733
Equity share in net losses of associates and joint ventures		—		(585	)		(1,718	)		—			(2,303	)
Financing costs – net		6,668		5,067			—			(1,658	)		10,077
Provision for income tax		4,016		5,466			—			51			9,533
Net income (loss) / Segment profit (loss)		13,246		25,609			(1,807	)		(9,037	)		27,998
Continuing operations		13,246		25,609			(1,807	)		(9,037	)		28,011
Discontinued operations (Notes 2 and 8)		—		—			—			—			(13	)

December 31, 2023 (Audited)
Assets and liabilities
Operating assets		291,140		260,220			13,415			(23,736	)		541,039
Investments in associates and joint ventures		41		42,709			7,558			—			50,308
Deferred income tax assets – net		5,356		11,270			53			1,493			18,172
Total assets		296,537		314,199			21,026			(22,243	)		609,519
Operating liabilities		233,237		279,660			1,883			(15,812	)		498,968
Deferred income tax liabilities		—		165			—			—			165
Total liabilities		233,237		279,825			1,883			(15,812	)		499,133

September 30, 2023 (Unaudited)
Other segment information
Capital expenditures, including capitalized interest (Note 9)(1)		27,308		28,000			—			—			55,308

(1) Net of additions subject to sale and leaseback from tower companies.

F-47

The following table presents our revenues from external customers by category of products and services for the nine months ended September 30, 2024 and 2023:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Wireless services
Service revenues:
Mobile		71,181		69,168
Home broadband		1,113		1,242
		72,294		70,410
Non-service revenues:
Sale of mobile handsets and broadband data modems		5,630		6,313
Total wireless revenues		77,924		76,723
Fixed line services
Service revenues:
Data		61,690		60,655
Voice and miscellaneous		21,011		18,687
		82,701		79,342
Non-service revenues:
Sale of phone units, devices and others		317		291
Total fixed line revenues		83,018		79,633
Total revenues		160,942		156,356

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 nine months ended September 30, 2024 and 2023.

Income and Expenses

Revenues from Contracts with Customers

Disaggregation of Revenue

We derived our revenue from the transfer of goods and services over time and at a point in time in the following major product lines. This is consistent with the revenue information that is disclosed for each reportable segment under IFRS 8, Operating Segments. See Note 4 – Operating Segment Information.

Set out below is the disaggregation of PLDT Group’s revenues from contracts with customers for the nine months ended
September 30, 2024 and 2023:


Revenue Streams	Wireless		Fixed Line		Others		Inter- segment Transactions			Consolidated
	(in million pesos)
September 30, 2024 (Unaudited)
Type of good or service
Service revenue		72,905		95,118		—		(13,028	)		154,995
Non-service revenue		5,630		317		—		—			5,947
Total revenues from contracts with customers		78,535		95,435		—		(13,028	)		160,942

Timing of revenue recognition
Transferred over time		72,905		95,118		—		(13,028	)		154,995
Transferred at a point time		5,630		317		—		—			5,947
Total revenues from contracts with customers		78,535		95,435		—		(13,028	)		160,942

September 30, 2023 (Unaudited)
Type of good or service
Service revenue		70,921		89,436		—		(10,605	)		149,752
Non-service revenue		6,313		291		—		—			6,604
Total revenues from contracts with customers		77,234		89,727		—		(10,605	)		156,356

Timing of revenue recognition
Transferred over time		70,921		89,436		—		(10,605	)		149,752
Transferred at a point time		6,313		291		—		—			6,604
Total revenues from contracts with customers		77,234		89,727		—		(10,605	)		156,356

Remaining performance obligations are associated with our wireless and fixed line subscription contracts. As at
September 30, 2024, excluding the performance obligations for contracts with original expected duration of less than one year,

F-48

the aggregate amount of the transaction price allocated to remaining performance obligations was Php26,864 million, of which we expect to recognize approximately 20% in 2024 and 80% in 2025 and onwards. As at December 31, 2023, excluding the performance obligations for contracts with original expected duration of less than one year, the aggregate amount of the transaction price allocated to remaining performance obligations was Php40,487 million, of which we recognized approximately 56% in 2024 and expect to recognize 44% in 2025 and onwards.

Contract Balances

Contract balances as at September 30, 2024 and December 31, 2023 consists of the following:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Trade and other receivables (Note 16)		47,788		43,301
Contract assets		2,094		1,960
Contract liabilities and unearned revenues (Notes 21 and 23)		18,699		18,895

Set out below is the movement in the allowance for expected credit losses of contracts assets as at September 30, 2024 and
December 31, 2023.


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
			(in million pesos)
Balances at beginning of the period		42			45
Provisions		4			—
Reversals		—			(3	)
Balances at end of the period		46			42

Changes in the contract liabilities and unearned revenues accounts for the nine months ended September 30, 2024 and for the year ended December 31, 2023 follow:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Balances at beginning of the period		18,895			17,114
Deferred during the period		95,590			135,982
Recognized as revenue during the period		(95,786	)		(134,201	)
Balances at end of the period		18,699			18,895

The contract liabilities and unearned revenues accounts as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Unearned revenues from prepaid contracts		6,435		6,864
Short-term advances for installation services		5,386		5,004
Leased facilities (Note 24)		4,860		4,851
Advance monthly service fees		1,990		2,152
Long-term advances from equipment		28		24
Total contract liabilities and unearned revenues		18,699		18,895

Contract liabilities:
Noncurrent (Note 21)		269		300
Current (Note 23)		17		16

Unearned revenues:
Noncurrent (Note 21)		8,133		7,906
Current (Note 23)		10,280		10,673

F-49

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the nine months ended September 30, 2024 and 2023 consist of the following:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Repairs and maintenance (Notes 13, 17 and 24)		22,749		22,046
Compensation and employee benefits		18,869		18,719
Professional and other contracted services (Note 24)		5,609		6,111
Selling and promotions (Notes 18 and 24)		4,211		4,588
Taxes and licenses		3,980		3,793
Insurance and security services (Note 24)		1,014		972
Rent (Notes 10 and 24)		905		1,196
Communication, training and travel (Note 24)		878		851
Amortization of intangible assets (Note 14)		171		166
Other expenses		349		447
Total selling, general and administrative expenses		58,735		58,889

Compensation and Employee Benefits

Compensation and employee benefits for the nine months ended September 30, 2024 and 2023 consist of the following:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Salaries and other employee benefits		15,460		15,251
Pension benefit costs (Note 25)		1,110		903
Incentive plan (Note 25)		857		668
MRP		1,442		1,897
Total compensation and employee benefits		18,869		18,719

Over the past several years, we have been implementing the MRP in line with our continuing efforts to reduce the cost base of our businesses. The decision to implement the MRP was a result of challenges faced by our businesses as significant changes in technology, increasing competition, and shifting market preferences have reshaped the future of our businesses. The MRP is being implemented in compliance with the Labor Code of the Philippines and all other relevant labor laws and regulations in the Philippines.

Cost of Sales and Services

Cost of sales and services for the nine months ended September 30, 2024 and 2023 consist of the following:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Cost of mobile handsets, phone units, broadband data modems and devices		7,211		7,953
Cost of services		2,808		2,949
Total cost of sales and services		10,019		10,902

Asset Impairment

Asset impairment for the nine months ended September 30, 2024 and 2023 consist of the following:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Trade and other receivables (Note 16)		2,712		3,019
Inventories and supplies (Note 17)		155		90
Contract assets		134		180
Property and equipment		67		—
Prepayments		1		—
Total asset impairment		3,069		3,289

F-50

Other Income (Expenses) – Net

Other income (expenses) – net for the nine months ended September 30, 2024 and 2023 consist of the following:


	September 30,
	2024			2023
	(Unaudited)
	(in million pesos)
Gains on derivative financial instruments – net (Note 27)		2,066			2,207
Foreign exchange gains – net		1,389			28
Gain on sale and leaseback of telecom towers – gross of expenses (Note 9)		1,165			5,008
Interest income		718			733
Gain on disposal of property and equipment		79			389
Equity share in net losses of associates and joint ventures (Note 11)		(1,119	)		(2,303	)
Financing costs – net		(10,972	)		(10,077	)
Others – net		1,882			1,790
Total other expenses – net		(4,792	)		(2,225	)

Interest Income

Interest income for the nine months ended September 30, 2024 and 2023 consist of the following:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Interest income arising from revenue contracts with customers		428		335
Interest income on cash and cash equivalents (Note 15)		231		340
Interest income on financial instruments at amortized cost (Note 12)		36		41
Interest income on financial instruments at FVPL		8		8
Interest income – others		15		9
Total interest income		718		733

Financing Costs – Net

Financing costs – net for the nine months ended September 30, 2024 and 2023 consist of the following:


	September 30,
	2024			2023
	(Unaudited)
	(in million pesos)
Interest on loans and other related items (Notes 20 and 27)		9,870			8,987
Accretion on lease liabilities (Note 10)		2,900			2,371
Accretion on financial liabilities (Note 20)		275			270
Financing charges		53			77
Capitalized interest (Notes 9 and 28)		(2,126	)		(1,628	)
Total financing costs – net		10,972			10,077

F-51

6. Components of Other Comprehensive Loss

Changes in other comprehensive loss under equity of our consolidated statements of financial position for the nine months ended September 30, 2024 and 2023 are as follows:


	Foreign currency translation differences of subsidiaries			Net loss on financial investments at FVPL – net of tax			Net transactions on cash flow hedges – net of tax			Revaluation increment on investment properties – net of tax		Actuarial gains (losses) on defined benefit plans – net of tax			Share in the other comprehensive loss of associates and joint ventures accounted for using the equity method			Fair value changes of financial instrument at FVOCI			Total other comprehensive loss attributable to equity holders of PLDT			Share of noncontrolling interests			Total other comprehensive loss – net of tax
	(in million pesos)
Balances as at January 1, 2024		133			—			(4,608	)		544		(38,260	)		(21	)		—			(42,212	)		10			(42,202	)
Other comprehensive income (loss)		101			—			(910	)		—		(10	)		—			—			(819	)		(35	)		(854	)
Balances as at September 30, 2024 (Unaudited)		234			—			(5,518	)		544		(38,270	)		(21	)		—			(43,031	)		(25	)		(43,056	)

Balances as at January 1, 2023		149			(9	)		(3,287	)		544		(32,856	)		(20	)		(3	)		(35,482	)		25			(35,457	)
Other comprehensive income (loss)		2			—			(1,245	)		—		155			—			—			(1,088	)		(2	)		(1,090	)
		151			(9	)		(4,532	)		544		(32,701	)		(20	)		(3	)		(36,570	)		23			(36,547	)
Adjustments		(8	)		9			(65	)		—		65			(4	)		3			—			—			—
Balances as at September 30, 2023 (Unaudited)		143			—			(4,597	)		544		(32,636	)		(24	)		—			(36,570	)		23			(36,547	)

Revaluation increment on investment properties pertains to the difference between the carrying value and fair value of property and equipment transferred to investment property at the time of change in classification.

F-52

Income Taxes

Corporate Income Tax

The major components of consolidated net deferred income tax assets and liabilities recognized in our consolidated statements of financial position as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Net deferred income tax assets		13,876		18,172
Net deferred income tax liabilities		30		165

The components of our consolidated net deferred income tax assets and liabilities as at September 30, 2024 and
December 31, 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Net deferred income tax assets:
Unearned revenues		4,251			5,192
Accumulated provision for expected credit losses		3,704			3,667
Lease liability over ROU assets under IFRS 16(1)		3,356			3,448
Fixed asset impairment/depreciation due to shortened life of property and equipment		2,310			2,875
Pension and other employee benefits		2,206			2,224
Unamortized past service pension costs		1,908			2,629
Unrealized foreign exchange gains		1,036			1,157
NOLCO		473			199
Accumulated write-down of inventories to net realizable values		340			393
Excess MCIT over RCIT		6			—
Derivative financial instruments		(75	)		215
Taxes and duties capitalized		(162	)		(147	)
Customer list and trademark		(338	)		(272	)
Capitalized charges and others		(5,139	)		(3,408	)
Total deferred income tax assets – net		13,876			18,172
Net deferred income tax liabilities:
Investment property		10			240
Unrealized foreign exchange gains		13			21
Others		7			(96	)
Total deferred income tax liabilities		30			165

(1) As at September 30, 2024 and December 31, 2023, the deferred tax asset on lease liability amounted to Php12,988 million and Php11,909 million,
respectively while the deferred tax liability on right of use asset amounted to Php9,632 million and Php8,461 million, respectively.

Changes in our consolidated net deferred income tax assets (liabilities) for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Net deferred income tax assets – balances at beginning of the period		18,172			17,636
Net deferred income tax liabilities – balances at beginning of the period		(165	)		(204	)
Net balances at beginning of the period		18,007			17,432
Movement charged directly to other comprehensive income		335			2,226
Provision for deferred income tax		(4,504	)		(1,648	)
Others		8			(3	)
Net balances at end of the period		13,846			18,007

F-53

The analysis of our consolidated net deferred income tax assets as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Deferred income tax assets:
Deferred income tax assets to be recovered after 12 months		9,316		15,423
Deferred income tax assets to be recovered within 12 months		4,560		2,749
Net deferred income tax assets		13,876		18,172

The analysis of our consolidated net deferred income tax liabilities as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Deferred income tax liabilities:
Deferred income tax liabilities to be settled after 12 months		30		165
Deferred income tax liabilities to be settled within 12 months		—		—
Net deferred income tax liabilities		30		165

Provision for income tax for the nine months ended September 30, 2024 and 2023 consist of:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Current		4,335		4,784
Deferred (Note 3)		4,504		4,749
		8,839		9,533

The reconciliation between the provision for income tax at the applicable statutory tax rate and the actual provision for corporate income tax for the nine months ended September 30, 2024 and 2023 are as follows:


	September 30,
	2024			2023
	(Unaudited)
	(in million pesos)
Provision for income tax at the applicable statutory tax rate		9,266			9,383
Tax effects of:
Equity share in net losses of associates and joint ventures		240			575
Nondeductible expenses		17			46
Loss not subject to income tax		54			(1	)
Special deductible items and income subject to lower tax rate		(130	)		(103	)
Income subject to final tax		(143	)		(199	)
Difference between Optional Standard Deduction (OSD) and itemized deductions		(247	)		(315	)
Net movement in unrecognized deferred income tax assets and other adjustments		(218	)		147
Actual provision for income tax		8,839			9,533

F-54

The breakdown of our consolidated deductible temporary differences, carryforward benefits of unused tax credits from excess of MCIT over RCIT, and NOLCO (excluding those not recognized due to the adoption of the OSD method) for which no deferred income tax assets were recognized and the equivalent amount of unrecognized deferred income tax assets as at
September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Accumulated provision for expected credit losses		1,274			1,294
NOLCO		1,204			1,541
Fixed asset impairment		176			192
Unrealized foreign exchange losses		51			37
Customer list and trademark		49			49
Provisions		36			72
Accumulated write-down of inventories to net realizable values		14			22
Unearned revenues		8			9
Lease liability over ROU assets under IFRS 16		3			1
Excess MCIT over RCIT		3			2
Pension and other employee benefits		(4	)		(3	)
Derivative financial instruments		(6	)		44
		2,808			3,260
Unrecognized deferred income tax assets		704			817

In 2024, DMPI, IP Converge and VITRO availed the OSD method in computing their taxable income. This assessment is based on projected taxable profits at a level where it is favorable to use OSD method. These companies are also expected to avail of the OSD method in the foreseeable future. Thus, certain deferred income tax assets of DMPI, IP Converge and VITRO amounting to Php226 million as at September 30, 2024 were not recognized.

Our consolidated deferred income tax assets have been recorded to the extent that such consolidated deferred income tax assets are expected to be utilized against sufficient future taxable profit. Deferred income tax assets shown in the preceding table were not recognized as we believe that future taxable profit will not be sufficient to realize these deductible temporary differences and carryforward benefits of unused tax credits from excess of MCIT over RCIT, and NOLCO in the future.

The breakdown of our consolidated excess MCIT and NOLCO as at September 30, 2024 are as follows:


Date Incurred	Expiry Date	MCIT			NOLCO
		(in million pesos)
December 31, 2021	December 31, 2024		1			—
December 31, 2021(a)	December 31, 2026		—			53
December 31, 2022	December 31, 2025		—			764
December 31, 2023	December 31, 2026		1			1,116
September 30, 2024	December 31, 2026		7			1,211
			9			3,144
Consolidated tax benefits			9			786
Consolidated unrecognized deferred income tax assets			(3	)		(313	)
Consolidated recognized deferred income tax assets			6			473

(a) Under R.A. 11494.

The excess MCIT totaling Php9 million as at September 30, 2024 can be deducted against future RCIT liability. There was no excess MCIT that was deducted against RCIT for the nine months ended September 30, 2024 and 2023.

NOLCO totaling Php3,144 million as at September 30, 2024 can be claimed as deduction against future taxable income. The NOLCO claimed as deduction against taxable income amounted to Php379 million and Php129 million for the nine months ended September 30, 2024 and 2023, respectively.

Republic Act No. 11494 Bayanihan to Recover as One Act, or Bayanihan II

Republic Act No. 11494, otherwise known as the Bayanihan to Recover as One Act, or Bayanihan II, was signed by
President Rodrigo Duterte on September 11, 2020. It contains the government’s second wave of relief measures to address the health and economic crises that stemmed from the COVID-19 outbreak.

As part of mitigating the costs and losses stemming from the disruption of economic activities, Bayanihan II extended the carry-over of the NOLCO incurred in 2021 as deductions from gross income for the next five consecutive taxable years immediately following the year of the loss. Hence, NOLCO incurred in 2021 amounting to Php53 million, which ordinarily can be carried over until December 31, 2024, has been extended until December 31, 2026.

F-55

Registration with Clark Special Economic Zone

ClarkTel is registered with Clark Special Economic Zone, or Economic Zones, under Republic Act No. 7227 otherwise known as the Bases Conversion and Development Act of 1992. As registrant, ClarkTel is entitled to all the rights, privileges and benefits established thereunder including tax and duty-free importation of capital equipment and a special income tax rate of 5% of gross income, as defined in Republic Act No. 7227.

Our consolidated income derived from non-registered activities within the Economic Zones is subject to the RCIT rate at the end of the reporting period. See Note 19 – Equity.

8. Earnings Per Common Share

The following table presents information necessary to calculate the EPS for the nine months ended September 30, 2024 and 2023:


	September 30,
	2024						2023
	Basic			Diluted			Basic			Diluted
	(in million pesos)
Net income attributable to equity holders of PLDT from:
Continuing operations		28,070			28,070			27,892			27,892
Discontinued operations		—			—			(13	)		(13	)
Consolidated net income attributable to common shares		28,070			28,070			27,879			27,879
Dividends on preferred shares (Note 19)		(44	)		(44	)		(44	)		(44	)
Consolidated net income attributable to common equity holders of PLDT		28,026			28,026			27,835			27,835

	(in thousands, except per share amounts which are in pesos)
Outstanding common shares at beginning of period		216,056			216,056			216,056			216,056
Weighted average number of common shares		216,056			216,056			216,056			216,056

EPS from continuing operations		129.71			129.71			128.89			128.89
EPS from discontinued operations		—			—			(0.06	)		(0.06	)
EPS attributable to common equity holders of PLDT		129.71			129.71			128.83			128.83

Basic EPS amounts are calculated by dividing our consolidated net income for the period attributable to common equity holders of PLDT (consolidated net income adjusted for dividends on all series of preferred shares, except for dividends on preferred stock subject to mandatory redemption) by the weighted average number of common shares issued and outstanding during the period.

Diluted EPS amounts are calculated in the same manner assuming that, at the beginning of the period or at the time of issuance during the period, all outstanding options are exercised, and convertible preferred shares are converted to common shares, and appropriate adjustments to our consolidated net income are effected for the related income and expenses on preferred shares. Outstanding stock options will have a dilutive effect only when the average market price of the underlying common share during the period exceeds the exercise price of the stock option.

Convertible preferred shares are deemed dilutive when required dividends declared on each series of convertible preferred shares divided by the number of equivalent common shares, assuming such convertible preferred shares are converted to common shares, decreases the basic EPS. As such, the diluted EPS is calculated by dividing our consolidated net income attributable to common shareholders (consolidated net income, adding back any dividends and/or other charges recognized for the period related to the dilutive convertible preferred shares classified as liability, less dividends on non-dilutive preferred shares except for dividends on preferred stock subject to mandatory redemption) by the weighted average number of common shares excluding the weighted average number of common shares held as treasury shares, and including the common shares equivalent arising from the conversion of the dilutive convertible preferred shares.

Where the effect of the assumed conversion of the preferred shares and the exercise of all outstanding options has an anti-dilutive effect, basic and diluted EPS are stated at the same amount.

F-56

Property and Equipment

Changes in property and equipment account for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:


	Cable and wire facilities			Central equipment			Network facilities			Building and lease improvement			Vehicles, furniture and other network equipment			Information Origination Termination				Land and land improvements			IT systems and platforms			Security platforms			Property under construction			Total
	(in million pesos)
Nine Months Ended September 30, 2024 (Unaudited)
Net book value at beginning of the period		81,227			384			101,941			7,979			3,654			—				4,122			18,794			1,162			67,840			287,103
Additions (Note 4)		72			—			68			43			299			—				—			271			—			45,428			46,181
Disposals/retirements		—			—			(5	)		—			(229	)		—				—			—			(131	)		—			(365	)
Reclassification		16,788			—			33,022			455			117			—				52			4,096			182			(53,217	)		1,495
Translation differences charged directly to cumulative translation adjustments		(2	)		—			—			—			—			—				—			—			—			—			(2	)
Depreciation of valuation increment on investment property		—			—			—			—			—			—				450			—			—			—			450
Adjustments		—			(24	)		(4	)		—			21			—				—			—			—			(185	)		(192	)
Impairment losses recognized during the period		—			—			—			—			—			—				—			—			(67	)		—			(67	)
Depreciation and amortization (Notes 3)		(7,580	)		(77	)		(12,573	)		(813	)		(847	)		—				(60	)		(4,208	)		(229	)		—			(26,387	)
Net book value at end of the period		90,505			283			122,449			7,664			3,015			—				4,564			18,953			917			59,866			308,216
As at September 30, 2024 (Unaudited)
Cost		296,353			532			367,920			29,301			40,203			—				5,006			54,703			1,855			59,866			855,739
Accumulated depreciation, impairment and amortization		(205,848	)		(249	)		(245,471	)		(21,637	)		(37,188	)		—				(442	)		(35,750	)		(938	)		—			(547,523	)
Net book value		90,505			283			122,449			7,664			3,015			—				4,564			18,953			917			59,866			308,216

December 31, 2022 (Audited)
Cost		261,429			7,338			328,729			26,788			40,572			77,429				4,591			35,095			377			55,427			837,775
Accumulated depreciation, impairment and amortization		(190,472	)		(3,732	)		(226,766	)		(20,142	)		(36,415	)		(42,643	)			(319	)		(24,297	)		(244	)		—			(545,030	)
Net book value		70,957			3,606			101,963			6,646			4,157			34,786				4,272			10,798			133			55,427			292,745
Year Ended December 31, 2023 (Audited)
Net book value at beginning of the period		70,957			3,606			101,963			6,646			4,157			34,786				4,272			10,798			133			55,427			292,745
Additions (Note 4)		5,221			19			4,913			108			529			7,945				212			952			11			65,173			85,083
Disposals/retirements		(1	)		—			(17	)		(8	)		(119	)		—				(320	)		(6	)		—			—			(471	)
Reclassification		—			—			1,311			—			—			(24,470	)			—			—			—			(15,269	)		(38,428	)
Transfers and others		14,484			—			10,245			2,291			321			204				68			8,364			1,210			(37,187	)		—
Translation differences charged directly to cumulative translation adjustments		1			—			—			—			1			—				—			—			—			—			2
Adjustments		—			(3,055	)		—			13			1			(83	)			(45	)		3,106			84			(304	)		(283	)
Depreciation and amortization from continuing operations (Notes 2 and 3)		(9,435	)		(186	)		(16,474	)		(1,071	)		(1,234	)		(18,382	)	(a)		(65	)		(4,420	)		(276	)		—			(51,543	)
Depreciation and amortization from discontinued operations (Notes 2 and 3)		—			—			—			—			(2	)		—				—			—			—			—			(2	)
Net book value at end of the period		81,227			384			101,941			7,979			3,654			—				4,122			18,794			1,162			67,840			287,103
As at December 31, 2023 (Audited)
Cost		280,237			683			344,218			28,881			40,387			—				4,504			50,344			1,914			67,840			819,008
Accumulated depreciation, impairment and amortization		(199,010	)		(299	)		(242,277	)		(20,902	)		(36,733	)		—				(382	)		(31,550	)		(752	)		—			(531,905	)
Net book value		81,227			384			101,941			7,979			3,654			—				4,122			18,794			1,162			67,840			287,103

(a) This includes amortization of cost to fulfill amounting to Php11,789 million.

F-57

Interest capitalized to property and equipment that qualified as borrowing costs amounted to Php2,126 million and
Php1,628 million for the nine months ended September 30, 2024 and 2023, respectively. See
Note 5 – Income and Expenses – Financing Costs – Net. The average interest capitalization rate used was approximately 5% and 4% for the nine months ended September 30, 2024 and 2023, respectively.

Our net foreign exchange differences, which qualified as borrowing costs, amounted to Php635 million and Php336 million for the nine months ended September 30, 2024 and 2023, respectively.

As at September 30, 2024, the estimated useful lives of our property and equipment are as follows:


Cable and wire facilities		5 – 15 years
Central equipment		3 – 15 years
Network facilities		3 – 20 years
Buildings		25 – 50 years
Vehicles, furniture and other network equipment		3 – 15 years
Land and land improvements		10 years
IT systems and platforms		5 years
Security platforms		5 years
Leasehold improvements		3 – 10 years or the term of the lease, whichever is shorter

See Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Estimating useful lives of property and equipment.

Sale and Leaseback of Telecom Towers

On various on dates in 2022 and 2023, Smart and DMPI signed Sale and Purchase Agreements with Edotco Towers, Inc., Edgepoint Towers, Inc., Unity Digital Infrastructure and Frontier Tower Associates Philippines, Inc., or the TowerCos in connection with the sale of 7,569 telecom towers and related passive telecommunication infrastructure for Php98,309 million.

Concurrent with the execution of the Sale and Purchase Agreements, Smart also entered into Master Service Agreements, or MSAs, with the TowerCos wherein Smart agreed to lease back the towers sold in the transaction for a period of 10 years. In addition to space, the TowerCos are responsible for providing operations and maintenance services, as well as power to the sites. The sale and leaseback with the TowerCos is complemented by a commitment to place service orders for a total of 1,220 Build-To-Suit, or BTS, sites within the next two to four years and 1,050 committed BTS sites within the next three to four years. Thus, total committed BTS sites with the TowerCos is 2,270 sites. The closing of the agreements is on a staggered basis depending on the satisfaction of closing conditions based on the number of towers transferred.

In 2022, we completed the sale of 4,665 telecom towers. As a result, we received total proceeds of Php60,492 million, and recognized gain on sale and leaseback amounting to Php25,234 million.

In 2023, we completed additional sale of 1,705 telecom towers for a total consideration of Php22,465 million. We recognized gain on sale and leaseback for these transactions totaling to Php7,467 million.

In 2024, we completed additional sale of 247 telecom towers for a consideration of Php3,037 million. We recognized gain on sale and leaseback for these transactions totaling to Php1,213 million.

The following summarizes the completed sale of Smart and DMPI telecom towers as at September 30, 2024:


Closing Date	Number of Tower Assets Sold		Cash Consideration		Net Book Value of Tower Assets (excluding taxes)
			(in million pesos)
2022		4,665		60,492		22,874
2023		1,705		22,465		13,377
2024		247		3,037		745
		6,617		85,994		36,996

The remaining telecom towers with net book value of Php5,190 million and Php7,163 million as at September 30, 2024 and December 31, 2023, respectively, subject to sale and purchase agreement within one year, were reclassified from “Property and equipment” to “Assets classified as held-for-sale” under current assets in our consolidated statements of financial position.

F-58

10.

Leases

Group as a Lessee

We have lease contracts for various items of sites, buildings, leased circuits and poles used in our operations. We considered in the lease term the non-cancellable period of the lease together with the periods covered by an option to extend and option to terminate the lease.

Our consolidated estimated useful lives of ROU assets as at September 30, 2024 are as follows:


Sites		1 – 30 years
International leased circuits(1)		1 – 19 years
Poles		1 – 12 years
Domestic leased circuits		3 – 10 years
Office buildings		1 – 25 years
Co-located sites		2 – 11 years

(1)

As at December 31, 2023, the estimated useful life ranges from 2-20 years.

F-59

Our consolidated roll forward analysis of ROU assets as at September 30, 2024 and December 31, 2023 are as follows:


	Sites			International Leased Circuits			Poles			Domestic Leased Circuits			Office Buildings			Co-located Sites			Total
	(in million pesos)
September 30, 2024 (Unaudited)
Costs:
Balances at beginning of the period		38,461			4,305			3,364			2,001			1,144			53			49,328
Additions (Note 28)		4,908			1,385			3,995			690			316			8			11,302
Asset retirement obligation		36			—			—			—			2			—			38
Modifications		190			(17	)		95			136			13			—			417
Terminations		(2,471	)		(1,047	)		(2,442	)		(262	)		(206	)		—			(6,428	)
Balances at end of the period		41,124			4,626			5,012			2,565			1,269			61			54,657

Accumulated depreciation and amortization:
Balances at beginning of the period		(7,599	)		(3,298	)		(3,156	)		(1,632	)		(887	)		(39	)		(16,611	)
Modifications		(3	)		(12	)		(3	)		(75	)		(19	)		—			(112	)
Charge from asset retirement obligation		3			—			—			—			—			—			3
Terminations		722			1,013			2,442			262			189			—			4,628
Depreciation (Notes 3)		(3,478	)		(563	)		(698	)		(291	)		(218	)		(7	)		(5,255	)
Balances at end of the period		(10,355	)		(2,860	)		(1,415	)		(1,736	)		(935	)		(46	)		(17,347	)
Net book value as at September 30, 2024 (Unaudited)		30,769			1,766			3,597			829			334			15			37,310

December 31, 2023 (Audited)
Costs:
Balances at beginning of the period		29,535			4,259			4,179			2,436			1,420			15			41,844
Additions (Note 28)		14,942			341			66			99			255			56			15,759
Asset retirement obligation		93			—			—			—			(26	)		—			67
Modifications		(35	)		(46	)		(851	)		(326	)		(149	)		(18	)		(1,425	)
Terminations		(3,566	)		(249	)		(30	)		(208	)		(356	)		—			(4,409	)
Reclassification to ROU assets classified as held-for-sale		(2,508	)		—			—			—			—			—			(2,508	)
Balances at end of the period		38,461			4,305			3,364			2,001			1,144			53			49,328

Accumulated depreciation and amortization:
Balances at beginning of the period		(5,415	)		(2,696	)		(2,504	)		(1,370	)		(987	)		(9	)		(12,981	)
Modifications		23			—			278			147			236			6			690
Charge from asset retirement obligation		16			—			—			—			17			—			33
Terminations		1,163			220			10			208			198			—			1,799
Depreciation from continuing operations (Notes 2 and 3)		(4,151	)		(822	)		(940	)		(617	)		(332	)		(36	)		(6,898	)
Depreciation from discontinued operations (Notes 2 and 3)		—			—			—			—			(19	)		—			(19	)
Reclassification to ROU assets classified as held-for-sale		765			—			—			—			—			—			765
Balances at end of the period		(7,599	)		(3,298	)		(3,156	)		(1,632	)		(887	)		(39	)		(16,611	)
Net book value as at December 31, 2023 (Audited)		30,862			1,007			208			369			257			14			32,717

F-60

The following amounts are recognized in our consolidated income statements for the nine months ended September 30, 2024 and 2023:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Depreciation expense of ROU assets from continuing operations		5,255		4,937
Depreciation expense of ROU assets from discontinued operations		—		19
Interest expense on lease liabilities from continuing operations		2,900		2,371
Interest expense on lease liabilities discontinued operations		—		1
Variable lease payments (included in general and administrative expenses)		511		453
Expenses relating to short-term leases (included in general and administrative expenses)		394		741
Total amount recognized in consolidated income statements		9,060		8,522

Our consolidated roll forward analysis of lease liabilities as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Balances at beginning of the period		47,546			42,435
Additions (Note 28)		11,302			15,759
Accretion on lease liabilities from continuing operations (Note 5)		2,900			3,266
Accretion on lease liabilities from discontinued operations		—			2
Reclassification to lease liabilities classified as held-for-sale		—			(1,503	)
Foreign exchange gains – net		48			1
Lease modifications		261			(933	)
Termination		(488	)		(774	)
Settlement of obligations		(8,994	)		(10,707	)
Balances at end of the period (Notes 3 and 28)		52,575			47,546
Less current portion of lease liabilities (Note 27)		7,098			5,921
Noncurrent portion of lease liabilities (Note 27)		45,477			41,625

We had total cash outflows for leases of Php8,994 million and Php7,993 million for the nine months ended
September 30, 2024 and 2023, respectively. We had non-cash additions to ROU assets of Php11,302 million and
Php15,759 million and lease liabilities of Php11,302 million and Php15,759 million as at September 30, 2024 and
December 31, 2023, respectively. The future cash outflows relating to leases that have not yet commenced are disclosed in Note 28 – Notes to the Statements of Cash Flows.

We have entered into several lease contracts that include automatic extension and termination options. These options are negotiated by us to provide flexibility in managing the leased-asset portfolio and align with our business needs. However, in some of these lease contracts, we did not impute the renewal period in our assessment of the lease terms of these contracts since said renewal period is not yet reasonably estimable at the time of transition or commencement date of the lease. See Note 3 – Managements Use of Accounting Judgments, Estimates and Assumptions – Determining the lease term of contracts with renewal and termination options – Company as a Lessee.

As disclosed in Note 9 – Property and Equipment, on the sale and leaseback of telecom towers, Smart and DMPI signed Sale and Purchase Agreements with the TowerCos in connection with the sale of 7,569 telecom towers and related passive telecom infrastructure, with the concurrent execution of MSAs with the TowerCos where Smart has agreed to lease back the towers sold in the transaction for a period of 10 years.

In 2022, 2023 and nine months ended September 30, 2024, the MSAs covering the leaseback arrangements of 4,665, 1,705 and 247 telecom towers, respectively, became effective. As a result, we recognized cumulative lease liability of
Php39,584 million and cumulative ROU assets of Php24,214 million as at September 30, 2024. The difference between lease liability and ROU assets represents the rights retained by the PLDT Group over the telecom assets leased back from the tower companies.

Including the related accounts on Unity and Frontier, the ROU assets relating to leasehold land with net book value of
Php1,998 million and Php1,844 million, and the related lease liabilities amounting to Php1,728 million and Php1,779 million were respectively reclassified as “Assets classified as held-for-sale” under current assets and “Liabilities associated with assets classified as held-for-sale” under current liabilities in our consolidated statement of financial position as at
September 30, 2024 and December 31, 2023, respectively.

Common Tower Pilot, or CTP, Program

The CTP Program, established by Smart in January 2020, in partnership with several TowerCos duly accredited by the Department of Information and Communications Technology, aims to accelerate new site roll-outs and reduce upfront the capital expenditures spending.

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Under the MSAs, TowerCos will handle site acquisition and permitting, site development works, construction and permanent electrification of the towers. Effective 30 days after the sites are Ready For Telecommunication Installation, or RFTI, Smart will be liable to settle a monthly fixed fee covering rental and maintenance costs for a contract term of 15 years. The monthly fee will be subject to agreed escalation rates with TowerCos. As anchor tenant, Smart will also be entitled to colocation discounts when additional tenants come on board.

Group as a Lessor

We have entered into operating leases on our investment property portfolio consisting of certain office buildings and business offices. See Note 13 – Investment Properties. These leases have a term of five years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. The lessee is also required to provide a residual guarantee on the properties. Rental income recognized by us amounted to Php45 million and
Php42 million for the nine months ended September 30, 2024 and 2023, respectively.

Future minimum rentals receivable under non-cancellable operating leases expected within one year amounted to
Php62 million and Php59 million, and after one year but not more than five years, amounted to Php78 million and
Php125 million both as at September 30, 2024 and December 31, 2023, respectively.

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11.

Investments in Associates and Joint Ventures

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Carrying value of investments in associates:
MediaQuest PDRs		9,111		9,260
MIH		6,755		7,250
Radius		2,120		—
Individually immaterial associates		959		108
		18,945		16,618
Carrying value of investments in joint ventures:
VTI, Bow Arken and Brightshare		33,591		33,649
Individually immaterial joint ventures		41		41
		33,632		33,690
Total carrying value of investments in associates and joint ventures		52,577		50,308

Changes in the cost of investments for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Balances at beginning of the period		64,658			63,020
Additions during the period		3,415			1,636
Translation and other adjustments		(133	)		2
Balances at end of the period		67,940			64,658

Changes in the accumulated impairment losses for the nine months ended September 30, 2024 and for the year ended
December 31, 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Balances at beginning of the period		2,875			2,805
Additions during the period (Note 4)		—			70
Adjustments		(112	)		—
Balances at end of the period		2,763			2,875

Changes in the accumulated equity share in net earnings (losses) of associates and joint ventures for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Balances at beginning of the period		(11,475	)		(8,669	)
Equity share in net earnings (losses) of associates and joint ventures:		(1,119	)		(2,806	)
MediaQuest PDRs		(149	)		(595	)
MIH		(918	)		(2,273	)
Radius		4			—
VTI, Bow Arken and Brightshare		(58	)		66
Individually immaterial associates and joint ventures		2			(4	)
Translation and other adjustments		(6	)		—
Balances at end of the period		(12,600	)		(11,475	)

Investments in Associates

Investment of ePLDT in MediaQuest PDRs

In 2012 and 2013, ePLDT made deposits totaling Php9.6 billion to MediaQuest, an entity wholly-owned by the PLDT Beneficial Trust Fund, for the issuance of PDRs by MediaQuest in relation to its indirect interest in Cignal TV through

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Satventures. Cignal TV is a wholly-owned subsidiary of Satventures, which is a wholly-owned subsidiary of MediaQuest incorporated in the Philippines. The Cignal TV PDRs confer an economic interest in common shares of Cignal TV indirectly owned by MediaQuest, and when issued, will provide ePLDT with a 40% economic interest in Cignal TV.

Cignal TV operates a direct-to-home, or DTH, Pay-TV business under the brand name “Cignal TV”, which is the largest DTH Pay-TV operator in the Philippines.

The PLDT Group’s financial investment in PDRs of MediaQuest is part of the PLDT Group’s overall strategy of broadening its distribution platforms and increasing the PLDT Group’s ability to deliver multimedia content to its customers across the PLDT Group’s broadband and mobile networks.

ePLDT’s aggregate value of investment in MediaQuest PDRs amounted to Php9,111 million and Php9,260 million as at
September 30, 2024 and December 31, 2023, respectively. See Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Accounting for investment in MediaQuest through PDRs.

The table below presents the summarized financial information of Satventures and subsidiaries as at September 30, 2024 and December 31, 2023, and for the nine months ended September 30, 2024 and 2023:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Statements of Financial Position:
Noncurrent assets		22,900		22,153
Current assets		8,546		7,974
Noncurrent liabilities		2,160		1,682
Current liabilities		14,050		12,976
Equity		15,236		15,469
Carrying amount of interest in Satventures		9,111		9,260
Additional Information:
Cash and cash equivalents		673		797
Current financial liabilities(1)		2,374		2,635
Noncurrent financial liabilities(1)		1,237		469

(1)

Excluding trade, other payables and provisions.


	September 30,
	2024			2023
	(Unaudited)
	(in million pesos)
Income Statements:
Revenues		6,192			6,460
Depreciation and amortization		1,047			939
Interest income		(36	)		(34	)
Interest expense		260			201
Benefit from income tax		(67	)		(308	)
Net loss / Total comprehensive loss		(233	)		(914	)
Equity share in net losses of Satventures		(149	)		(585	)

Investment of PCEV in MIH

The following summarizes the subscription agreements entered into by PCEV with MIH:


Date	Agreement	Number of Shares		Total Consideration			PCEV's Equity Interest
		(in millions)
March 14, 2018	Acquisition of Ordinary Shares		53.4		465			100.00	%
March 14, 2018	Subscription of Ordinary Shares		95.9		3,806			100.00	%
December 31, 2020	Conversion of notes to Class A2 preference shares		7.9		544			43.97	%
March 12, 2021	Exercise of warrants to subscribe Class A2 preference shares		6.7		447			41.87	%
June 11, 2021	Subscription to Class B convertible preferred shares		15.6		1,218			38.45	%
April 7, 2022	Subscription to Class C convertible preferred shares		27.2		3,252			36.82	%
December 13, 2023	Subscription to Class C2 convertible preferred shares		19.0		2,420	(a)		37.66	%

(a) Includes subscription payable amounting to US$15.3 million, or Php857 million subsequently paid on April 5, 2024.

PCEV’s percentage equity interest in MIH stood at 37.66% and 36.97% as at September 30, 2024 and December 31, 2023.

Investment in Class C2 Convertible Preference Shares

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On April 5, 2024, PCEV paid the subsequent consideration of US$15.3 million or Php857 million for 6.7 million MIH Class C2 convertible preferred shares and received warrants for 2.7 million shares valued at Php152 million, resulting in an increase of PCEV’s ownership in MIH from 36.97% to 37.66%.

The summarized financial information of MIH as at September 30, 2024 and December 31, 2023, and for the nine months ended September 30, 2024 and 2023 is shown below:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Statements of Financial Position:
Noncurrent assets		6,672		4,309
Current assets		13,737		17,942
Noncurrent liabilities		775		190
Current liabilities		12,882		13,446
Equity		6,752		8,615
Carrying amount of interest in MIH		6,755		7,250
Additional Information:
Cash and cash equivalents		2,906		6,682
Current financial liabilities(1)		12,742		13,317

(1) Excluding statutory payables and accrued taxes.


	September 30,
	2024				2023
	(Unaudited)
				(in million pesos)
Income Statements:
Revenues		9,889				7,084
Depreciation and amortization		293				251
Interest income		128				99
Provision for income tax		46				5
Net loss/Total comprehensive losses		(2,458	)			(4,821	)
Equity share in net losses of MIH (1)		(918	)			(1,766	)

(1) 2023 amounts include impact of 2022 audit adjusting entries, respectively.

The carrying value of PCEV’s investment in MIH as at September 30, 2024 and December 31, 2023 are as follows.


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
MIH Equity(1)		4,768			6,895
PCEV's noncontrolling interests		37.66	%		36.97	%
Share in net assets of MIH		1,795			2,549
Goodwill arising from acquisition		4,960			4,701
Carrying amount of interest in MIH		6,755			7,250

(1) MIH Equity is net of Php1,984 million and Php1,549 million Stock Option in 2024 and 2023, respectively.

Investment in Radius

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Investments in Joint Ventures

Investments of PLDT in VTI, Bow Arken and Brightshare

The Company’s acquisition of 50% equity interest, including outstanding advances and assumed liabilities, in the telecommunications business of San Miguel Corporation, or SMC, was approved by the PLDT Board on May 30, 2016. Globe acquired the remaining 50% interest. PLDT and Globe executed separate purchase agreements : (i) with SMC to acquire the entire outstanding capital, including outstanding advances and assumed liabilities, in VTI (and the other subsidiaries of VTI), which holds SMC’s telecommunications assets through its subsidiaries, or the VTI Transaction; and
(ii) with the owners of two other entities, Bow Arken (the parent company of New Century Telecoms, Inc.) and Brightshare (the parent company of eTelco, Inc.), which separately hold additional spectrum frequencies through their respective subsidiaries, or the Bow Arken Transaction and Brightshare Transaction, respectively. We refer to the VTI Transaction, Bow Arken Transaction and Brightshare Transaction collectively as the SMC Transactions.

The consideration in the amount of Php52.8 billion representing the purchase price for the equity interest and assigned advances of previous owners to VTI, Bow Arken and Brightshare was paid in three tranches: 50% upon signing of the Share Purchase Agreements on May 30, 2016, 25% on December 1, 2016 and the final 25% on May 30, 2017. The Share Purchase Agreements also provide that PLDT and Globe, through VTI, Bow Arken and Brightshare, would assume liabilities amounting to Php17.2 billion from May 30, 2016. In addition, the Share Purchase Agreements contain a price adjustment mechanism based on the variance in these assumed liabilities to be agreed among PLDT, Globe and previous owners on the results of the confirmatory due diligence procedures jointly performed by PLDT and Globe. PLDT and Globe paid the previous owners the net amount of Php2.6 billion on May 29, 2017 in relation to the aforementioned price adjustment based on the result of the confirmatory due diligence. See Note 27 – Financial Assets and Liabilities – Commercial Commitments.

As part of SMC Transactions, PLDT and Globe acquired certain outstanding advances made by the former owners of VTI, Bow Arken and Brightshare to VTI, Bow Arken and Brightshare or their respective subsidiaries. The largest amounts of the advances outstanding to PLDT since the date of assignment to PLDT amounted to Php11,359 million: (i) Php11,038 million from VTI and its subsidiaries; (ii) Php238 million from Bow Arken and its subsidiaries; and (iii) Php83 million from Brightshare and its subsidiaries.

PLDT and Globe each subscribed to 2.8 million new preferred shares on February 28, 2017. The shares were to be issued out of the unissued portion of the existing authorized capital stock of VTI, at a subscription price of Php4 thousand per subscribed share (inclusive of a premium over par of Php3 thousand per subscribed share) or a total subscription price for each of Php11,040 million (inclusive of a premium over par of Php8,280 million). PLDT and Globe’s assigned advances from SMC which were subsequently reclassified to deposit for future subscription of each amounting to Php11,040 million were applied as full subscription payment for the subscribed shares. PLDT and Globe each subscribed to 800 thousand new preferred shares of the authorized capital stock of VTI, at a subscription price of Php4 thousand per subscribed share (inclusive of a premium over par of Php3 thousand per subscribed share), or a total subscription price for each Php3,200 million (inclusive of a premium over par of Php2,400 million). PLDT and Globe each paid Php148 million in cash for the subscribed shares upon execution of the relevant agreement. The remaining balance of the subscription price of PLDT and Globe has been fully paid as at December 29, 2017.

PLDT and Globe each subscribed to 600 thousand new preferred shares of the authorized capital stock of VTI on
December 15, 2017, at a subscription price of Php5 thousand per subscribed share (inclusive of a premium over par of
Php4 thousand per subscribed share), for a total subscription price of Php3,000 million (inclusive of a premium over par of Php2,400 million). PLDT and Globe each paid Php10 million in cash for the subscribed shares upon execution of the agreement. The remaining balance of the subscription price was paid via conversion of advances amounting to
Php2,990 million as at December 31, 2017.

The amount of the advances outstanding of PLDT, to cover for the assumed liabilities and working capital requirements of the acquired companies, each amounted to Php69 million as at September 30, 2024 and December 31, 2023.

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The table below presents the summarized financial information of VTI, Bow Arken and Brightshare as at September 30, 2024 and December 31, 2023, and for the nine months ended September 30, 2024 and 2023:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Statements of Financial Position:
Noncurrent assets		77,905		78,046
Current assets		4,795		4,375
Noncurrent liabilities		9,493		9,186
Current liabilities		2,193		2,174
Equity		71,014		71,061
Carrying amount of assets in VTI, Bow Arken and Brightshare		35,507		33,649
Additional Information:
Cash and cash equivalents		2,819		2,387
Current financial liabilities (1)		72		72

(1) Excluding trade, other payables and provisions.


	September 30,
	2024				2023
	(Unaudited)
				(in million pesos)
Income Statements:
Revenues		3,260				3,140
Depreciation and amortization		1,423				1,249
Interest income		92				81
Provision for income tax		39				120
Net income (loss) / Total comprehensive income (loss)		(117	)			87
Equity share in net income (loss) of VTI, Bow Arken and Brightshare		(58	)			44

The carrying value of PLDT’s investment in VTI, Bow Arken and Brightshare as at September 30, 2024 and
December 31, 2023:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
VTI, Bow Arken and Brightshare equity		71,014			71,061
PLDT's share		50	%		50	%
Share in net assets of VTI, Bow Arken and Brightshare		35,507			35,530
Share in adjustment based on liability and ETPI net cash balance		442			442
Reimbursements		(246	)		(239	)
Share in SMC's advances in VTI, Bow Arken and Brightshare		(840	)		(840	)
Non-controlling interests		(1,115	)		(1,055	)
Others		(157	)		(189	)
Carrying amount of interest in VTI, Bow Arken and Brightshare		33,591			33,649

Notice of Transaction filed with the PCC

Prior to closing the transaction on May 30, 2016, each of PLDT, Globe and SMC submitted notices of the VTI, Bow Arken and Brightshare Transaction (respectively, the VTI Notice, the Bow Arken Notice and the Brightshare Notice and collectively, the Notices) to the PCC pursuant to the Philippine Competition Act, or PCA, and Circular No. 16-001 and Circular No. 16-002 issued by the PCC, or the Circulars. As stated in the Circulars, upon receipt by the PCC of the requisite notices, each of the said transactions shall be deemed approved in accordance with the Circulars.

Subsequently, PLDT and the other parties to the said transactions received separate letters dated June 6 and 7, 2016 from the PCC which essentially stated, that: (a) with respect to VTI Transaction, the VTI Notice is deficient and defective in form and substance, therefore, the VTI Transaction is not “deemed approved” by the PCC, and that the missing key terms of the transaction are critical since the PCC considers certain agreements as prohibited and illegal; and (b) with respect to the Bow Arken and Brightshare Transactions, the compulsory notification under the Circulars does not apply and that even assuming that the Circulars apply, the Bow Arken Notice and the Brightshare Notice are deficient and defective in form and substance.

In response to the PCC’s letter, PLDT submitted its response on June 10, 2016, articulating its position that the VTI Notice is adequate, complete and sufficient and compliant with the requirement under the Circulars and does not contain false material information; as such, the VTI Transaction enjoys the benefit of Section 23 of the PCA. Therefore, the VTI Transaction is deemed approved and cannot be subject to retroactive review by the PCC. Moreover, the parties have taken all necessary steps, including the relinquishment/return of certain frequencies and co-use of the remaining frequencies by Smart and Belltel

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and Globe and Belltel as discussed above, to ensure that the VTI Transaction will not substantially prevent, restrict or lessen competition to violate the PCA. Nevertheless, in the spirit of cooperation and for transparency, the parties voluntarily submitted to the PCC, among others, copies of the Sale and Purchase Agreements for the PCC’s information and reference.

The PCC required the parties to further submit additional documents relevant to the co-use arrangement and the frequencies subject thereto, as well as other definitive agreements relating to the VTI Transaction in a letter dated June 17, 2016. It also disregarded the deemed approved status of the VTI Transaction in violation of the Circulars which the PCC itself issued, and insisted that it will conduct a full review, if not investigation of the said transaction under the different operative provisions of the PCA.

In the Matter of the Petition against the PCC

PLDT filed before the Court of Appeals, or CA, a Petition for Certiorari and Prohibition (With Urgent Application for the Issuance of a Temporary Restraining Order, or TRO, and/or Writ of Preliminary Injunction), or the Petition, against the PCC on July 12, 2016. The Petition sought to enjoin the PCC from proceeding with the review of the acquisition by PLDT and Globe of equity interest, including outstanding advances and assumed liabilities, in the telecommunications business of SMC, or the SMC Transactions, and performing any act which challenges or assails the “deemed approved” status of the SMC Transactions. On July 19, 2016, the 12th Division of the CA, issued a Resolution directing the PCC through the Office of the Solicitor General, or the OSG, to file its Comment within a non-extendible period of 10 days from notice and show cause why the Petition should not be granted. On August 11, 2016, the PCC through the OSG, filed its Comment to the Petition (With Opposition to Petitioner’s Application for a Writ of Preliminary Injunction).

PLDT filed its Reply to Respondent PCC’s Comment on August 19, 2016. On August 26, 2016, the CA issued a Writ of Preliminary Injunction enjoining and directing the respondent PCC, their officials and agents, or persons acting for and in their behalf, to cease and desist from conducting further proceedings for the pre-acquisition review and/or investigation of the SMC Transactions based on its Letters dated June 7, 2016 and June 17, 2016 during the pendency of the case and until further orders are issued by the CA. On September 14, 2016, the PCC filed a Motion for Reconsideration of the CA’s Resolution. During this time, Globe moved to have its Petition consolidated with the PLDT Petition. In a Resolution promulgated on October 19, 2016, the CA, or the First CA Resolution: (i) accepted the consolidation of Globe’s petition versus the PCC (CA G.R. SP No. 146538) into PLDT’s petition versus the PCC (CA G.R. SP No. 146528) with the right of replacement;
(ii) admitted the Comment dated October 4, 2016 filed by the PCC; (iii) referred to the PCC for Comment (within 10 days from receipt of notice) PLDT’s Urgent Motion for the Issuance of a Gag Order dated September 30, 2016 and to cite the PCC for indirect contempt; and (iv) ordered all parties to submit simultaneous memoranda within a non-extendible period of 15 days from notice. On November 11, 2016, PLDT filed its Memorandum in compliance with the CA’s Resolution.

The CA issued a Resolution, or the Second CA Resolution, denying PCC’s Motion for Reconsideration dated
September 14, 2016, for lack of merit on February 17, 2017. The CA denied PLDT’s Motion to Cite the PCC for indirect Contempt for being premature. In the same Resolution, as well as in a separate Gag Order attached to the Resolution, the CA granted PLDT’s Urgent Motion for the Issuance of a Gag Order and directed PCC to remove immediately from its website its preliminary statement of concern and submit its compliance within five days from receipt thereof. All the parties were ordered to refrain, cease and desist from issuing public comments and statements that would violate the sub judice rule and subject them to indirect contempt of court. The parties were also required to comment within ten days from receipt of the Second CA Resolution, on the Motion for Leave to Intervene and to Admit the Petition-in-Intervention dated
February 7, 2017 filed by Citizenwatch, a non-stock and non-profit association.

The PCC filed before the Supreme Court a Petition to Annul the Writ of Preliminary Injunction issued by the CA’s 12th Division on August 26, 2016 restraining PCC’s review of the SMC Transactions on April 18, 2017. In compliance with the Supreme Court’s Resolution issued on April 25, 2017, PLDT on July 3, 2017 filed its Comment dated July 1, 2017 to the PCC’s Petition. The Supreme Court issued a Resolution dated July 18, 2017 noting PLDT’s Comment and requiring the PCC to file its Consolidated Reply. The PCC filed a Motion for Extension of Time and prayed that it be granted until
October 23, 2017 to file its Consolidated Reply. The PCC filed its Consolidated Reply to the: (1) Comment filed by PLDT; and (2) Motion to Dismiss filed by Globe on November 7, 2017. The same was noted by the Supreme Court in a Resolution dated November 28, 2017.

During the intervening period, the CA rendered its Decision on October 18, 2017, granting the Petitions filed by PLDT and Globe. In its Decision, the CA: (i) permanently enjoined the PCC from conducting further proceedings for the pre-acquisition review and/or investigation of the SMC Transactions based on its Letters dated June 7, 2016 and June 17, 2016; (ii) annulled and set aside the Letters dated June 7, 2016 and June 17, 2016; (iii) precluded the PCC from conducting a full review and/or investigation of the SMC Transactions; (iv) compelled the PCC to recognize the SMC Transactions as deemed approved by operation of law; and (v) denied the PCC’s Motion for Partial Reconsideration dated March 6, 2017, and directed the PCC to permanently comply with the CA’s Resolution dated February 17, 2017 requiring PCC to remove its preliminary statement of concern from its website. The CA clarified that the deemed approved status of the SMC Transactions does not, however,

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remove the power of PCC to conduct post-acquisition review to ensure that no anti-competitive conduct is committed by the parties.

PCC filed a Motion for Additional Time to file a Petition for Review on Certiorari before the Supreme Court on
November 7, 2017. The Supreme Court granted PCC’s motion in its Resolution dated November 28, 2017.

PLDT, through counsel, received the PCC’s Petition for Review on Certiorari filed before the Supreme Court assailing the CA’s Decision dated October 18, 2017, on December 13, 2017. In this Petition, the PCC raised procedural and substantive issues for resolution. Particularly, the PCC assailed the issuance of the writs of certiorari, prohibition, and mandamus considering that the determination of the sufficiency of the Notice pursuant to the Transitory Rules involves the exercise of administrative and discretionary prerogatives of the PCC. On the substantive aspect, the PCC argued that the CA committed grave abuse of discretion in ruling that the SMC Transactions should be accorded the deemed approved status under the Transitory Rules. The PCC maintained that the Notice of the SMC Transactions was defective because it failed to provide the key terms thereof.

In the Supreme Court Resolution dated November 28, 2017, which was received by PLDT on December 27, 2017, the Supreme Court decided to consolidate the PCC’s Petition to Annul the Writ of Preliminary Injunction issued by the CA’s 12th Division with that of its Petition for Review on Certiorari assailing the decision of the CA on the merits.

PLDT received Globe’s Motion for Leave to File and Admit the Attached Rejoinder on February 13, 2018, which was denied by the Supreme Court in a Resolution dated March 13, 2018. On February 27, 2018, PLDT received notice of the Supreme Court’s Resolution dated January 30, 2018 directing PLDT and Globe to file their respective Comments to the Petition for Review on Certiorari without giving due course to the same.

PLDT filed its Comment on the Petition for Review on Certiorari on April 5, 2018. On April 11, 2018, PLDT received Globe’s Comment/Opposition [Re: Petition for Review on Certiorari dated December 11, 2017] dated March 4, 2018. On April 24, 2018, PLDT received the PCC’s Motion to Expunge [Respondent PLDT’s Comment on the Petition for Review on Certiorari] dated April 18, 2018. On May 9, 2018, PLDT filed a Motion for Leave to File and Admit the Attached Comment on the Petition for Review on Certiorari dated May 9, 2018.

The Supreme Court’s Resolution dated April 24, 2018 which granted PLDT's motion for an extension, was received by PLDT on June 5, 2018. It noted PLDT's Comment on the Petition for Review on Certiorari filed in compliance with the Supreme Court’s Resolution dated January 30, 2018 and required the PCC to file a Consolidated Reply to the comments within ten days from notice. The PCC’s Urgent Omnibus Motion for: (1) Partial Reconsideration of the Resolution dated
April 24, 2018; and (2) Additional Time dated June 11, 2018 was received by PLDT, through counsel, on June 20, 2018.

PCC filed its Consolidated Reply Ad Cautelam dated July 16, 2018, which was received on July 19, 2018. On July 26, 2018, PLDT received a Resolution dated June 19, 2018 where the Supreme Court resolved to grant PLDT’s Motion for Leave to File and Admit the Attached Comment, and PCC’s Motion for Extension to file a Comment/Opposition on/to PLDT’s Motion for Leave to File and Admit the Attached Comment.

PLDT received a Resolution dated July 3, 2018 where the Supreme Court resolved to deny the PCC’s motion to reconsider the Resolution dated April 24, 2018 and grant its motion for extension of time to file its reply to PLDT’s and Globe’s Comments on August 14, 2018, with a warning that no further extension will be given. On August 16, 2018, PLDT received a Resolution dated June 5, 2018 where the Supreme Court noted without action the Motion to Expunge by PCC in view of the Resolution dated April 24, 2018 granting the motion for extension of time to file a comment on the petition in G.R. No. 234969.

PLDT received a Resolution dated August 7, 2018 where the Supreme Court noted the PCC’s Consolidated Reply Ad Cautelam on October 4, 2018.

PLDT received a Resolution dated March 3, 2020 requiring petitioners in G.R. No. 242352 (Atty. Joseph Lemuel Baligod Baquiran and Ferdinand C. Tecson v. NTC, et al.,) to file a Consolidated Reply to the comments on the petition within
10 days from notice on July 2, 2020.

PLDT received a Resolution dated June 30, 2020 where the Supreme Court resolved to Await the Consolidated Reply of the petitioners in G.R. No. 242352 as required in the resolution dated March 3, 2020, on September 2, 2020.

PLDT received a Resolution of the Supreme Court dated October 6, 2020 which granted the motions filed by the petitioners in G.R. No. 242352 to extend the filing of the Consolidated Reply until September 29, 2020, on November 16, 2020.

On February 8, 2021, PLDT received a Resolution where the Supreme Court noted the Consolidated Reply dated
September 29, 2020 filed by the Petitioners in G.R. 242352.

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The consolidated petitions remain pending as of the date of this report.

VTI’s Tender Offer for the Minority Stockholders’ Shares in Liberty Telecom Holdings, Inc., or LIB

The voluntary tender offer to acquire the common shares of LIB, a subsidiary of VTI, which are held by the remaining minority shareholders, and the intention to delist the shares of LIB from the PSE was approved by the Board of Directors of VTI on August 18, 2016. On August 24, 2016, VTI, owner of 87.12% of the outstanding common shares of LIB, undertook the tender offer to purchase up to 165.88 million common shares owned by the remaining minority shareholders, representing 12.82% of LIB’s common stock, at a price of Php2.20 per share. The tender offer period ended on October 20, 2016, the extended expiration date, with over 107 million shares tendered, representing approximately 8.3% of LIB’s issued and outstanding common shares. The tendered shares were crossed at the PSE on November 4, 2016, with the settlement on November 9, 2016. The tender offer was undertaken in compliance with the PSE’s requirements for the voluntary delisting of LIB common shares from the PSE. The voluntary delisting of LIB was approved by the PSE effective November 21, 2016.

Following the conclusion of the tender offer, VTI now owns more than 95% of the issued and outstanding common shares, and 99.1% of the total issued and outstanding capital stock, of LIB.

Individually immaterial associates and joint ventures

As at September 30, 2024 and December 31, 2023, following are the carrying values of individually immaterial associates and joint ventures:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Individually immaterial associates:
Kayana		872		—
Appcard, Inc.		87		108
PG1		—		—
AF Payments, Inc.		—		—
		959		108
Individually immaterial joint ventures:
Telecommunications Connectivity, Inc.		41		41
PFC		—		—
VFC		—		—
		41		41
Total individually immaterial associates and joint ventures		1,000		149

As at September 30, 2024, following is the summarized financial information of individually immaterial associates and joint ventures:



	(in million pesos)
Statements of Financial Position:
Noncurrent assets		7,390
Current assets		976
Noncurrent liabilities		5,549
Current liabilities		3,047
Equity		(230	)
Carrying amount of interest in individually immaterial associates and joint ventures		1,000
Additional Information:
Cash and cash equivalents		501
Current financial liabilities		2,850
Noncurrent financial liabilities		2,398

Income Statements:
Revenues		834
Depreciation and amortization		235
Interest income		8
Interest expense		—
Provision for income tax		27
Net loss / Total comprehensive loss		(1,554	)
Equity share in net income of individually immaterial associates and joint ventures		2

F-70

12.

Debt Instruments at Amortized Cost

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Retail Treasury Bonds		340		440
Fixed Rate Treasury Notes, or FXTN		55		55
BDO Asean Bonds		—		100
		395		595
Less: Current portion of debt instrument at amortized cost (Note 27)		25		200
Noncurrent portion of debt instrument at amortized cost (Note 27)		370		395

Retail Treasury Bonds

On March 9, 2021, Smart purchased at par a three-year Retail Treasury Bond Tranche 25 with face value of Php100 million which matured on March 9, 2024. The bond has a gross coupon rate of 2.375% payable on a quarterly basis. Interest income, net of withholding tax, recognized on this investment amounted to Php359 thousand and Php1.4 million for the nine months ended September 30, 2024 and 2023. The carrying value of this investment amounted to nil and Php100 million as at September 30, 2024 and December 31, 2023, respectively.

On December 2, 2021, PLDT and Smart purchased at par a 5.5-year Retail Treasury Bond Tranche 26 with face value of Php300 million maturing on June 2, 2027. The bond has a gross coupon rate of 4.6250% payable on a quarterly basis. Interest income, net of withholding tax, recognized on this investment amounted to Php8.3 million each for the nine months ended September 30, 2024 and 2023. The carrying value of this investment amounted to Php300 million as at
September 30, 2024 and December 31, 2023.

On March 4, 2022, PLDT and Smart purchased at par a five-year Retail Treasury Bond Tranche 27 with face value of
Php240 million maturing on March 4, 2027. The bond has a gross coupon rate of 4.8750% payable on a quarterly basis. Interest income, net of withholding tax, recognized on this investment amounted to Php1.2 million each for the nine months ended September 30, 2024 and 2023. The carrying value of this investment amounted to Php40 million as at
September 30, 2024 and December 31, 2023.

FXTN

On June 3, 2022, Smart purchased at a discount a three-year FXTN 03-27 with face value of Php25 million maturing on
April 7, 2025. The bond has a gross coupon rate of 4.25% payable on a semi-annual basis. Interest income, net of withholding tax, recognized on this investment amounted to Php639.8 thousand each for the nine months ended
September 30, 2024 and 2023. The carrying value of this investment amounted to Php25 million as at September 30, 2024 and December 31, 2023.

On June 16, 2022, Smart purchased at a premium a seven-year FXTN 07-67 with a face value of Php10 million maturing on May 19, 2029. The bond has a gross coupon rate of 6.5% payable on a semi-annual basis. Interest income, net of withholding tax, recognized on this investment amounted to Php393 thousand each for the nine months ended
September 30, 2024 and 2023. The carrying value of this investment amounted to Php10 million as at September 30, 2024 and December 31, 2023.

On July 7, 2022, PLDT and Smart purchased at a premium a four-year FXTN 07-62 with face value of Php20 million maturing on February 14, 2026. The bond has a gross coupon rate of 6.25% payable on a semi-annual basis. Interest income, net of withholding tax, recognized on this investment amounted to Php744 thousand each for the nine months ended September 30, 2024 and 2023, respectively. The carrying value of this investment amounted to Php20 million as at September 30, 2024 and December 31, 2023.

BDO ASEAN Sustainable Bond

On January 28, 2022, PLDT and Smart purchased at par a two-year BDO Fixed Rate ASEAN Sustainability Bond Due 2024 with face value of Php100 million which matured on January 28, 2024. The bond has a gross coupon rate of 2.90% payable on a quarterly basis. Interest income, net of withholding tax, recognized on this investment amounted to Php88 thousand and Php1.7 million for the nine months ended September 30, 2024 and 2023, respectively. The carrying value of this investment amounted to nil and Php100 million as at September 30, 2024 and December 31, 2023, respectively.

F-71

13.

Investment Properties

Changes in investment properties account for the nine months ended September 30, 2024 and for the year ended
December 31, 2023 are as follows:


	Land			Land Improvements		Building			Total
	(in million pesos)
September 30, 2024 (Unaudited)
Balances at beginning of the period		1,184			12		119			1,315
Net gains from fair value adjustments charged to profit or loss		—			—		2			2
Transfers to property and equipment		(450	)		—		(21	)		(471	)
Balances at end of the period		734			12		100			846

December 31, 2023 (Audited)
Balances at beginning of the period		858			2		155			1,015
Net gains (losses) from fair value adjustments charged to profit or loss		58			8		(36	)		30
Transfers from property and equipment		363			2		2			367
Disposals during the period		(95	)		—		(2	)		(97	)
Balances at end of the period		1,184			12		119			1,315

Investment properties, which consist of land, land improvements and building, are stated at fair values, which have been determined based on appraisal performed by an independent firm of appraisers, an industry specialist in valuing these types of investment properties.

The valuation for land was based on a market approach valuation technique using price per square meter. The valuation for building and land improvements was based on a cost approach valuation technique using current material and labor costs for improvements based on external and independent reviewers.

We have determined that the highest and best use of some of the idle or vacant land properties at the measurement date would be to convert the properties for residential or commercial development. The properties are not being used for strategic reasons.

We have no restrictions on the realizability of our investment properties and no contractual obligations to either purchase, construct or develop investment properties or for repairs, maintenance and enhancements.

Repairs and maintenance expenses related to investment properties that do not generate rental income amounted to
Php87 million and Php91 million for the nine months ended September 30, 2024 and 2023.

Rental income relating to investment properties that are being leased and included as part of revenues amounted to
Php45 million and Php42 million for the nine months ended September 30, 2024 and 2023, respectively. See
Note 10 – Leases.

The above investment properties were categorized under Level 2 and Level 3 of the fair value hierarchy. There were no transfers in and out of Level 2 and Level 3 of the fair value hierarchy.

Significant increases or decreases in price per square meter for land, current material and labor costs of improvements would result in a significantly higher or lower fair value measurement.

F-72

14.

Goodwill and Intangible Assets

Changes in goodwill and intangible assets account for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:


	Intangible Assets with		Intangible Assets with Finite Life													Total Intangible Assets with		Total				Total Goodwill and
	Indefinite Life		Trademark		Franchise		Licenses		Customer List		Spectrum		Others			Finite Life		Intangible Assets		Goodwill		Intangible Assets
			(in million pesos)
September 30, 2024 (Unaudited)
Costs:
Balances at beginning of the period		220		4,561		3,017		135		4,703		1,205		1,321			14,942		15,162		63,595		78,757
Additions during the period		—		—		—		—		—		—		167			167		167		—		167
Translation and other adjustments		—		4		—		—		—		—		3			7		7		—		7
Balances at end of the period		220		4,565		3,017		135		4,703		1,205		1,491			15,116		15,336		63,595		78,931
Accumulated amortization and impairment:
Balances at beginning of the period		—		4,561		2,265		135		4,703		1,205		899			13,768		13,768		654		14,422
Amortization during the period		—		—		140		—		—		—		31			171		171		—		171
Translation and other adjustments		—		4		—		—		—		—		—			4		4		—		4
Balances at end of the period		—		4,565		2,405		135		4,703		1,205		930			13,943		13,943		654		14,597
Net balances at end of the period		220		—		612		—		—		—		561			1,173		1,393		62,941		64,334
Estimated useful lives (in years)		—		—		16		—		—		—	5-10				—		—		—		—
Remaining useful lives (in years)		—		—		4		—		—		—	3-10				—		—		—		—
December 31, 2023 (Audited)
Costs:
Balances at beginning of the period		220		4,505		3,016		135		4,703		1,205		1,320			14,884		15,104		63,595		78,699
Translation and other adjustments		—		56		1		—		—		—		1			58		58		—		58
Balances at end of the period		220		4,561		3,017		135		4,703		1,205		1,321			14,942		15,162		63,595		78,757
Accumulated amortization and impairment:
Balances at beginning of the period		—		4,505		2,078		135		4,703		1,205		870			13,496		13,496		654		14,150
Amortization during the period		—		—		186		—		—		—		35			221		221		—		221
Translation and other adjustments		—		56		1		—		—		—		(6	)		51		51		—		51
Balances at end of the period		—		4,561		2,265		135		4,703		1,205		899			13,768		13,768		654		14,422
Net balances at end of the period		220		—		752		—		—		—		422			1,174		1,394		62,941		64,335
Estimated useful lives (in years)		—		—		16		—		—		—	5-10				—		—		—		—
Remaining useful lives (in years)		—		—		4		—		—		—	3-8				—		—		—		—

F-73

The consolidated goodwill and intangible assets of our reportable segments as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024 (Unaudited)						December 31, 2023 (Audited)
	Wireless		Fixed Line		Total		Wireless		Fixed Line		Total
	(in million pesos)
Franchise		612		—		612		752		—		752
Customer list with indefinite life		—		220		220		—		220		220
Others		—		561		561		—		422		422
Total intangible assets		612		781		1,393		752		642		1,394
Goodwill		56,571		6,370		62,941		56,571		6,370		62,941
Total goodwill and intangible assets		57,183		7,151		64,334		57,323		7,012		64,335

The consolidated future amortization of intangible assets as at September 30, 2024 are as follows:


Year	(in million pesos)
2024 (1)		57
2025		238
2026		238
2027		232
2028		53
2029 and onwards		355
		1,173

(1) From October 1, 2024 to December 31, 2024

Impairment Testing of Goodwill

The organizational structure of PLDT and its subsidiaries is designed to monitor financial operations based on fixed line and wireless segmentation. Management provides guidelines and decisions on resource allocation, such as continuing or disposing of asset and operations by evaluating the performance of each segment through review and analysis of available financial information on the fixed line and wireless segments. As at September 30, 2024, the PLDT Group’s goodwill comprised of goodwill resulting from PGIH’s acquisition of Multisys in 2022, ePLDT’s acquisition of IPCDSI in 2012, PLDT’s acquisition of Digitel in 2011, ePLDT’s acquisition of ePDS in 2011, Smart’s acquisition of PDSI and Chikka in 2009, SBI’s acquisition of Airborne Access Corporation in 2008, and Smart’s acquisition of SBI in 2004.

Although revenue streams may be segregated among the companies within the PLDT Group, cash inflows are not considered coming from independent group of assets on a per Company basis due largely to the significant portion of shared and commonly used network/platform that generates related revenue. On the other hand, PLDT has the largest fixed line network in the Philippines. PLDT’s transport facilities are installed nationwide to cover both domestic and international IP backbone to route and transmit IP traffic generated by the customers. In the same manner, PLDT has the most Internet Gateway facilities which are composed of high-capacity IP routers and switches that serve as the main gateway of the Philippines to the Internet connecting to the World Wide Web. With PLDT’s network coverage, other fixed line subsidiaries share the same facilities to leverage from a Group perspective.

Because of the significant common use of network facilities among fixed line and wireless companies within the Group, management deems that the Wireless and Fixed Line units are the lowest CGUs to which goodwill is to be allocated and tested for impairment given that the Fixed Line and Wireless operations generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

The recoverable amount of the Wireless and Fixed Line CGUs have been determined using the value-in-use approach calculated using cash flow projections based on the financial budgets approved by the Board of Directors. The post-tax discount rates applied to cash flow projections are 9.29% for the Wireless and Fixed Line CGUs. Cash flows beyond the projection period of three years are determined using a 2.4% growth rate for the Wireless and Fixed Line CGUs, which is the same as the long-term average growth rate for the telecommunications industry. Other key assumptions used in the cash flow projections include revenue growth rate and capital expenditures.

Based on the assessment of the VIU of the Wireless and Fixed Line CGUs, the recoverable amount of the Wireless and Fixed Line CGUs exceeded their carrying amounts. Hence, no impairment was recognized in relation to goodwill as at
September 30, 2024 and December 31, 2023.

F-74

15.

Cash and Cash Equivalents

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Cash on hand and in banks (Note 27)		9,894		9,993
Temporary cash investments (Note 27)		2,412		6,184
		12,306		16,177

Cash in banks earn interest at prevailing bank deposit rates. Temporary cash investments are made for varying periods of up to three months depending on our immediate cash requirements and earn interest at the prevailing temporary cash investment rates. Due to the short-term nature of such transactions, the carrying value approximates the fair value of our temporary cash investments. See Note 27 – Financial Assets and Liabilities.

Interest income earned from cash in banks and temporary cash investments amounted to Php231 million and Php340 million for the nine months ended September 30, 2024 and 2023, respectively. See Note 5 – Income and Expenses.

F-75

16. Trade and Other Receivables

As at September 30, 2024 and December 31, 2023, this account consists of receivables from:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Retail subscribers (Note 27)		21,038		19,894
Corporate subscribers (Note 27)		18,319		15,934
Foreign administrations (Note 27)		1,068		1,250
Domestic carriers (Note 27)		297		188
Dealers, agents and others (Note 27)		7,066		6,035
		47,788		43,301
Less: Allowance for expected credit losses		19,192		17,215
		28,596		26,086

Trade and other receivables are noninterest-bearing and generally have settlement terms of 30 to 180 days.

Receivables from foreign administrations and domestic carriers represent receivables based on interconnection agreements with other telecommunications carriers. The aforementioned amounts of receivable are shown net of related payables to the same telecommunications carriers where a legal right of offset exists and settlement is facilitated on a net basis.

Receivables from dealers, agents and others consist mainly of receivables from credit card companies, dealers and distributors having collection arrangements with the PLDT Group, dividend receivables and advances to affiliates.

For terms and conditions relating to related party receivables, see Note 24 – Related Party Transactions.

See Note 27 – Financial Assets and Liabilities on credit risk of trade receivables to understand how we manage and measure credit quality of trade receivables that are neither past due nor impaired.

F-76

The following table explains the changes in the allowance for expected credit losses as at September 30, 2024 and December 31, 2023:


	Retail Subscribers						Corporate Subscribers						Foreign Administrations					Domestic Carriers					Dealers, Agents and Others						Total
	Stage 2			Stage 3			Stage 2			Stage 3			Stage 2		Stage 3			Stage 2		Stage 3			Stage 2			Stage 3			Stage 2			Stage 3
	Lifetime ECL						Lifetime ECL						Lifetime ECL					Lifetime ECL					Lifetime ECL						Lifetime ECL						Total
	(in million pesos)
September 30, 2024 (Unaudited)
Balances at beginning of the period		1,448			8,250			2,126			3,820			8		116			—		1			608			838			4,190			13,025			17,215
Provisions		(386	)		2,547			193			347			6		—			—		—			—			5			(187	)		2,899			2,712
Translation adjustments		—			—			6			1			—		—			—		—			—			—			6			1			7
Write-offs		—			(182	)		—			(610	)		—		—			—		—			—			—			—			(792	)		(792	)
Reclassifications and reversals		(401	)		519			(74	)		168			4		(51	)		—		(1	)		(5	)		(109	)		(476	)		526			50
Balances at end of the period		661			11,134			2,251			3,726			18		65			—		—			603			734			3,533			15,659			19,192

December 31, 2023 (Audited)
Balances at beginning of the period		1,866			5,023			1,717			3,382			1		133			—		1			652			886			4,236			9,425			13,661
Provisions from continuing operations		(394	)		3,716			335			451			—		(4	)		—		—			10			5			(49	)		4,168			4,119
Provisions from discontinued operations		—			—			4			—			—		—			—		—			—			—			4			—			4
Translation adjustments		—			—			(3	)		(1	)		—		—			—		—			—			—			(3	)		(1	)		(4	)
Write-offs		—			(506	)		—			—			—		—			—		—			—			—			—			(506	)		(506	)
Reclassifications and reversals		(24	)		17			73			(12	)		7		(13	)		—		—			(54	)		(53	)		2			(61	)		(59	)
Balances at end of the period		1,448			8,250			2,126			3,820			8		116			—		1			608			838			4,190			13,025			17,215

The significant changes in the balances of trade and other receivables and contract assets are disclosed in Note 5 – Income and Expenses, while the information about the credit exposures are disclosed in Note 27 – Financial Assets and Liabilities.

F-77

17.

Inventories and Supplies

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Cost
Commercial		1,524		2,053
Network		1,388		1,971
Others		454		928
Total		3,366		4,952

Allowance for inventory obsolescence and write-down
Commercial		377		306
Network		877		1,020
Others		127		286
Total		1,381		1,612

Net realizable value
Commercial		1,147		1,747
Network		511		951
Others		327		642
Total		1,985		3,340

The cost of inventories and supplies recognized as expense for the nine months ended September 30, 2024 and 2023 are as follows:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Cost of sales		7,698		7,869
Repairs and maintenance		314		601
Provision for inventory obsolescence		155		90
		8,167		8,560

Changes in the allowance for inventory obsolescence and write-down for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Balances at beginning of the period		1,612			2,218
Provisions (Note 5)		155			89
Reversals		(212	)		(252	)
Disposals and other adjustments		(39	)		(59	)
Cost of sales		(135	)		(384	)
Balances at end of the period		1,381			1,612

F-78

18.

Prepayments and Other Non-Financial Assets

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Advances to suppliers and contractors		39,012		47,706
Subscriber contract costs		29,500		28,926
Prepaid taxes		9,199		11,914
Prepaid fees and licenses		2,496		2,022
Prepaid repairs and maintenance		1,282		455
Prepaid benefit costs (Note 25)		976		917
Prepaid rent		405		399
Prepaid insurance (Note 24)		264		150
Other prepayments		999		518
Other non-financial assets		1,019		573
		85,152		93,580
Less current portion of prepayments and other nonfinancial assets		12,249		13,215
Noncurrent portion of prepayments and other nonfinancial assets		72,903		80,365

Advances to suppliers and contractors are non-interest bearing and are to be applied to contractors’ subsequent progress billings for projects.

Subscriber contract costs consist of the cost to obtain and cost to fulfill a contract with subscribers. Cost to obtain amounted to Php4,394 million and Php4,456 million as at September 30, 2024 and December 31, 2023, respectively. Amortization of cost to obtain presented under selling and promotions amounted to Php882 million and Php927 million for the nine months ended September 30, 2024 and 2023, respectively. Costs to fulfill amounted to Php25,106 million and Php24,470 million as at September 30, 2024 and December 31, 2023, respectively. Amortization of cost to fulfill, which is presented under depreciation and amortization in the Income Statement, amounted to Php5,520 million and Php6,596 million for the nine months ended September 30, 2024 and 2023, respectively.

Prepaid taxes include creditable withholding taxes and input VAT.

Prepaid fees and licenses include advance payments for NTC license fees and unexpired portion of fees paid to the NTC.

F-79

19.

Equity

PLDT’s number of shares of subscribed and outstanding capital stock as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in millions)
Authorized
Non-Voting Serial Preferred Stock		388		388
Voting Preferred Stock		150		150
Common Stock		234		234
Subscribed
Non-Voting Serial Preferred Stock(1)		300		300
Voting Preferred Stock		150		150
Common Stock		219		219
Outstanding
Non-Voting Serial Preferred Stock(1)		300		300
Voting Preferred Stock		150		150
Common Stock		216		216
Treasury Stock
Common Stock		3		3

(1) 300 million shares of Series IV Cumulative Non-Convertible Redeemable Preferred Stock subscribed for Php3 billion, of which Php360 million has
been paid.

There were no changes in PLDT’s capital account for the nine months ended September 30, 2024 and for the year ended
December 31, 2023.

Preferred Stock

Non-Voting Serial Preferred Stock

On November 5, 2013, the Board of Directors designated 50,000 shares of Non-Voting Serial Preferred Stock as Series JJ 10% Cumulative Convertible Preferred Stock to be issued from January 1, 2013 to December 31, 2015, pursuant to the PLDT Subscriber Investment Plan, or SIP. On June 8, 2015, PLDT issued 870 shares of Series JJ 10% Cumulative Convertible Preferred Stock.

On January 26, 2016, the Board of Directors designated 20,000 shares of Non-Voting Serial Preferred Stock as Series KK 10% Cumulative Convertible Preferred Stock to be issued from January 1, 2016 to December 31, 2020, pursuant to the SIP.

The Series JJ and KK 10% Cumulative Convertible Preferred Stock, or SIP shares, earn cumulative dividends at an annual rate of 10%. After the lapse of one year from the last day of the year of issuance of a particular Series of 10% Cumulative Convertible Preferred Stock, any holder of such series may convert all or any of the shares of 10% Cumulative Convertible Preferred Stock held by him into fully paid and non-assessable shares of Common Stock of PLDT, at a conversion price equivalent to 10% below the average of the high and low daily sales price of a share of Common Stock of PLDT on the PSE, or if there have been no such sales on the PSE on any day, the average of the bid and the ask prices of a share of Common Stock of PLDT at the end of such day on such Exchange, in each case averaged over a period of 30 consecutive trading days prior to the conversion date, but in no case shall the conversion price be less than the par value per share of Common Stock. The number of shares of Common Stock issuable at any time upon conversion of 10% Cumulative Convertible Preferred Stock is determined by dividing Php10.00 by the then applicable conversion price.

In case the shares of Common Stock outstanding are at any time subdivided into a greater or consolidated into a lesser number of shares, then the minimum conversion price per share of Common Stock will be proportionately decreased or increased, as the case may be, and in the case of a stock dividend, such price will be proportionately decreased, provided, however, that in every case the minimum conversion price shall not be less than the par value per share of Common Stock. In the event the relevant effective date for any such subdivision or consolidation of shares of stock dividend occurs during the period of 30 trading days preceding the presentation of any shares of 10% Cumulative Convertible Preferred Stock for conversion, a similar adjustment will be made in the sales prices applicable to the trading days prior to such effective date utilized in calculating the conversion price of the shares presented for conversion.

In case of any other reclassification or change of outstanding shares of Common Stock, or in case of any consolidation or merger of PLDT with or into another corporation, the Board of Directors shall make such provisions, if any, for adjustment of the minimum conversion price and the sale price utilized in calculating the conversion price as the Board of Directors, in its sole discretion, shall deem appropriate.

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At PLDT’s option, the Series JJ and KK 10% Cumulative Convertible Preferred Stock are redeemable at par value plus accrued dividends five years after the year of issuance.

The Series IV Cumulative Non-Convertible Redeemable Preferred Stock earns cumulative dividends at an annual rate of 13.5% based on the paid-up subscription price. It is redeemable at the option of PLDT at any time one year after subscription and at the actual amount paid for such stock, plus accrued dividends.

The Non-Voting Serial Preferred Stocks are non-voting, except as specifically provided by law, and are preferred as to liquidation.

All preferred stocks limit the ability of PLDT to pay cash dividends unless all dividends on such preferred stock for all past dividend payment periods have been paid and or declared and set apart and provision has been made for the currently payable dividends.

Voting Preferred Stock

On June 5, 2012, the Philippine SEC approved the amendments to the Seventh Article of PLDT’s Articles of Incorporation consisting of the sub-classification of its authorized Preferred Capital Stock into: 150 million shares of Voting Preferred Stock with a par value of Php1.00 each, and 807.5 million shares of Non-Voting Serial Preferred Stock with a par value of Php10.00 each, and other conforming amendments, or the Amendments. The shares of Voting Preferred Stock may be issued, owned, or transferred only to or by: (a) a citizen of the Philippines or a domestic partnership or association wholly-owned by citizens of the Philippines; (b) a corporation organized under the laws of the Philippines of which at least 60% of the capital stock entitled to vote is owned and held by citizens of the Philippines and at least 60% of the board of directors of such corporation are citizens of the Philippines; and (c) a trustee of funds for pension or other employee retirement or separation benefits, where the trustee qualifies under paragraphs (a) and (b) above and at least 60% of the funds accrue to the benefit of citizens of the Philippines, or Qualified Owners. The holders of Voting Preferred Stock will have voting rights at any meeting of the stockholders of PLDT for the election of directors and for all other purposes, with one vote in respect of each share of Voting Preferred Stock. The Amendments were approved by the Board of Directors and stockholders of PLDT on July 5, 2011 and March 22, 2012, respectively.

On October 12, 2012, the Board of Directors, pursuant to the authority granted to it in the Seventh Article of PLDT’s Articles of Incorporation, determined the following specific rights, terms and features of the Voting Preferred Stock: (a) entitled to receive cash dividends at the rate of 6.5% per annum, payable before any dividends are paid to the holders of Common Stock; (b) in the event of dissolution or liquidation or winding up of PLDT, holders will be entitled to be paid in full, or pro-rata insofar as the assets of PLDT will permit, the par value of such shares of Voting Preferred Stock and any accrued or unpaid dividends thereon before any distribution shall be made to the holders of shares of Common Stock; (c) redeemable at the option of PLDT; (d) not convertible to Common Stock or to any shares of stock of PLDT of any class; (e) voting rights at any meeting of the stockholders of PLDT for the election of directors and all other matters to be voted upon by the stockholders in any such meetings, with one vote in respect of each Voting Preferred Share; and (f) holders will have no pre-emptive right to subscribe for or purchase any shares of stock of any class, securities or warrants issued, sold or disposed by PLDT.

On October 16, 2012, BTFHI subscribed to 150 million newly issued shares of Voting Preferred Stock of PLDT, at a subscription price of Php1.00 per share for a total subscription price of Php150 million pursuant to a subscription agreement between BTFHI and PLDT dated October 15, 2012. As a result of the issuance of Voting Preferred Shares, the voting power of the NTT Group (NTT DOCOMO and NTT Communications), First Pacific Group and its Philippine affiliates, and JG Summit Group was reduced to 9.68%, 15% and 6.65%, respectively, as at September 30, 2024. See Note 1 – Corporate Information.

Redemption of Preferred Stock

On September 23, 2011, the Board of Directors approved the redemption, or the Redemption, of all outstanding shares of PLDT’s Series A to FF 10% Cumulative Convertible Preferred Stock, or the Series A to FF Shares, from holders of record as of October 10, 2011, and all such shares were redeemed and retired effective on January 19, 2012. In accordance with the terms and conditions of the Series A to FF Shares, the holders of Series A to FF Shares as at January 19, 2012 are entitled to payment of the redemption price in an amount equal to the par value of such shares, plus accrued and unpaid dividends thereon up to January 19, 2012, or the Redemption Price of Series A to FF Shares.

PLDT set aside Php4,029 million (the amount required to fund the redemption price for the Series A to FF Shares) in addition to Php4,143 million for unclaimed dividends on Series A to FF Shares, or a total amount of Php8,172 million, to fund the redemption of the Series A to FF Shares, or the Redemption Trust Fund, in a trust account, or the Trust Account, in the name of RCBC, as Trustee. Pursuant to the terms of the Trust Account, the Trustee will continue to hold the Redemption Trust Fund or any balance thereof, in trust, for the benefit of holders of Series A to FF Shares, for a period of ten years from January 19, 2012 until January 19, 2022. After the said date, any and all remaining balance in the Trust Account shall be

F-81

returned to PLDT and revert to its general funds. Any interest on the Redemption Trust Fund shall accrue for the benefit of, and be paid from time to time, to PLDT.

On May 8, 2012, the Board of Directors approved the redemption of all outstanding shares of PLDT’s Series GG 10% Cumulative Convertible Preferred Stock, or the Series GG Shares, from the holders of record as of May 22, 2012, and all such shares were redeemed and retired effective August 30, 2012. In accordance with the terms and conditions of the Series GG Shares, the holders of the Series GG Shares as at May 22, 2012 are entitled to the payment of the redemption price in an amount equal to the par value of such shares, plus accrued and unpaid dividends thereon up to August 30, 2012, or the Redemption Price of Series GG Shares.

PLDT set aside Php236 thousand (the amount required to fund the redemption price for the Series GG Shares) in addition to Php74 thousand for unclaimed dividends on Series GG Shares, or a total amount of Php310 thousand, to fund the redemption price of the Series GG Shares, or the Redemption Trust Fund for Series GG Shares, which forms an integral part of the Redemption Trust Fund previously set aside in the Trust Account with RCBC, as Trustee. Pursuant to the terms of the Trust Account, the Trustee will continue to hold the Redemption Trust Fund for Series GG Shares or any balance thereof, in trust, for the benefit of holders of Series GG Shares, for a period of ten years from August 30, 2012, or until August 30, 2022. After the said date, any and all remaining balance in the Redemption Trust Fund for Series GG Shares shall be returned to PLDT and revert to its general funds. Any interest on the Redemption Trust Fund for Series GG Shares shall accrue for the benefit of, and be paid from time to time, to PLDT.

On January 29, 2013, the Board of Directors approved the redemption of all outstanding shares of PLDT’s Series HH 10% Cumulative Convertible Preferred Stock which were issued in 2007, or the Series HH Shares issued in 2007, from the holders of record as of February 14, 2013 and all such shares were redeemed and retired effective May 16, 2013. In accordance with the terms and conditions of the Series HH Shares issued in 2007, the holders of the Series HH Shares issued in 2007 as at February 14, 2013 are entitled to the payment of the redemption price in an amount equal to the par value of such shares, plus accrued and unpaid dividends thereon up to May 16, 2013, or the Redemption Price of Series HH Shares issued in 2007.

PLDT set aside Php24 thousand (the amount required to fund the redemption price for the Series HH Shares issued in 2007) in addition to Php6 thousand for unclaimed dividends on Series HH Shares issued in 2007, or a total amount of
Php30 thousand, to fund the redemption price of the Series HH Shares issued in 2007, or the Redemption Trust Fund for Series HH Shares issued in 2007, which forms an integral part of the Redemption Trust Funds previously set aside in the Trust Account with RCBC, as Trustee. Pursuant to the terms of the Trust Account, the Trustee will continue to hold the Redemption Trust Fund for Series HH Shares issued in 2007 or any balance thereof, in trust, for the benefit of holders of Series HH Shares issued in 2007, for a period of ten years from May 16, 2013, or until May 16, 2023. After the said date, any and all remaining balance in the Redemption Trust Fund for Series HH Shares issued in 2007 shall be returned to PLDT and revert to its general funds. Any interest on the Redemption Trust Fund for Series HH Shares issued in 2007 shall accrue for the benefit of, and be paid from time to time, to PLDT.

On January 28, 2014, the Board of Directors approved the redemption of all outstanding shares of PLDT’s Series HH 10% Cumulative Convertible Preferred Stock which were issued in 2008, or the Series HH Shares issued in 2008, from the holders of record as of February 14, 2014 and all such shares were redeemed and retired effective May 16, 2014. In accordance with the terms and conditions of the Series HH Shares issued in 2008, the holders of the Series HH Shares issued in 2008 as at February 14, 2014 are entitled to the payment of the redemption price in an amount equal to the par value of such shares, plus accrued and unpaid dividends thereon up to May 16, 2014, or the Redemption Price of Series HH Shares issued in 2008.

PLDT set aside Php2 thousand (the amount required to fund the redemption price of Series HH Shares issued in 2008) in addition to Php1 thousand for unclaimed dividends on Series HH Shares issued in 2008, or a total amount of Php3 thousand, to fund the redemption of the Series HH Shares issued in 2008, or the Redemption Trust Fund for Series HH Shares issued in 2008, which forms an integral part of the Redemption Trust Funds previously set aside in the Trust Account with RCBC, as Trustee. Pursuant to the terms of the Trust Account, the Trustee will continue to hold the Redemption Trust Fund for Series HH Shares issued in 2008 or any balance thereof, in trust, for the benefit of holders of Series HH Shares issued in 2008, for a period of ten years from May 16, 2014, or until May 16, 2024. After the said date, any and all remaining balance in the Redemption Trust Fund for Series HH Shares issued in 2008 shall be returned to PLDT and revert to its general funds. Any interests on the Redemption Trust Fund for Series HH Shares issued in 2008 shall accrue for the benefit of, and be paid from time to time, to PLDT.

On January 26, 2016, the Board of Directors approved the redemption of all outstanding shares of PLDT’s Series II 10% Cumulative Convertible Preferred Stock, or the Series II Shares, from the holder of record as of February 10, 2016, and all such shares were redeemed and retired effective May 11, 2016. In accordance with the terms and conditions of the Series II Shares, the holder of the Series II Shares as at February 10, 2016 is entitled to the payment of the redemption price in an amount equal to the par value of such shares, plus accrued and unpaid dividends thereon up to May 11, 2016, or the Redemption Price of Series II Shares.

F-82

PLDT set aside Php4 thousand to fund the redemption price of Series II Shares, or the Redemption Trust Fund for Series II Shares, which forms an integral part of the Redemption Trust Funds previously set aside in the Trust Account with RCBC, as Trustee. Pursuant to the terms of the Trust Account, the Trustee will continue to hold the Redemption Trust Fund for Series II Shares or any balance thereof, in trust, for the benefit of holder of Series II Shares, for a period of ten years from
May 11, 2016, or until May 11, 2026. After the said date, any and all remaining balance in the Redemption Trust Fund for Series II Shares shall be returned to PLDT and revert to its general funds. Any interests on the Redemption Trust Fund for Series II Shares shall accrue for the benefit of, and be paid from time to time, to PLDT.

As at January 19, 2012, August 30, 2012, May 16, 2013, May 16, 2014 and May 11, 2016, notwithstanding that any stock certificate representing the Series A to FF Shares, Series GG Shares, Series HH Shares issued in 2007, Series HH Shares issued in 2008 and Series II Shares, respectively, were not surrendered for cancellation, the Series A to II Shares were no longer deemed outstanding and the right of the holders of such shares to receive dividends thereon ceased to accrue and all rights with respect to such shares ceased and terminated, except only the right to receive the Redemption Price of such shares, but without interest thereon.

On January 28, 2020, the Board of Directors authorized and approved the retirement of shares of PLDT’s Series JJ 10% Cumulative Convertible Preferred Stock, or SIP Shares, effective May 12, 2020. The record date for the determination of the holders of outstanding SIP Shares available for redemption was February 11, 2020.

On January 20, 2022, RCBC returned to PLDT the remaining unclaimed balance of the Trust Account for the Series A to FF, amounting to Php7,839 million. Due to the prescription of PLDT’s obligations to pay the trust amounts for Series A to FF, income from prescription of preferred shares redemption liability of Php7,839 million was recognized in 2022.

PLDT has withdrawn Php13 thousand and Php353 thousand from the Trust Account, representing total payments on redemption nine months ended September 30, 2024 and 2023, respectively. The balance of the Trust Account of amounting to nil and Php13 thousand were presented as part of “Current portion of other financial assets” and the related redemption liability were presented as part of “Accrued expenses and other current liabilities” in our consolidated statements of financial position as at September 30, 2024 and December 31, 2023, respectively. See related disclosures below under Perpetual Notes and Note 27 – Financial Assets and Liabilities.

Common Stock/Treasury Stock

The Board of Directors approved a share buyback program of up to five million shares of PLDT’s common stock, representing approximately 3% of PLDT’s then total outstanding shares of common stock in 2008. Under the share buyback program, PLDT reacquired shares on an opportunistic basis, directly from the open market through the trading facilities of the PSE and NYSE.

As at November 2010, we had acquired a total of approximately 2.72 million shares of PLDT’s common stock at a weighted average price of Php2,388 per share for a total consideration of Php6,505 million in accordance with the share buyback program. There were no further buyback transactions subsequent to November 2010.

Dividends Declared

Our dividends declared for the nine months ended September 30, 2024 and 2023 are detailed as follows:

September 30, 2024 (Unaudited)

Date

Amount

Class

Approved

Record

Payable

Per Share

Total

(in million pesos, except per share amounts)

Cumulative Non-Convertible
Redeemable Preferred Stock

Series IV (1)

January 30, 2024

February 14, 2024

March 15, 2024

—

May 9, 2024

May 24, 2024

June 15, 2024

—

August 13, 2024

August 28, 2024

September 15, 2024

—

Voting Preferred Stock

March 21, 2024

April 5, 2024

April 15, 2024

—

June 11, 2024

June 28, 2024

July 15, 2024

—

August 13, 2024

September 16, 2024

October 15, 2024

—

Common Stock

Regular Dividend

March 7, 2024

March 21, 2024

April 5, 2024

46.00

9,938

August 13, 2024

August 27, 2024

September 11, 2024

50.00

10,804

20,742

Charged to retained earnings

20,786

(1) Dividends were declared based on total amount paid up.

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September 30, 2023 (Unaudited)

Date

Amount

Class

Approved

Record

Payable

Per Share

Total

(in million pesos, except per share amounts)

Cumulative Non-Convertible
Redeemable Preferred Stock

Series IV (1)

January 31, 2023

February 27, 2023

March 15, 2023

—

May 4, 2023

May 19, 2023

June 15, 2023

—

August 3, 2023

August 19, 2023

September 15, 2023

—

Voting Preferred Stock

March 2, 2023

March 17, 2023

April 15, 2023

—

June 13, 2023

June 28, 2023

July 15, 2023

—

August 29, 2023

September 13, 2023

October 15, 2023

—

Common Stock

Regular Dividend

March 23, 2023

April 11, 2023

April 24, 2023

45.00

9,722

August 3, 2023

August 17, 2023

September 4, 2023

49.00

10,587

Special Dividend

March 23, 2023

April 11, 2023

April 24, 2023

14.00

3,025

23,334

Charged to retained earnings

23,378

(1) Dividends were declared based on total amount paid up.

Our dividends declared after September 30, 2024 are detailed as follows:

Date

Amount

Class

Approved

Record

Payable

Per Share

Total

(in million pesos, except per share amounts)

Cumulative Non-Convertible
Redeemable Preferred Stock

Series IV (1)

November 12, 2024

November 28, 2024

December 15, 2024

—

Charged to retained earnings

(1) Dividends were declared based on total amount paid up.

Noncontrolling Interests – Perpetual Notes

Smart issued Php2,610 million and Php1,590 million perpetual notes on March 3, 2017 and March 6, 2017, respectively, under two Notes Facility Agreements dated March 1, 2017 and March 2, 2017, respectively. The transaction costs amounting to Php35 million were accounted for as a deduction from the perpetual notes. Smart paid distributions amounting to
Php59 million and Php177 million for the nine months ended September 30, 2024 and 2023, respectively. The notes are subordinated to and rank junior to all senior loans of Smart. In accordance with IAS 32, Financial Instruments: Presentation, the notes are classified as part of Smart’s equity and recorded as noncontrolling interests in PLDT’s consolidated financial statements.

Proceeds from the issuance of these notes were used to finance capital expenditures. The notes have no fixed redemption dates. On March 3, 2024 and March 6, 2024, Smart redeemed its Perpetual Notes amounting to Php2,610 million and Php1,590 million, respectively.

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20.

Interest-bearing Financial Liabilities

As at September 30, 2024 and December 31, 2023, this account consists of the following:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Long-term portion of interest-bearing financial liabilities:
Long-term debt (Notes 27 and 28)		251,476		243,152

Current portion of interest-bearing financial liabilities:
Long-term debt maturing within one year (Notes 27 and 28)		19,107		11,646
		270,583		254,798

Unamortized debt discount, representing debt premium, debt issuance costs and any difference between the fair value of consideration given or received at initial recognition, included in our financial liabilities amounted to Php2,006 million and Php2,129 million as at September 30, 2024 and December 31, 2023, respectively. See Note 27 – Financial Assets and Liabilities.

The following table describes all changes to unamortized debt discount for the nine months ended September 30, 2024 and for the year ended December 31, 2023:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Unamortized debt discount at beginning of the period		2,129			2,279
Additions		150			214
Revaluations		2			(2	)
Accretion included as part of financing costs – net		(275	)		(362	)
Unamortized debt discount at end of the period		2,006			2,129

The scheduled maturities of our consolidated outstanding long-term debt at nominal values as at September 30, 2024 are as follows:


	U.S. Dollar Debt				Php Debt		Total
Year	U.S. Dollar		Php		Php		Php
	(in millions)
2024(1)		4		196		1,770		1,966
2025		14		784		22,693		23,477
2026		14		784		14,878		15,662
2027		14		784		26,498		27,282
2028		28		1,569		19,408		20,977
2029 and onwards		614		34,395		148,830		183,225
Total long-term debt (Note 27)		688		38,512		234,077		272,589

(1) From October 1, 2024 to December 31, 2024.

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Long-term Debt

As at September 30, 2024 and December 31, 2023, long-term debt consists of:


		September 30, 2024				December 31, 2023
		(Unaudited)				(Audited)
Description	Interest Rates	U.S. Dollar		Php		U.S. Dollar		Php
		(in millions)
U.S. Dollar Debts:
Fixed Rate Notes	2.5000% to 3.4500% in 2024 and 2023		590		33,076		590		32,691
Term Loans:
Others (1)	SOFR + 1.31161 % to 1.47826% in 2024 and SOFR + 1.31161 % to 1.47826% & US$LIBOR +1.0500% in 2023		87		4,879		122		6,788
			677		37,955		712		39,479
Philippine Peso Debts:
Fixed Rate Retail Bonds	5.2813% in 2024 and 2023				—				2,599
Term Loans:
Unsecured Term Loans	4.0000% to 5.3500%; PHP BVAL + 0.5000% to 1.0000% (floor rate 4.5000% to 4.6250%) in 2024 and 3.9500% to 5.3500%; PHP BVAL + 0.5000% to 1.0000% (floor rate 4.5000% to 4.6250%) in 2023				232,628				212,720
					232,628				215,319
Total long-term debt (Notes 27 and 28)					270,583				254,798
Less portion maturing within one year (Note 27)					19,107				11,646
Noncurrent portion of long-term debt (Note 27)					251,476				243,152

(1) Effective September 2023, the benchmark rate of our U.S. Dollar-denominated debts was changed from LIBOR to SOFR.

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Outstanding Amounts

September 30, 2024

December 31, 2023

Repurchase Amount

(Unaudited)

(Audited)

Loan Amount

Issuance Date

Trustee

Terms

Php

Dates

Paid in
full on

U.S.
Dollar

Php

U.S.
Dollar

Php

(in millions)

Fixed Rate Notes(1)

US$600M

June 23, 2020

The Bank of New
York Mellon, London Branch

Non-amortizing, payable in full upon maturity
on January 23, 2031 and June 23, 2050

—

590

(2)

33,076

(2)

590

(2)

32,691

(2)

590

33,076

590

32,691

(1) The purpose of this loan is to refinance the existing loan obligations, prepay outstanding loans and partially finance capital expenditures.

(2) Amounts are net of unamortized debt discount/premium and/or debt issuance cost.

Drawn

Cancelled Undrawn

Outstanding Amounts

September 30, 2024

December 31, 2023

Amount

(Unaudited)

(Audited)

Loan Amount

Date of Loan
Agreement

Lender(s)

Terms

Dates Drawn

U.S. Dollar

Paid in
full on

U.S.
Dollar

Php

U.S.
Dollar

Php

(in millions)

U.S. Dollar Debts

Other Term Loans(1)

US$50M

2016 and 2017

NTT TC Leasing

Non-amortizing, payable upon maturity on March 30, 2023 and March 27, 2024

2016 and 2017

—

March 30, 2023 and March 27, 2024

—

(2)

1,385

(2)

US$140M

March 4, 2020

PNB

Quarterly amortization rates equivalent to: (a) 2.5% of the total amount drawn payable on the first interest payment date up to the 28th interest payment date; (b) 5% of the total amount drawn payable on the 29th interest payment date up to the 32nd interest payment date; and (3) 2.5% of the total amount drawn payable on the 37th interest payment date up to maturity on December 13, 2030

December 14,
2020

140

—

(2)

4,879

(2)

5,403

(2)

4,879

122

6,788

(1) The purpose of this loan is to finance the capital expenditures and/or to refinance existing loan obligations which were utilized for network expansion and improvement programs.

(2) Amounts are net of unamortized debt discount/premium and/or debt issuance cost.

Outstanding Amounts

Date of

Payments

September 30, 2024

December 31, 2023

Issuance/

Amount

(Unaudited)

(Audited)

Loan Amount

Agreement

Paying Agent

Terms

Drawdown

Php

Date

Php

(in millions)

Fixed Rate Retail Bonds(1)

PLDT

Php15,000M

January 22, 2014

Philippine Depositary
Trust Corp.

Php12.4B – non-amortizing, payable in full upon maturity on
February 6, 2021; Php2.6B – non-amortizing payable in full on February 6, 2024

February 6, 2014

12,400
2,600

February 8, 2021
February 6, 2024

—

2,599

(2)

(1) The purpose of this loan is to finance the capital expenditures and/or to refinance existing loan obligations which were utilized for network expansion and improvement programs.

(2) Amounts are net of unamortized debt discount/premium and/or debt issuance cost.

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							Outstanding Amounts
					Drawn		September 30, 2024			December 31, 2023
	Date of Loan				Amount		(Unaudited)			(Audited)
Loan Amount	Agreement	Lender(s)	Terms	Dates Drawn	Php		Php			Php
					(in millions)		(in millions)
Term Loans
Unsecured Term Loans(1)

Php14,900M	Various dates in 2014, 2016 and 2019	Union Bank	With annual amortization up to 7 and 10 years	Various dates in 2014, 2016 and 2019		14,900		7,822	(2)		9,298	(2)

Php71,300M	Various dates in 2015 to 2023	BPI	With annual amortization up to 6, 7, 10 and 11 years	Various dates in 2015 to 2024		69,800		53,704	(2)		54,436	(2)

Php46,500M	Various date in 2015 to 2024	Metrobank	With annual amortization up to 7, 10 and 11 years	Various date in 2015 to 2024		46,500		38,663	(2)		26,443	(2)

Php18,500M	Various dates in 2019 and 2023	China Banking Corporation	With annual amortization up to 10 years	Various dates in 2019 and 2023		18,500		16,557	(2)		16,616	(2)

Php14,000M	Various dates in 2016 and 2017	Security Bank	With semi-annual amortization up to 10 years	Various dates in 2017		14,000		10,584	(2)		10,760	(2)

Php22,500M	Various dates in 2016, 2020, 2021 and 2023	BDO	With annual amortization up to 7 and 10 years	Various dates in 2016, 2020, 2021 and 2024		22,500		21,701	(2)		14,318	(2)

Php8,500M	Various dates in 2016, 2017 and 2019	PNB	With annual amortization up to 7, 8 and 10 years	Various dates in 2017, 2018 and 2019		8,500		7,915	(2)		7,946	(2)

Php41,500M	Various dates in 2016 to 2023	LBP	With annual amortization up to 10 years	Various dates in 2016 to 2023		41,500		39,553	(2)		39,824	(2)

Php14,000M	Various dates in 2019 to 2021	DBP	With annual amortization up to 8, 9 and 10 years	Various dates in 2019 to 2022		14,000		13,547	(2)		13,629	(2)

Php2,000M	September 6, 2019	Bank of China (Hong Kong) Limited, Manila Branch	With annual amortization up to 7 years	September 6, 2019		2,000		1,895	(2)		1,914	(2)

Php15,000M	Various dates in 2020, 2021 and 2023	RCBC	With annual amortization up to 8, 10 and 11 years	Various dates in 2020, 2021 and 2023		15,000		14,436	(2)		14,566	(2)

Php2,500M	April 2, 2020	MUFG Bank, Ltd.	With semi-annual amortization up to 6 years	April 2, 2020		2,500		1,472	(2)		1,970	(2)

Php3,800M	Various dates in 2023 and 2024	Bank of Commerce	With annual amortization up to 9 and 10 years	Various dates in 2023 and 2024		3,800		3,779	(2)		1,000	(2)

Php1,000M	April 3, 2024	HSBC	With annual amortization up to 5 years	April 3, 2024		1,000		1,000	(2)		—	(2)
								232,628			212,720

(1) The purpose of this loan is to finance the capital expenditures and/or to refinance existing loan obligations which were utilized for network expansion and improvement programs.

(2) Amounts are net of unamortized debt discount/premium and/or debt issuance cost.

F-88

Short-term Debt

PLDT and Smart availed unsecured short-term debt from various banks amounting to Php6,000 million and Php4,000 million, respectively, with an interest rate of 2.60% in March and April 2022. In July 2022, PLDT prepaid its outstanding short-term debt amounting to Php2,000 million. In October 2022, Smart paid its outstanding short-term debt amounting to
Php4,000 million. In November 2022, PLDT and Smart availed unsecured short-term debt amounting to Php4,000 million and Php2,000 million, respectively, with an interest rate of 5.16%. In March 2023, PLDT paid its outstanding short-term debt amounting to Php4,000 million. In October 2023, PLDT and Smart paid their remaining outstanding short-term debt amounting to Php4,000 million and Php2,000 million, respectively. As at September 30, 2024 and December 31, 2023, PLDT and Smart has no outstanding balance of short-term debt.

Interest-bearing financial liabilities drawn after September 30, 2024 are detailed as follows:



	Date of Loan				Drawn Amount
Loan Amount	Agreement	Lender(s)	Terms	Dates Drawn	Php
					(in millions)
Term Loans
Unsecured Term Loans(1)
PLDT
Php530M	September 30, 2024	PVB	With annual amortization up to 7 years	October 30, 2024		530
Php2,000M	October 21, 2024	HSBC	With annual amortization up to 5 years	October 30, 2024		2,000

Smart
Php2,000M	October 11, 2024	BDO	With annual amortization up to 10 years	October 16, 2024		2,000
Php3,000M	October 21, 2024	BDO	With annual amortization up to 10 years	October 24, 2024		3,000

(1) The purpose of this loan is to finance the capital expenditures and/or to refinance existing loan obligations which were utilized for network expansion and improvement programs.

Compliance with Debt Covenants

PLDT’s debt instruments contain restrictive covenants, including covenants that require us to comply with specified financial ratios tests, such as total debt to EBITDA and interest cover ratio, at relevant measurement dates, principally at the end of each quarterly period.

PLDT’s debt instruments also contain a number of other negative covenants that, subject to certain exceptions and qualifications, restrict PLDT’s ability to take certain actions without lenders’ approval, including: (a) making or permitting any material change in the character of its business; (b) selling, leasing, transferring or disposing of all or substantially all of its assets or any significant portion thereof other than in the ordinary course of business; (c) creating any lien or security interest; (d) permitting set-off against amounts owed to PLDT; (e) merging or consolidating with any other company; and
(f) making or permitting any preference or priority in respect of any other relevant indebtedness of PLDT. PLDT’s debt instruments also contain customary and other default provisions that permit the lender to accelerate amounts due or terminate their commitments to extend additional funds under the debt instruments.

Smart’s debt instruments contain certain restrictive covenants that require Smart to comply with specified financial ratios and other financial tests at semi-annual measurement dates. Smart’s loan agreements include compliance with financial tests such as Smart’s consolidated debt to consolidated EBITDA and interest coverage ratio. The agreements also contain customary and other default provisions that permit the lender to accelerate amounts due under the loans or terminate their commitments to extend additional funds under the loans.

ePLDT’s debt instruments contain certain restrictive covenants that require ePLDT to comply with specified financial ratios and other financial tests at quarterly measurement dates. ePLDT’s loan agreement includes compliance with financial tests such as total debt to equity and interest coverage ratio. The agreement also contains customary and other default provisions that permit the lender to accelerate amounts due under the loans or terminate their commitments to extend additional funds under the loans. ePLDT’s debt instruments also contain a number of other negative covenants that, subject to certain exceptions and qualifications, restrict ePLDT’s ability to take certain actions without lenders’ approval.

F-89

The principal factors that could negatively affect our ability to comply with these financial ratio covenants and other financial tests are poor operating performance of PLDT and its subsidiaries, depreciation of the Philippine Peso relative to the U.S. Dollar, 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 (net of consolidated debt discount), approximately 14% and 15% were denominated in U.S. Dollars as at September 30, 2024 and December 31, 2023, respectively. Considering our consolidated outstanding hedges, the unhedged portion of the PLDT’s net debt amounts was approximately 7% (or 5%, net of our consolidated U.S. Dollar cash balances allocated for debt) and 5% (or 5%, net of our consolidated U.S. Dollar cash balances allocated for debt) as at September 30, 2024 and December 31, 2023, respectively. 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. See Note 27 – Financial Assets and Liabilities – Foreign Currency Exchange Risk.

The loan agreements with banks (foreign and local alike) and other financial institutions provide for certain restrictions and requirements with respect to, among others, maintenance of percentage of ownership of specific shareholders, incurrence of additional long-term indebtedness or guarantees and creation of property encumbrances.

As at September 30, 2024 and December 31, 2023, we were in compliance with all of our debt covenants. See
Note 27 – Financial Assets and Liabilities – Derivative Financial Instruments.

F-90

21.

Deferred Credits and Other Noncurrent Liabilities

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Contract liabilities and unearned revenues		8,402		8,206
Provision for asset retirement obligations		1,213		1,164
Accrual of capital expenditures under long-term financing (a)		108		198
Others		105		39
		9,828		9,607

(a) Represents expenditures related to the expansion and upgrade of our network facilities which are not due to be settled within one year. Such accruals
are settled through refinancing from long-term loans obtained from the banks. See Note 20 – Interest-bearing Financial Liabilities.

The following table summarizes the changes to provision for asset retirement obligations for the nine months ended
September 30, 2024 and for the year ended December 31, 2023:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Provision for asset retirement obligations at beginning of the period		1,164			1,514
Capitalized to ROU assets during the period		43			163
Accretion expenses		40			63
Settlement of obligations and others		(3	)		(2	)
Change in assumptions		(31	)		(30	)
Revaluation due to change in IBR		—			(175	)
Reclassification to liabilities associated with assets classified as held-for-sale		—			(369	)
Provision for asset retirement obligations at end of the period		1,213			1,164

F-91

22.

Accounts Payable

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Suppliers and contractors (Note 27)		65,326		74,518
Taxes (Note 26)		6,262		3,964
Carriers and others (Note 27)		2,992		2,362
Related parties (Notes 24 and 27)		374		170
		74,954		81,014

Certain suppliers entered into Trade Financing Agreements (TFAs) to sell a portion of their receivables. The balances of accounts entered into TFA amounted to Php18,158 million and Php20,553 million as at September 30, 2024 and
December 31, 2023, respectively. These amounts are included in the payables to Suppliers and Contractors. Under the terms of the TFAs, the Purchaser will have exclusive ownership of the purchased receivables and all of its rights, title and interest. There were no changes in the payment terms.

For terms and conditions pertaining to the payables to related parties, see Note 24 – Related Party Transactions.

For detailed discussion on the PLDT Group’s liquidity risk management processes, see Note 27 – Financial Assets and Liabilities – Liquidity Risk.

F-92

23.

Accrued Expenses and Other Current Liabilities

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Accrued utilities and related expenses (Notes 24 and 27)		59,434		61,407
Contract liabilities and unearned revenues (Note 5)		10,297		10,689
Accrued taxes and related expenses (Note 26)		4,925		5,943
Accrued employee benefits and other provisions (Note 27)		6,441		5,510
Accrued interests and other related costs (Note 28)		2,583		2,157
Others		2,169		3,044
		85,849		88,750

Accrued utilities and related expenses pertain to costs incurred for electricity and water consumption, repairs and maintenance, selling and promotions, professional and other contracted services, rent, insurance and security services and other operational related expenses pending receipt of billings and statement of accounts from suppliers. These liabilities are noninterest-bearing and are normally settled within a year.

Contract liabilities and unearned revenues represent advance payments for leased lines, installation fees, monthly service fees and unused and/or unexpired portions of prepaid loads.

Accrued taxes and related expenses pertain to licenses, permits and other related business taxes, which are normally settled within a year.

Accrued employee benefits and other provisions pertain to accrued salaries, wages and bonuses, and other employee benefits that are normally settled within a year.

Accrued interests and other related costs includes interest expense on loans, which are normally settled within a year.

Other accrued expenses and other current liabilities are noninterest-bearing and are normally settled within a year. This pertains to other costs incurred for operations-related expenses pending receipt of invoice and statement of accounts from suppliers.

F-93

24. Related Party Transactions

Parties are considered to be related if one party has the ability, directly and indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities.

Settlement of outstanding balances of related party transactions at year-end are expected to be settled with cash.

The following table provides the summary of outstanding balances as at September 30, 2024 and December 31, 2023, and transactions for the nine months ended September 30, 2024 and 2023 that have been entered into with related parties:

September 30,

December 31,

September 30,

Statement of Financial

2024

2023

Income Statement

2024

2023

Company Name

Particulars

Terms

Conditions

Position Classification

(Unaudited)

(Audited)

Classification

(Unaudited)

(in million pesos)

Manila Electric Company, or Meralco

Electricity services to PLDT and certain subsidiaries’ offices within Meralco's franchise area

Immediately upon receipt of invoice

Unsecured

Accounts payable and accrued expenses and other current liabilities

628

603

Repairs and maintenance

2,322

2,414

Pole attachment contracts, wherein Meralco leases its pole spaces to accommodate PLDT and Smart’s cable network facilities

45 days upon receipt of billings

Unsecured

Accrued expenses and other current liabilities

—

Rent

—

Upon depreciation or expiration of lease

Unsecured

ROU assets

2,926

598

Depreciation and amortization

327

2,041

2024 – due after September 30, 2024;
2023 – due after December 31, 2023

Unsecured

Lease liabilities - net of current portion

2,154

2024 – due after September 30, 2024;
2023 – due after December 31, 2023

Unsecured

Current portion of lease liabilities

556

Meralco Industrial Engineering Services Corporation, or MIESCOR

Customer line installation, repair, rehabilitation and maintenance activities

30 days upon receipt of invoice

Unsecured

Accrued expenses and other current liabilities

Transactions with major stockholders, directors and officers:

NTT TC Leasing

PLDT signed a US$25 million term loan facility agreement on March 22, 2016

Non-amortizing, payable upon maturity on March 30, 2023

Unsecured

Interest-bearing financial liabilities

—

Financing costs – net

—

PLDT signed a US$25 million term loan facility agreement on January 31, 2017

Non-amortizing, payable upon maturity on March 27, 2024

Unsecured

Interest-bearing financial liabilities

—

1,385

Financing costs – net

F-94

September 30,

December 31,

September 30,

Statement of Financial

2024

2023

Income Statement

2024

2023

Company Name

Particulars

Terms

Conditions

Position Classification

(Unaudited)

(Audited)

Classification

(Unaudited)

(in million pesos)

Transactions with major stockholders, directors and officers:

NTT World Engineering Marine Corporation

On February 1, 2008, PLDT entered into a service agreement, wherein NTT World Engineering Marine Corporation provides offshore submarine cable repair and other allied services for the maintenance of PLDT’s domestic fiber optic network submerged plant.

1st month of each quarter; noninterest-bearing

Unsecured

Accounts payable and accrued expenses and other current liabilities

237

261

Repairs and maintenance

NTT Communications

On March 24, 2000, PLDT entered into an advisory service agreement (as amended on March 31, 2003, March 31, 2005 and June 16, 2006), under which NTT Communications provides PLDT with technical, marketing and other consulting services for various business areas of PLDT starting April 1, 2000.

30 days upon receipt of invoice; noninterest-bearing

Unsecured

Accrued expenses and other current liabilities

104

Professional and other contracted services

On March 24, 2000, PLDT entered into an agreement with NTT Communications under which PLDT and NTT Communications agreed to cooperative arrangements for conventional international telecommunications services to enhance their respective international businesses.

30 days upon receipt of invoice; noninterest-bearing

Unsecured

Accounts payable

—

NTT Worldwide Telecommunications Corporation

On March 24, 2000, PLDT entered into an agreement under which PLDT markets, and manages data and other services under NTT Communications’ “Arcstar” brand to its corporate customers in the Philippines. PLDT also entered into a Trade Name and Trademark Agreement with NTT Communications under which PLDT has been given the right to use the trade name “Arcstar” and its related trademark, logo and symbols, solely for the purpose of PLDT’s marketing, promotional and sales activities for the Arcstar services within the Philippines.

30 days upon receipt of invoice; noninterest-bearing

Unsecured

Accounts payable

—

Selling and promotions

—

NTT DOCOMO

On June 5, 2006, in accordance with the Cooperation Agreement dated January 31, 2006, an Advisory Services Agreement was entered into by NTT DOCOMO and PLDT. Pursuant to the Advisory Services Agreement, NTT DOCOMO will provide the services of certain key personnel in connection with certain aspects of the business of PLDT and Smart. Also, this agreement governs the terms and conditions of the appointments of such key personnel and the corresponding fees related thereto.

30 days upon receipt of invoice; noninterest-bearing

Unsecured

Accrued expenses and other current liabilities

103

Professional and other contracted services

F-95

September 30,

December 31,

September 30,

Statement of Financial

2024

2023

Income Statement

2024

2023

Company Name

Particulars

Terms

Conditions

Position Classification

(Unaudited)

(Audited)

Classification

(Unaudited)

(in million pesos)

Transactions with major stockholders, directors and officers:

JGSHI and Subsidiaries

PLDT and certain of its subsidiaries have existing agreements with Universal Robina Corporation and Robinsons Land Corporation for office and business office rental.

1st month of each quarter; 30 days upon receipt of invoice; noninterest-bearing

Unsecured

Accounts payable and accrued expenses and other current liabilities

Rent

199

257

Upon depreciation or expiration of lease

Unsecured

ROU assets

Depreciation and amortization

—

2024 – due after September 30, 2024;
2023 – due after December 31, 2023

Unsecured

Lease liabilities - net of current portion

—

PLDT group's other transactions with JGSHI and subsidiaries

30 days upon receipt of invoice; noninterest-bearing

Unsecured

Accrued expenses and other current liabilities

Repairs and maintenance

121

Communication, training and travel

—

Malayan Insurance Co., Inc., or Malayan

PLDT and certain of its subsidiaries have insurance policies with Malayan covering directors, officers, liability to employees and material damage for buildings, building improvements, equipment and motor vehicles. The premiums are directly paid to Malayan.

Immediately upon receipt of invoice

Unsecured

Accounts payable and accrued expenses and other current liabilities

Insurance and security services

163

162

Immediately upon receipt of invoice

Unsecured

Prepayments and other nonfinancial assets

—

152

Gotuaco del Rosario and Associates, or Gotuaco

Gotuaco acts as the broker for certain insurance companies to cover certain insurable properties of the PLDT Group. Insurance premiums are remitted to Gotuaco and the broker’s fees are settled between Gotuaco and the insurance companies.

Immediately upon receipt of invoice

Unsecured

Accounts payable and accrued expenses and other current liabilities

—

Insurance and security services

100

111

F-96

September 30,

December 31,

September 30,

Statement of Financial

2024

2023

Income Statement

2024

2023

Company Name

Particulars

Terms

Conditions

Position Classification

(Unaudited)

(Audited)

Classification

(Unaudited)

(in million pesos)

Transactions with major stockholders, directors and officers:

First Pacific Investment Management Limited,
or FPIML

'On March 1, 2018, Smart entered into an Advisory Services Agreement with FPIML effective for a period of one-year subject to a 12-month automatic renewal unless either party notifies the other party of its intent not to renew the agreement. FPIML provides advisory and related services in connection with the operation of Smart’s business of providing mobile communications services, high-speed internet connectivity, and access to digital services and content. The agreement provides that Smart shall pay a monthly service fee of US$250 thousand and any additional fee shall be mutually agreed upon by both parties on a monthly basis. On March 26, 2020, Smart and FPIML mutually agreed to reduce the monthly service fee to US$100 thousand in consideration of the services provided under this agreement, effective April 1, 2020. Starting April 2021, the fee has been increased to $220 thousand per month. Smart prepaid the fees for the period April to October 2021 (US$1.54 million).

Unsecured

Accounts payable and accrued expenses and other current liabilities (Notes 23 and 24)

—

Professional and other contracted services

111

124

Other related parties:

Various

PLDT and certain of its subsidiaries provide telephone, data communication and other services to various related parties.

30 days upon receipt of invoice

Unsecured

Trade and other receivables
(Note 16)

6,322

5,193

Revenues

1,950

2,343

PLDT and certain of its subsidiaries avail of lease and other services from various related parties.

2024 – due after September 30, 2024;
2023 – due after December 31, 2023

Unsecured

Lease liabilities - net of current portion (Note 10)

184

Expenses

2,783

2,919

2024 – due after September 30, 2024;
2023 – due after December 31, 2023

Unsecured

Current portion of lease liabilities (Note 10)

Upon depreciation or expiration of lease

Unsecured

ROU assets
(Note 10)

310

148

30 days upon receipt of billing; noninterest-bearing

Unsecured

Accounts payable
(Note 22)

661

666

Immediately upon receipt of billing

Unsecured

Accrued expenses and other current liabilities (Note 23)

100

603

F-97

Compensation of Key Officers of the PLDT Group

The compensation of key officers of the PLDT Group by benefit type for the nine months ended September 30, 2024 and 2023 are as follows:


	September 30,
	2024		2023
	(Unaudited)
	(in million pesos)
Short-term employee benefits		278		368
Other long-term employee benefits (Note 25)		89		124
Post-employment benefits (Note 25)		16		19
Total compensation paid to key officers of the PLDT Group		383		511

The amounts disclosed in the table above are the amounts recognized as expenses during the period related to key management personnel.

Effective January 2014, each of the directors, including the members of the advisory board of PLDT, is entitled to a director’s fee in the amount of Php250 thousand for each board meeting attended. Each of the members or advisors of the audit, governance, nomination and sustainability, executive compensation, technology strategy, and risk and data privacy and information security committees is entitled to a fee in the amount of Php125 thousand for each committee meeting attended.

Total fees paid for board meetings and board committee meetings amounted to Php63 million and Php69 million for the nine months ended September 30, 2024 and 2023, respectively.

Except for the fees mentioned above, the directors are not compensated, directly or indirectly, for their services as such directors.

There are no agreements between PLDT Group and any of its key management personnel providing benefits upon termination of employment, except for such benefits to which they may be entitled under PLDT Group’s retirement and incentive plans.

F-98

25.

Pension and Other Employee Benefits

Pension

Defined Benefit Pension Plans

PLDT has defined benefit pension plans, operating under the legal name “The Board of Trustees for the account of the Beneficial Trust Fund created pursuant to the Benefit Plan of PLDT Co.” and covering all of our permanent and regular employees, in which case, benefits are computed based on R.A. 7641 (Retirement Pay Law) or the minimum mandated benefit by the law. For the purpose of complying with Revised IAS 19, Employee Benefits, pension benefit expense has been actuarially computed based on defined benefit plan.

PLDT and certain of its subsidiaries' actuarial valuation is performed every year-end. There is no significant change in the fair value of plan assets for the nine months ended September 30, 2024. Based on the latest actuarial valuation, the actual present value of accrued (prepaid) benefit costs as at September 30, 2024 and December 31, 2023, and net periodic benefit costs and average assumptions used in developing the valuation for the nine months ended September 30, 2024 and 2023 are as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Changes in the present value of defined benefit obligations:
Present value of defined benefit obligations at beginning of the period		17,964			15,883
Service costs		824			1,016
Interest costs on benefit obligation		53			1,065
Actuarial losses on obligations – experience		—			154
Actuarial losses on obligations – economic assumptions		—			2,303
Actual benefits paid/settlements		(2,235	)		(2,848	)
Curtailment and others		20			391
Present value of defined benefit obligations at end of the period		16,626			17,964
Changes in fair value of plan assets:
Fair value of plan assets at beginning of the period		14,522			16,291
Actual contributions		2,838			4,507
Interest income on plan assets		654			1,138
Actual benefits paid/settlements		(2,855	)		(2,510	)
Return on plan assets (excluding amount included in net interest)		—			(4,904	)
Fair value of plan assets at end of the period		15,159			14,522
Unfunded status – net		(1,467	)		(3,442	)
Accrued benefit costs		1,625			3,541
Prepaid benefit costs		158			99

	For the Nine Months Ended September 30,
	2024			2023
	(Unaudited)
Components of net periodic benefit costs:
Service costs		824			690
Interest costs - net		53			(155	)
Curtailment/settlement losses and other adjustments		20			145
Net periodic benefit costs		897			680

Actual net gain on plan assets amounted to Php654 million and Php641 million for the nine months ended September 30, 2024 and 2023, respectively.

Based on the latest actuarial valuation, our expected contribution to the defined benefit plan in 2024 will amount to
Php4,374 million.

The following table sets forth the expected future settlements by the Plan of maturing defined benefit obligation as at
September 30, 2024:


	(in million pesos)
2024(1)		238
2025		344
2026		538
2027		593
2028		1,284
2029 to 2033		12,214

(1) From October 1, 2024 to December 31, 2024.

F-99

The average duration of the defined benefit obligation at the end of the reporting period is 12.21 years.

The weighted average assumptions used to determine pension benefits for the nine months ended September 30, 2024 and 2023 are as follows:


	September 30,
	2024		2023
	(Unaudited)
	(in percentage)
Rate of increase in compensation		5.7		5.7
Discount rate		6.0		7.3

The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the defined benefit obligation as at September 30, 2024 and December 31, 2023, assuming all other assumptions were held constant:


	Increase (Decrease)
	(in percentage)			(in million pesos)
Discount rate		1			15,762
		(1	)		(19,838	)

Future salary increases		1			19,903
		(1	)		(15,732	)

PLDT’s Retirement Plan

The Board of Trustees, which manages the beneficial trust fund, is composed of: (i) a member of the Board of Directors of PLDT, who is not a beneficiary of the Plan; (ii) a member of the Board of Directors or a senior officer of PLDT, who is a beneficiary of the Plan; (iii) a senior member of the executive staff of PLDT; and (iv) two persons who are not executives nor employees of PLDT.

Benefits are payable in the event of termination of employment due to: (i) compulsory, optional, or deferred retirement;
(ii) death while in active service; (iii) physical disability; (iv) voluntary resignation; or (v) involuntary separation from service. For a plan member with less than 15 years of credited services, retirement benefit is equal to 100% of final compensation for every year of service. For those with at least 15 years of service, retirement benefit is equal to 125% of final compensation for every year of service, with such percentage to be increased by an additional 5% for each completed year of service in excess of 15 years, but not to exceed a maximum of 200%. In the case of voluntary resignation after attainment of age 40 and completion of at least 15 years of credited service, benefit is equal to a percentage of his vested retirement benefit, in accordance with percentages prescribed in the retirement plan.

The Board of Trustees of the beneficial trust fund uses an investment approach with the objective of maximizing the long-term expected return of plan assets.

The majority of the Plan’s investment portfolio consists of listed and unlisted equity securities while the remaining portion consists of passive investments like temporary cash investments and fixed income investments.

The plan assets are primarily exposed to financial risks such as liquidity risk and price risk.

Liquidity risk pertains to the plan’s ability to meet its obligation to the employees upon retirement. To effectively manage liquidity risk, the Board of Trustees invests at least the equivalent amount of actuarially computed expected compulsory retirement benefit payments for the year to liquid/semi-liquid assets such as government securities, savings and time deposits with commercial banks.

Price risk pertains mainly to fluctuations in market prices of equity securities listed in the PSE. In order to effectively manage price risk, the Board of Trustees continuously assesses these risks by closely monitoring the market value of the securities and implementing prudent investment strategies.

F-100

The following table sets forth the fair values, which are equal to the carrying values, of PLDT’s plan assets recognized as at September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Noncurrent Financial Assets
Investments in:
Unquoted equity investments		11,790		9,439
Shares of stock		2,142		2,017
Corporate bonds and loans receivable		299		2,287
Mutual funds		210		225
Government securities		4		10
Total noncurrent financial assets		14,445		13,978
Current Financial Assets
Cash and cash equivalents		457		399
Receivables		99		42
Total current financial assets		556		441
Total PLDT’s Plan Assets		15,001		14,419
Subsidiaries Plan Assets		158		103
Total Plan Assets of Defined Benefit Pension Plans		15,159		14,522

Investment in shares of stocks is valued using the latest bid price at the reporting date. Investments in corporate bonds, mutual funds and government securities are valued using the quoted market prices at reporting date.

Unquoted Equity Investments

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)		(Unaudited)		(Audited)
	(Percentage of Ownership)				(in million pesos)
MediaQuest		100		100		8,507		8,507
Tahanan Mutual Building and Loan Association, Inc., or TMBLA, (net of subscriptions payable of Php32 million)		100		100		692		672
BTFHI		100		100		2,591		260
						11,790		9,439

Investments in MediaQuest

MediaQuest was registered with the Philippine SEC on June 29, 1999 primarily to purchase, subscribe for or otherwise acquire and own, hold, use, manage, sell, assign, transfer, mortgage, pledge, exchange, or otherwise dispose of real and personal property or every kind and description, and to pay thereof in whole or in part, in cash or by exchanging, stocks, bonds and other evidences of indebtedness or securities of this any other corporation. Its investments include common shares of stocks of various communication, broadcasting and media entities.

Investments in MediaQuest are carried at fair value. The VIU calculations were derived from cash flow projections over a period of five years based on the 2024 financial budgets approved by MediaQuest’s Board of Directors and calculated terminal value. Other key assumptions used in the cash flow projections include revenue growth rate, direct costs and capital expenditures. The post-tax discount rates applied to cash flow projections range from 11.3% to 12.2%. Cash flows beyond the five-year period are determined using 0.0% to 4.8% growth rates.

The Board of Trustees of the PLDT Beneficial Trust Fund approved an issuance by MediaQuest of PDRs with underlying shares of stocks of Cignal TV held by MediaQuest through Satventures (Cignal TV PDRs) amounting to Php6 billion on
May 8, 2012. On the same date, MediaQuest Board of Directors approved the investment in Cignal TV PDRs by ePLDT, which gave ePLDT a 40% economic interest in Cignal TV. In various dates in 2012, MediaQuest received a deposit for future PDRs subscription of Php6 billion from ePLDT.

The Board of Trustees of the PLDT Beneficial Trust Fund and the MediaQuest Board of Directors approved the issuance of additional MediaQuest PDRs amounting to Php3.6 billion on January 25, 2013. The underlying shares of these additional PDRs are the shares of Satventures held by MediaQuest (Satventures PDRs), the holder of which will have a 40% economic interest in Satventures. Satventures is a wholly-owned subsidiary of MediaQuest and the investment vehicle for Cignal TV. From March to August 2013, MediaQuest received from ePLDT an amount aggregating to Php3.6 billion representing deposits for future PDRs subscription. The Satventures PDRs and Cignal TV PDRs were subsequently issued on

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September 27, 2013, providing ePLDT an effective 64% economic interest in Cignal TV. Also, on the same date, the Board of Trustees of the PLDT Beneficial Trust Fund and the MediaQuest Board of Directors approved the issuance of additional MediaQuest PDRs amounting to Php1.95 billion. The underlying shares of these additional PDRs are the shares of stocks of Hastings held by MediaQuest (Hastings PDRs). Hastings is a wholly-owned subsidiary of MediaQuest, which holds all the print-related investments of MediaQuest, including equity interests in the three leading newspapers: The Philippine Star, Philippine Daily Inquirer, and Business World. From June 2013 to October 2013, MediaQuest received from ePLDT an amount aggregating to Php1.95 billion representing deposits for future PDRs subscription.

ePLDT’s Board of Directors approved on February 19, 2014 an additional Php500 million investment in Hastings PDRs of which Php300 million was received by MediaQuest on March 11, 2014. As at December 31, 2014, total deposit for PDRs subscription amounted to Php2,250 million.

ePLDT’s Board of Directors approved an additional Php800 million investment in Hastings PDRs and settlement of the Php200 million balance of the Php500 million Hastings PDR investment in 2014 on May 21, 2015. Subsequently, on
May 30, 2015, the Board of Trustees of the PLDT Beneficial Trust Fund and the Board of Directors of MediaQuest approved the issuance of Php3,250 million Hastings PDRs. This provided ePLDT with 70% economic interest in Hastings. In February 2018, ePLDT entered into a Deed of Assignment with the Board of Trustees of the PLDT Beneficial Trust Fund transferring the Hastings PDRs for Php1,664 million.

The Board of Trustees of the PLDT Beneficial Trust Fund approved additional investment in MediaQuest amounting to Php3,100 million and Php1,400 million to fund MediaQuest’s investment requirements in 2019 and 2020, respectively, which were fully drawn by MediaQuest during the same years. The full amounts were fully drawn by MediaQuest during 2019 and 2020.

In 2021 and 2022, the Board of Trustees of the PLDT Beneficial Trust Fund approved an additional investment in MediaQuest to fund its cash requirements amounting to Php2,000 million and Php1,000 million, respectively. Both investments were already fully drawn by MediaQuest in 2022.

Investment in TMBLA

TMBLA was incorporated for the primary purpose of accumulating the savings of its stockholders and lending funds to them for housing programs. The beneficial trust fund’s total investment into TMBLA amounted to Php119 million consisting of initial direct subscription in shares of stocks of TMBLA in the amount of Php20 million (net of unpaid subscription amounting to Php32 million) and subsequently via a Deed of Pledge amounting to Php99 million. The cumulative change in the fair market values of this investment amounted to Php573 million and Php553 million as at September 30, 2024 and December 31, 2023, respectively.

Investment in BTFHI

BTFHI was incorporated for the primary purpose of acquiring voting preferred shares in PLDT and while the owner, holder of possessor thereof, to exercise all the rights, powers, and privileges of ownership or any other interest therein.

BTFHI subscribed to a total of 150 million shares of Voting Preferred Stock of PLDT at a subscription price of Php1.00 per share for a total subscription price of Php150 million on October 26, 2012. Total cash dividend income each amounted to
Php7 million for the nine months ended September 30, 2024 and 2023. Dividend receivables each amounted to Php2 million as at September 30, 2024 and December 31, 2023.

On April 30, 2024, the Board of Trustees of PLDT Beneficial Trust Fund subscribed and paid an additional subscription into BTFHI amounting to Php2,480 million.

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Shares of Stocks

As at September 30, 2024 and December 31, 2023, this account consists of:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Common shares
PSE		1,188		1,134
PLDT		40		34
Others		554		489
Preferred shares		360		360
		2,142		2,017

Dividends earned on PLDT common shares each amounted to Php3 million for the nine months ended September 30, 2024 and 2023.

Preferred shares represent 300 million unlisted preferred shares of PLDT at Php10 par value, net of subscription payable of Php2,640 million both as at September 30, 2024 and December 31, 2023. These shares, which bear a dividend of 13.5% per annum based on the paid-up subscription price, are cumulative, non-convertible and redeemable at par value at the option of PLDT. Dividends earned on this investment amounted to Php37 million each for the nine months ended September 30, 2024 and 2023.

Corporate Bonds and Loans Receivable

Investment in corporate bonds includes various long-term peso and dollar denominated bonds with maturities ranging from February 2025 to May 2031 and fixed interest rates from 3.36% to 7.53% per annum.

On various dates in 2023 and on January 24, 2024, the Board of Trustees of the PLDT Beneficial Trust Fund entered into
10-year loan agreements with TV5 Network Inc. with an aggregate amount of Php2,300 million (“TV5 Loans”). The total amount was fully drawn by TV5 Network Inc. on the respective loan agreement dates. The applicable interest rates for the loans shall be based on the average of the One Year PHP BVAL for the three consecutive business days immediately prior to and including the interest rate setting date plus a credit margin of 125 bps per annum. On April 30, 2024, the Board of Trustees of the PLDT Beneficial Trust Fund entered into an Assignment Agreement, transferring all of its rights, title and interests in and to the TV5 Loans, with BTF Properties, Inc. On the same date, TV5 settled the loan with BTF Properties, Inc. through dacion en pago for and in consideration of TV5’s real properties with an aggregate value of Php2,300 million.

Mutual Funds

Investment in mutual funds includes UITF, bond and equity funds, which aims to out-perform benchmarks in various indices as part of its investment strategy.

Government Securities

Investments in government securities include Retail Treasury Bonds and FXTN bearing interest rates ranging from 3.9% to 4.8% per annum. These securities are fully guaranteed by the government of the Republic of the Philippines.

The allocation of the fair value of the assets for the PLDT pension plan as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in percentage)
Investments in listed and unlisted equity securities		93		79
Temporary cash investments		3		3
Debt and fixed income securities		2		16
Mutual funds		1		2
Receivables and other assets		1		—
		100		100

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Defined Contribution Plans

Smart’s and certain of its subsidiaries’ contributions to the plan are made based on the employees’ years of tenure and range from 5% to 10% of the employee’s monthly salary. Additionally, an employee has an option to make a personal contribution to the fund, at an amount not exceeding 10% of his monthly salary. The employer then provides an additional contribution to the fund ranging from 10% to 50% of the employee’s contribution based on the employee’s years of tenure. Although the plan has a defined contribution format, Smart and certain of its subsidiaries regularly monitor their compliance with Republic Act No. 7641. As at September 30, 2024 and December 31, 2023, Smart and certain of its subsidiaries were in compliance with the requirements of Republic Act No. 7641.

Smart’s and certain of its subsidiaries’ actuarial valuation is performed every year-end. There is no significant change in the fair value of plan assets for the nine months ended September 30, 2024. Based on the latest actuarial valuation, the actual present value of prepaid benefit costs as at September 30, 2024 and December 31, 2023, and net periodic benefit costs and average assumptions used in developing the valuation as at and for the nine months ended September 30, 2024 and 2023 and for year ended December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Changes in the present value of defined contribution obligations:
Present value of defined contribution obligations at beginning of the period		2,800		2,777
Service costs		213		262
Interest costs on contribution obligation		—		210
Actuarial losses – economic assumptions		—		8
Actuarial gains – experience		—		(98	)
Actual benefits paid/settlements		—		(344	)
Curtailment and others		324		(15	)
Present value of defined contribution obligations at end of the period		3,337		2,800
Changes in fair value of plan assets:
Fair value of plan assets at beginning of the period		3,618		3,485
Actual contributions		211		248
Interest income on plan assets		—		261
Return on plan assets (excluding amount included in net interest)		—		(4	)
Actual contribution paid/settlements		326		(372	)
Fair value of plan assets at end of the period		4,155		3,618
Funded status – net		818		818
Prepaid contribution costs (Note 18)		818		818

	For the Nine Months Ended September 30,
	2024		2023
	(Unaudited)
Components of net periodic contribution costs:
Service costs		213		223
Net periodic contribution costs		213		223

Actual net income on plan assets amounted to nil for the nine months ended September 30, 2024 and 2023.

Based on the latest actuarial valuation, Smart and certain of its subsidiaries expect to contribute the amount of approximately Php309 million to the plan in 2024.

The following table sets forth the expected future settlements by the Plan of maturing defined contribution obligation as at
September 30, 2024:


	(in million pesos)
2024(1)		85
2025		144
2026		140
2027		186
2028		254
2029 to 2033		2,069

(1) From October 1, 2024 to December 31, 2024.

The average duration of the defined contribution obligation at the end of the reporting period is 10 years.

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The weighted average assumptions used to determine pension benefits for the nine months ended September 30, 2024 and for the year ended December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in percentage)
Rate of increase in compensation		5.0		5.0
Discount rate		7.3		7.3

The sensitivity analysis below has been determined based on reasonably possible changes of each significant assumption on the defined contribution obligation as at September 30, 2024 and December 31, 2023, assuming if all other assumptions were held constant:


	Increase (Decrease)
	(in percentage)			(in million pesos)
Discount rate		1			33
		(1	)		(33	)

Future salary increases		(1	)		(33	)
		1			33

Smart’s Retirement Plan

The fund is being managed and invested by BPI Asset Management and Trust Corporation, as Trustee, pursuant to an amended trust agreement dated February 21, 2012.

The plan’s investment portfolio seeks to achieve regular income, long-term capital growth and consistent performance over its own portfolio benchmark. In order to attain this objective, the Trustee’s mandate is to invest in a diversified portfolio of bonds and equities, both domestic and international. The portfolio mix is kept at 70% and 30% for fixed income securities and equity securities, respectively.

The following table sets forth the fair values, which are equal to the carrying values, of Smart’s plan assets recognized as at September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Noncurrent Financial Assets
Investments in:
Domestic fixed income		2,743		2,471
International equities		1,006		723
Philippine foreign currency bonds		754		670
Domestic equities		689		613
International fixed income		176		259
Total noncurrent financial assets		5,368		4,736
Current Financial Assets
Cash and cash equivalents		241		217
Total current financial assets		241		217
Total plan assets		5,609		4,953
Less: Employee’s share, forfeitures and mandatory reserve account		1,454		1,335
Total Plan Assets of Defined Contribution Plans		4,155		3,618

Domestic Fixed Income

Investments in domestic fixed income include Philippine Peso denominated bonds, such as government securities and corporate debt securities, with fixed interest rates from 2.90% to 11.00% per annum.

International Equities

Investments in international equities include exchange traded funds in iSHARES Core MSCI World UCITS ETF USD and Invesco QQQ ETF USD, and WisdomTree Japan ETF.

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Philippine Foreign Currency Bonds

Investments in Philippine foreign currency bonds include U.S. Dollar denominated fixed income instruments issued by the Philippine government and local corporations with fixed interest rates from 2.38% to 10.63% per annum.

Domestic Equities

Investments in domestic equities include direct equity investments in common shares listed in the PSE. These investments earn on stock price appreciation and dividend payments. This includes investment in PLDT shares with fair value of
Php39 million and Php33 million as at September 30, 2024 and December 31, 2023, respectively.

International Fixed Income

Investments in international fixed income include iSHARES U.S. Treasury Bond ETF and PIMCO GIS Global Bond Fund.

Cash and Cash Equivalents

This pertains to the fund’s excess liquidity in Philippine Peso and U.S. Dollars including investments in time deposits, money market funds and other deposit products of banks with duration or tenor less than a year.

The asset allocation of the Plan is set and reviewed from time to time by the Plan Trustees taking into account the membership profile, the liquidity requirements of the Plan and risk appetite of the Plan sponsor. This considers the expected benefit cash flows to be matched with asset durations.

The plan assets are primarily exposed to financial risks such as liquidity risk and price risk.

Liquidity risk pertains to the Plan’s ability to meet its obligation to the employees upon retirement. To effectively manage liquidity risk, the Plan Trustees invest a portion of the fund in readily tradeable and liquid investments which can be sold at any given time to fund liquidity requirements.

Price risk pertains mainly to fluctuations in market prices of equity securities listed in the PSE. In order to effectively manage price risk, the Plan Trustees continuously assess these risks by closely monitoring the market value of the securities and implementing prudent investment strategies.

The allocation of the fair value of Smart and certain of its subsidiaries' pension plan assets as at September 30, 2024 and
December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in percentage)
Investments in debt and fixed income securities and others		70		73
Investments in listed and unlisted equity securities		30		27
	100		100

Other Long-term Employee Benefits

LTIP

The ECC approved on December 23, 2021 the LTIP covering the years 2022 to 2026, covering two cycles, based on the achievement of telco core income targets, with additional performance metrics on Customer Experience and Sustainability to impact the LTIP payout. Cycle 1 covers the performance period from 2022 to 2024. Payout will be based on the achievement of performance targets. Cycle 2 covers the performance period from 2025 and 2026 and is subject to the ECC’s further evaluation and approval of the final terms.

This long-term employee benefit liability was recognized and measured using the projected unit credit method and was amortized on a straight-line basis over the vesting period.

The expense accrued for the LTIP amounted to Php857 million and Php668 million for the nine months ended
September 30, 2024 and 2023, respectively.

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The accrued incentive payable amounted to Php3,039 million and Php2,182 million as at September 30, 2024 and
December 31, 2023, respectively. See Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Estimating Pension Benefit Costs and Other Employee Benefits and Note 5 – Income and Expenses – Compensation and Employee Benefits.

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26.

Provisions and Contingencies

PLDT’s Local Business and Franchise Tax Assessments

As at September 30, 2024, PLDT has no contested LGU assessments for franchise taxes based on gross receipts received or collected for services within its respective territorial jurisdiction.

Smart’s Local Business and Franchise Tax Assessments

Province of Cagayan

The Province of Cagayan, or the Province, issued a tax assessment against Smart in 2016 for alleged local franchise tax covering years 2011 to 2015. Smart appealed the assessment to the Regional Trial Court, or RTC, on the ground that Smart cannot be held liable for local franchise tax mainly because it has no sales office within the Province pursuant to Section 137 of the Local Government Code (Republic Act No. 7160). The RTC rendered its Decision on November 29, 2021 dismissing the appeal of Smart for lack of jurisdiction without prejudice. Subsequently, a motion for reconsideration was filed by the Province. On April 25, 2023, the RTC ruled in favor of the Province and denied Smart’s subsequent Motion for Reconsideration. On May 24, 2023, Smart filed its Petition for Review before the Court of Tax Appeals. On June 27, 2023, the Second Division of the CTA, in a resolution, ordered the Province to file their Comment to the Petition for Review filed by Smart. The same was complied with. On December 14, 2023, Smart filed its Memorandum requesting for favorable decision by stating all legal and factual bases. The case is pending as of the date of this report.

City of Makati

The City of Makati sent letters to Smart and SBI for alleged franchise tax liability, which Smart and SBI refuted through respective protest letters and judicial actions on the ground that Makati City is imposing tax on revenues outside its jurisdiction. After several court proceedings, on March 2, 2023, the City of Makati, Smart and SBI, mutually agreed to execute respective Compromise Agreements to abbreviate the long and protracted court cases. On March 17, 2023, the court approved the Compromise Agreement. Pursuant thereto, on March 28, 2023 and June 30, 2023, external counsels informed Smart and SBI, respectively, that the Courts approved Compromise Agreements, which eventually ended the cases. On April 27, 2023, the City of Makati issued the Business Permits of Smart and SBI. For 2024, all Business Permits were issued by the City of Makati to Smart and SBI.

Digitel’s Local Government Unit, or LGU, Assessments

Digitel is discussing with various LGUs as to the settlement of its local taxes.

DMPI vs. City of Trece Martires

DMPI petitioned in 2010 to declare void the City of Trece Martires' ordinance of imposing tower fee of Php150 thousand for each cell site every year. Application for the issuance of a preliminary injunction by DMPI is pending resolution as of the date of this report.

ACeS Philippines’ Withholding Tax Assessments

ACeS Philippines had a case filed with the Supreme Court (ACeS Philippines Satellite Corporation vs. Commissioner of Internal Revenue Supreme Court G.R. No. 226680) for alleged 2006 deficiency withholding tax. On July 23, 2014, the CTA Second Division affirmed the assessment of the Commissioner of Internal Revenue for deficiency basic withholding tax, surcharge plus deficiency interest, and delinquency interest amounting to Php87 million. On November 18, 2014, ACeS Philippines filed a Petition for Review with the CTA En Banc. On August 16, 2016, the CTA En Banc also affirmed the assessment with finality. On October 19, 2016, ACeS Philippines filed a petition before the Supreme Court assailing the decision of the CTA. On February 23, 2017 and March 15, 2017, respectively, the Company paid a compromise settlement amounting to Php27 million and filed a formal request for compromise of tax liabilities before the Bureau of Internal Revenue, or BIR, while the case is pending before the Supreme Court.

ACeS Philippines entered into an amicable settlement with the BIR on February 19, 2021 pursuant to the provisions of the Civil Code of the Philippines and paid an additional compromise settlement amounting to Php20 million. The Commissioner of Internal Revenue signed the judicial compromise agreement on April 18, 2021. The corresponding Certificate of Availment (Compromise Settlement) was issued by the BIR. The parties filed with the Supreme Court on July 21, 2022 a Joint Motion for Judgment based on Judicial Compromise Agreement. On January 31, 2023, ACeS Philippines received the Decision of the Supreme Court dated August 30, 2022 affirming the decision of the CTA En Banc. On February 15, 2023, ACeS Philippines filed its Motion for Reconsideration praying to consider the Joint Motion for Judgment based on Judicial Compromise Agreement filed on July 21, 2022. In a Notice dated February 21, 2023, the Supreme Court required the BIR to comment on the Motion for Reconsideration (on the Decision dated August 30, 2022). The BIR filed its Comment dated

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March 13, 2023 submitting that the Judicial Compromise Agreement executed by and between the parties be considered and judgment be rendered based thereon.

In a Notice received on June 29, 2023, the Supreme Court issued a Resolution dated April 25, 2023 resolving to deny ACeS Philippines’ Motion for Reconsideration with finality. The corresponding Entry of Judgment was received on
September 20, 2023. While the Supreme Court Decision and Resolution did not mention the Judicial Compromise Agreement, the BIR – National Evaluation Board previously approved ACeS Philippines’ application and payment for compromise settlement and issued the Certificate of Availment.

Arbitration with Eastern Telecommunications Philippines, Inc., or ETPI

Since 1990 up to the present, PLDT and ETPI have been engaged in legal proceedings involving a number of issues in connection with their business relationship. Among PLDT’s claims against ETPI are ETPI’s alleged uncompensated bypass of PLDT’s systems from July 1, 1998 to November 28, 2003; unpaid access charges from July 1, 1999 to
November 28, 2003; and non-payment of applicable rates for Off-Net and On-Net traffic from January 1, 1999 to
November 28, 2003 arising from ETPI’s unilateral reduction of its rates for the Philippines-Hong Kong traffic stream through Hong Kong REACH-ETPI circuits. ETPI’s claims against PLDT, on the other hand, involve an alleged Philippines-Hong Kong traffic shortfall for the period July 1, 1998 to November 28, 2003; unpaid share of revenues generated from PLDT’s activation of additional growth circuits in the Philippines-Singapore traffic stream for the period July 1, 1999 to
November 28, 2003; under reporting of ETPI share of revenues under the terms of a Compromise Agreement for the period
January 1, 1999 to November 28, 2003 (which ETPI is seeking to retroact to February 6, 1990); lost revenues arising from PLDT’s blocking of incoming traffic from Hong Kong from November 1, 2001 up to November 2003; and lost revenues arising from PLDT’s circuit migration from January 1, 2001 up to December 31, 2001.

While the parties have entered into Compromise Agreements in the past (one in February 1990 and another in March 1999), said agreements have not put to rest the issues between them. To avoid protracted litigation and to preserve their business relationship, PLDT and ETPI agreed to submit their differences and issues to voluntary arbitration. On April 16, 2008, PLDT and ETPI signed an Arbitration Settlement Agreement and submitted their respective Statement of Claims and Answers. Subsequent to such submissions, PLDT and ETPI agreed to suspend the arbitration proceedings. ETPI’s total claim against PLDT is about Php2.9 billion while PLDT’s total claim against ETPI is about Php2.8 billion.

In an agreement, PLDT and Globe have agreed that they shall cause ETPI, within a reasonable time after May 30, 2016, to dismiss Civil Case No. 17694 entitled Eastern Telecommunications Philippines, Inc. vs. Philippine Long Distance Telephone Company, and all related or incidental proceedings (including the voluntary arbitration between ETPI and PLDT), and PLDT, in turn, simultaneously, shall withdraw its counterclaims against ETPI in the same entitled case, all with prejudice. As of date of this report, there are no changes on the status of the case.

Department of Labor and Employment, or DOLE, Compliance Order, or Order, to PLDT

In a series of orders including a Compliance Order issued by the DOLE Regional Office on July 3, 2017, which was partly affirmed by DOLE Secretary Silvestre Bello, III, or DOLE Secretary, in his resolutions dated January 10, 2018 and
April 24, 2018, the DOLE had previously ordered PLDT to regularize 7,344 workers from 38 of PLDT’s third party service contractors. PLDT questioned these “regularization orders” before the CA, which led to the July 31, 2018 Decision of the CA.

In sum, the CA: (i) granted PLDT’s prayer for an injunction against the regularization orders; (ii) set aside the regularization orders insofar as they declared that there was labor-only contracting of the following functions: (a) janitorial services, messengerial and clerical services; (b) information technology, or IT, firms and services; (c) IT support services, both hardware and software, and applications development; (d) back office support and office operations; (e) business process outsourcing or call centers; (f) sales; and (g) medical, dental engineering and other professional services; and (iii) remanded to the DOLE for further proceedings, the matters of: (a) determining which contractors, and which individuals deployed by these contractors, are performing installation, repair and maintenance, or IRM, of PLDT lines which individuals will be covered by the regularization orders because they are performing the core functions of PLDT; and (b) properly computing monetary awards for benefits such as unpaid overtime or 13th month pay, which in the regularization orders amounted to Php51.8 million.

The CA agreed with PLDT’s contention that the DOLE Secretary’s regularization order was “tainted with grave abuse of discretion” because it did not meet the “substantial evidence” standards set out by the Supreme Court in landmark jurisprudence. The Court also said that the DOLE’s appreciation of evidence leaned in favor of the contractor workers, and that the DOLE Secretary had “lost sight” of distinctions involving the labor law concepts of “control over means and methods,” and “control over results.”

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PLDT filed a motion on August 20, 2018 seeking a partial reconsideration of that part of the CA decision, which ordered a remand to the Office of the Regional Director of the DOLE-National Capital Region of the matter of the regularization of individuals performing installation, repair and maintenance, or IRM, services. In its motion, PLDT argued that the fact-finding process contemplated by the Court’s remand order is actually not part of the visitorial power of the DOLE (i.e., the evidence that will need to be assessed cannot be gleaned in the ‘normal course’ of a labor inspection) and is therefore, outside the jurisdiction of the DOLE Secretary.

PLDT also questioned that part of the CA ruling which seems to conclude that all IRM jobs are “regular or core functions of PLDT.” It argued that the law recognizes that some work of this nature can be project-based or seasonal in nature. Instead of the DOLE, PLDT suggested that the National Labor Relations Commission – a tribunal with better fact-finding powers – take over from the DOLE to determine whether the jobs are in fact IRM, and if so, whether they are “regular” or can be considered project-based or seasonal.

Both adverse parties, the PLDT rank-and-file labor union Manggagawa sa Komunikasyon ng Pilipinas, or MKP, and the DOLE filed Motions for Reconsideration.

The CA issued a Resolution on February 14, 2019 denying all Motions for Reconsideration and upheld its July 31, 2018 Decision. After filing a Motion for Extension of Time on March 7, 2019, PLDT filed on April 5, 2019 a Petition for Review with the Supreme Court, questioning only one aspect of the CA decision i.e. its order remanding to the DOLE the determination of which jobs fall within the scope of “installation, repair and maintenance,” without however a qualification as to the “project” or “seasonal” nature of those engagements. The Supreme Court has consolidated PLDT’s Petition with the separate Petitions for Review filed by the DOLE and MKP. PLDT submitted on February 17, 2020 its Comment on the Petitions for Review filed by the DOLE Secretary and MKP. PLDT also received the Comment filed by MKP and the DOLE Secretary dated January 13, 2020 and September 3, 2020, respectively. PLDT filed on September 10, 2020 a Motion for Leave and for Time to File a Consolidated Reply (re: MKP’s Comment dated January 13, 2020 and DOLE Secretary’s Comment dated September 3, 2020). PLDT filed on December 23, 2020 its Reply to the Comment submitted by MKP and the DOLE Secretary. PLDT received DOLE’s Reply dated March 2, 2021 on March 11, 2021.

On March 20, 2024, we received the Supreme Court’s Decision dated February 14, 2024, dismissing PLDT’s, DOLE’s and MKP’s petitions and affirming the Court of Appeal’s July 31, 2018 Resolution.

The Supreme Court affirmed the Court of Appeals’ modification of the DOLE Secretary’s Resolution and set aside the order to regularize the workers of PLDT’s service contractors, except those performing installation, repair, and maintenance services, who may be declared regular employees of PLDT subject to various terms of the remand of the SAVE proceedings to the DOLE NCR Regional Office.

For clarity, the Supreme Court remanded the case to the Office of the Regional Director of the DOLE – NCR and ordered the said office to: (a) review and properly determine the effects of the regularization of the workers performing installation, repair, and maintenance services; (b) review, compute, and properly determine, the monetary award on the labor standards violation, to which petitioner PLDT, Inc., and the concerned contractors are solidarily liable; and (c) conduct further appropriate proceedings, consistent with the February 14, 2024 Decision.

On April 4, 2024, we filed PLDT’s Motion for Partial Reconsideration of even date and on April 16, 2024, PLDT received a copy of MKP’s Motion for Partial Reconsideration. To date, the Motions for Partial Reconsideration are pending resolution before the Supreme Court.

Attys. Baquiran and Tecson vs. NTC, et al.

This is a Petition for Mandamus filed on October 23, 2018 by Attys. Joseph Lemuel Baligod Baquiran and Ferdinand C. Tecson against the Respondents NTC, the PCC, Liberty, BellTel, Globe, PLDT and Smart. Briefly, the case involves the 700 MHz frequency, among others, or Subject Frequencies, that was originally assigned to Liberty and which eventually became subject of the Co-Use Agreement between Globe, on the one hand, and PLDT and Smart, on the other, or the Co-Use Agreement.

The Petition prayed that: (a) a Temporary Restraining Order, or TRO, /Writ of Preliminary Injunction, or WPI, be issued to enjoin and restrain Globe, PLDT and Smart from utilizing and monopolizing the Subject Frequencies and the NTC from bidding out or awarding the frequencies returned by PLDT, Smart and Globe; (b) the NTC’s conditional assignment of the Subject Frequencies be declared unconstitutional, illegal and void; (c) alternatively, Liberty and its successors-in-interest be divested of the Subject Frequencies and the same be reverted to the State; (d) Liberty be declared to have transgressed Section 11 (1), Article XVI of the Constitution; (e) Liberty and its parent company be declared to have contravened paragraph 2 of Section 10, Article XII of the 1987 Constitution; (f) Liberty’s assignment of the Subject Frequencies to BellTel be declared illegal and void; (g) the Co-Use Agreement be declared invalid; (h) the NTC be found to have unlawfully neglected the performance of its positive duties; (i) the PCC be found to have unlawfully neglected the performance of its positive duties;

F-110

(j) a Writ of Mandamus be issued commanding the NTC to revoke the Co-Use Agreement, recall the Subject Frequencies in favor of the State, and make the same available to the best qualified telecommunication players; (k) a Writ of Mandamus be issued commanding the PCC to conduct a full review of PLDT’s and Globe’s acquisition of all issued and outstanding shares of Vega Telecom; (l) an Investigation of NTC be ordered for possible violation of Section 3 (e) of Republic Act No. 3019 and other applicable laws; and (m) the said TRO/WPI be made permanent.

Essentially, petitioners contend that the NTC’s assignments of the Subject Frequencies of Liberty were void for failing to comply with Section 4 (c) of Republic Act No. 7925 which essentially states that “the radio frequency spectrum is a scarce public resource xxx.” Even assuming the assignments were valid, Liberty should be deemed divested of the same by operation of law (with the Subject Frequencies reverted to the State), considering that it underutilized or never utilized the Subject Frequencies in violation of the terms and conditions of the assignments. Assuming further that the NTC’s assignments of the Subject Frequencies were valid, and that Liberty was not divested of the same by operation of law, still, Liberty did not validly assign the Subject Frequencies to BellTel because of the absence of Congressional approval. Petitioners conclude that since the assignments of the Subject Frequencies from the NTC to Liberty, and from Liberty to BellTel, were all illegal and void, it follows that the Subject Frequencies could not serve as the object of the Co-Use Agreement between PLDT, Smart and Globe.

PLDT filed on November 23, 2018 an Entry of Appearance on behalf of PLDT and Smart. PLDT and Smart filed their Comment on January 17, 2019. Essentially, the Comment raised the following arguments: first, that the requisites for judicial review and for a mandamus petition are lacking; second, that there was no need for Liberty to obtain prior Congressional approval before it assigned the Subject Frequencies to BellTel; and third, that the Co-Use Agreement is valid and approved by the NTC and did not violate the Constitution or any laws.

PLDT received a copy of BellTel’s Comment/Opposition dated January 10, 2019 on January 15, 2019. PLDT received a copy of Globe Telecom, Inc.’s, or Globe’s Comment/Opposition dated January 21, 2019 on February 12, 2019. In a Resolution dated March 19, 2019, the Supreme Court noted the aforesaid filings. As at the date of the report, however, PLDT has not received any pleadings from the OSG on behalf of the public respondents.

The Supreme Court issued on June 18, 2019 a Resolution consolidating this case with G.R. No. 230798 (Philippine Competition Commission vs. CA [Twelfth Division] and PLDT; Globe, intervenor) and G.R. No. 234969 (Philippine Competition Commission vs. PLDT and Globe). The consolidated cases were assigned to the Supreme Court Division in charge of G.R. No. 230798, the case with the lowest docket number.

On September 17, 2024, PLDT received a Notice of Resolution dated August 6, 2024 issued by the Supreme Court requiring the parties to move in the premises within ten (10) days from notice. PLDT filed its compliance on October 3, 2024.

Notice of Material Breach and Demand for Payment on DITO

PLDT and DITO entered into an agreement in February 2021 for the construction of a transmission facility that served as the point of interconnection for their subscribers. Under the agreement, PLDT established and managed the interconnection facility that operated as the primary physical interface for both companies. The planned facility was completed in
March 2021.

PLDT served on DITO on October 6, 2022 a Notice of Material Breach and Demand for Payment due to DITO's refusal to pay the outstanding balance of Php430 million for contracted services provided by PLDT in relation to the building and provisioning of transmission facilities used by DITO to deliver telecommunication services to its subscribers. Upon DITO’s request, PLDT agreed to limit the scope of work, the resulting in a reduction of the outstanding balance to Php280 million, which will be payable in three tranches. To date, DITO has only paid the first and second tranche amounting to
Php168 million, with a remaining balance of Php112 million.

Meanwhile, DITO filed a petition with the NTC on September 22, 2021 seeking the latter’s intervention in directing Smart to grant DITO’s request for additional capacity for interconnection. In response, Smart filed an answer on October 4, 2021 stating that the petition should be denied for DITO’s failure to prevent, detect, or block International Simple Resale, or ISR,/Bypass Traffic emanating from its network and DITO’s failure to set up an effective fraud management system; and requesting for compensation for losses incurred due to these ISR/ bypass activities, in violation of its Interconnection Agreement with Smart, the provisions of R.A. No. 7925, and NTC MC No. 14-07-2000. The NTC facilitated mediation conferences on November 5, 2021, November 18, 2021, February 4, 2022, and February 16, 2022. On March 6, 2024, Smart filed a Manifestation informing the NTC that Smart already provided additional capacity for interconnection to DITO, and that Smart and DITO executed a memorandum of agreement on bypass activities. On May 9, 2024, Smart filed a Motion to Dismiss in light of the aforementioned supervening events.

Following news reports on August 8, 2022 that DITO had filed a complaint with the PCC against Globe and Smart involving the same issue pending with the NTC on ISR, Smart received a subpoena duces tecum dated December 7, 2022 (“December

F-111

Subpoena”) from the PCC Competition Enforcement Office in relation to an ongoing full administrative investigation involving the telecommunications industry. The subpoena notified Smart that it was the subject of ongoing investigation pursuant to Section 2.9 of the 2017 PCC Rules of Procedure, involving allegations of violations by Smart of Section 14(b)(1), 15(b), 15(c) and 15(i) of the Philippine Competition Act. Smart was directed to submit its corporate documents, documents and information pertaining to its operations as a PTE and its relationship with other PTEs, and documents and information on ISR. to the PCC on January 23, 2023, followed by the submission of a supplemental submission on January 27, 2023. On May 26, 2023, Smart received a subpoena ad testificandum from the PCC directing duly authorized representative(s) knowledgeable on: (i) Smart’s operations, including but not limited to interconnection with other public telecommunications entities, products and services offered, and corporate structure; and (ii) submitted documents in relation to the December Subpoena, to appear before the PCC Enforcement Office on June 8, 2023. Accordingly, Smart representatives appeared before the PCC on the said date for the clarificatory hearing. On July 4, 2023, Smart received a PCC Resolution setting another hearing and requiring Smart's representatives to appear and address pending matters on competitor information, market distinction between postpaid and prepaid services, network coverage, interconnection agreements, clarificatory questions on documents already submitted, and other related matters. Accordingly, representatives attended the clarificatory hearings before the PCC on July 20 and November 20, 2023. On January 19, 2024, DITO informed Smart that it had signed the Memorandum of Agreement (Cooperation Against Bypass Activity) and provided a fully-signed copy on said date. On March 2, 2024, Smart filed a Manifestation informing the PCC-Competition Enforcement Office (PCC-CEO) that an agreement had been reached with DITO on bypass activities and that DITO acknowledged its ISR liabilities for 2021 to August 2023. Smart filed another Manifestation on March 8, 2024, informing the PCC-CEO that it granted DITO additional capacity for interconnection following the execution of the agreement on bypass activities. Smart has not received any subsequent order or resolution from the PCC.

Class Action Suit Against PLDT

On February 6, 2023, Sophia Olsson, an investor in PLDT American Depositary Shares (“ADSs”), filed a putative class action in the United States District Court for the Central District of California (the “Court”) against PLDT and certain current and former directors and officers on behalf of herself and all other persons similarly situated who purchased or otherwise acquired ADSs between January 1, 2019 and December 19, 2022 (“U.S. Class Action”). On April 7, 2023, Ms. Olsson and another individual, Kevin Douglas, submitted separate motions to the Court to serve as lead plaintiff in the U.S. Class Action. On May 1, 2023, the Court granted Mr. Douglas’s (“Plaintiff”) motion to serve as the lead plaintiff.

On December 1, 2023, Defendants and Plaintiff notified the Court that they had reached an agreement in principle to settle the U.S. Class Action. The notification indicated that, accordingly, Defendants and Plaintiff jointly sought to vacate the schedule for further briefing on PLDT’s pending motion to dismiss to allow the parties to finalize the settlement. On
December 4, 2023, the Court granted the request to vacate the briefing schedule.

On June 6, 2024, the Court rescheduled the final approval hearing from August 5, 2024 to August 9, 2024. On
August 9, 2024, following Plaintiff’s filing of a motion for final approval of the settlement (together with other motions relating to Plaintiff’s proposed plan for allocating settlement proceeds, attorneys’ fees for counsel for the class, litigation expenses and an award for Plaintiff), the Court held a hearing to address whether to grant final approval of the settlement. After counsel for the class orally presented these motions, the Court reserved judgment. On September 17, 2024, the Court granted final approval to PLDT’s case-ending settlement of the U.S. Class Action.

On September 17, 2024, the Court granted final approval to PLDT’s case-ending settlement of securities class action litigation. The Judgment and Order of the Court provides that the Court will retain jurisdiction over (among other matters) implementation of the settlement and the distribution and disposition of the settlement fund. There is a 30-day period to appeal but any such appeal by a class member on the Plan of Allocation or the amount of attorney's fees will not affect the finality of the Judgment and Order as to the approval of the Settlement vis-a-vis PLDT and the individual defendants. Given that the 30-day period expired with no appeal on record, the case is now considered closed and terminated.

F-112

Other disclosures required by IAS 37, Provisions, Contingent Liabilities and Contingent Assets, were not provided as it may prejudice our position in ongoing claims, litigations and assessments. See Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Provision for legal contingencies and tax assessments

F-113

27.

Financial Assets and Liabilities

We have various financial assets such as trade and non-trade receivables, cash and short-term deposits. Our principal financial liabilities, other than derivatives, comprise of bank loans, lease liabilities, trade and non-trade payables. The main purpose of these financial liabilities is to finance our operations. We also enter into derivative transactions, primarily principal only-currency swap agreements, interest rate swaps and forward foreign exchange contracts and options to manage the currency and interest rate risks arising from our operations and sources of financing. Our accounting policies in relation to derivatives are set out in Note 2 – Summary of Material Accounting Policies – Financial Instruments.

The following table sets forth our consolidated financial assets and financial liabilities as at September 30, 2024 and
December 31, 2023:


	Financial instruments at amortized cost				Financial instruments at FVPL		Total financial instruments
	(in million pesos)
Assets as at September 30, 2024 (Unaudited)
Noncurrent:
Financial assets at fair value through profit or loss		—				1,139		1,139
Debt instruments at amortized cost – net of current portion		370				—		370
Derivative financial assets – net of current portion		—				232		232
Other financial assets – net of current portion		2,835		(1)		—		2,835
Current:
Cash and cash equivalents		12,306				—		12,306
Short-term investments		102				—		102
Trade and other receivables		28,596				—		28,596
Current portion of derivative financial assets		—				11		11
Current portion of debt instruments at amortized cost		25				—		25
Current portion of other financial assets		847		(1)		—		847
Total assets		45,081				1,382		46,463

Liabilities as at September 30, 2024 (Unaudited)
Noncurrent:
Interest-bearing financial liabilities – net of current portion		251,476				—		251,476
Lease liabilities – net of current portion		45,477				—		45,477
Customers' deposits		2,255				—		2,255
Deferred credits and other noncurrent liabilities		205				—		205
Current:
Accounts payable		68,658				—		68,658
Accrued expenses and other current liabilities		70,283				2		70,285
Current portion of interest-bearing financial liabilities		19,107				—		19,107
Current portion of lease liabilities		7,098				—		7,098
Dividends payable		2,004				—		2,004
Current portion of derivative financial liabilities		—				413		413
Liabilities associated with assets classified as held-for-sale		1,728				—		1,728
Total liabilities		468,291				415		468,706
Net assets (liabilities)		(423,210	)			967		(422,243	)

(1)

Includes refundable deposits and notes receivable.

F-114


	Financial instruments at amortized cost				Financial instruments at FVPL				Total financial instruments
	(in million pesos)
Assets as at December 31, 2023 (Audited)
Noncurrent:
Financial assets at fair value through profit or loss		—				578				578
Debt instruments at amortized cost – net of current portion		395				—				395
Derivative financial assets – net of current portion		—				96				96
Other financial assets – net of current portion		3,481		(1)		—				3,481
Current:
Cash and cash equivalents		16,177				—				16,177
Short-term investments		122				269		(2)		391
Trade and other receivables		26,086				—				26,086
Current portion of debt instruments at amortized cost		200				—				200
Current portion of other financial assets		320		(1)		—		(3)		320
Total assets		46,781				943				47,724

Liabilities as at December 31, 2023 (Audited)
Noncurrent:
Interest-bearing financial liabilities – net of current portion		243,152				—				243,152
Lease liabilities – net of current portion		41,625				—				41,625
Derivative financial liabilities – net of current portion		—				12				12
Customers' deposits		2,238				—				2,238
Deferred credits and other noncurrent liabilities		229				—				229
Current:
Accounts payable		77,050				—				77,050
Accrued expenses and other current liabilities		71,756				—				71,756
Current portion of interest-bearing financial liabilities		11,646				—				11,646
Current portion of lease liabilities		5,921				—				5,921
Dividends payable		1,912				—				1,912
Current portion of derivative financial liabilities		—				1,021				1,021
Liabilities associated with assets classified as held-for-sale		1,779				—				1,779
Total liabilities		457,308				1,033				458,341
Net liabilities		(410,527	)			(90	)			(410,617	)

(1)

Includes refundable deposits and notes receivable.

(2)

Includes investments in the funds of Credit Suisse and Julius Baer. In 2021, PLDT withdrew US$6.6 million from the Supply Chain Finance fund of Credit Suisse and impaired the remaining fund value of US$3.4 million. In the same year, Smart invested US$5.0 million in the Focus Fixed Income Asia Defensive fund of Julius Baer. As at December 31, 2023, the fund’s value amounted to US$4.85 million. On September 10, 2024, Smart withdrew its investment with Julius Baer amounting to US$5.0 million with US$54 thousand earnings from the investment.

(3)

Includes RCBC Redemption Trust Account. See Note 19 – Equity – Redemption of Preferred Stock.

The following table sets forth our consolidated offsetting of financial assets and liabilities recognized as at
September 30, 2024 and December 31, 2023:


	Gross amounts of recognized financial assets and liabilities		Gross amounts of recognized financial assets and liabilities set-off in the consolidated statements of financial position		Net amount presented in the consolidated statements of financial position
	(in million pesos)
September 30, 2024 (Unaudited)
Current Financial Assets
Trade and other receivables
Foreign administrations		4,229		3,244		985
Domestic carriers		394		97		297
Total		4,623		3,341		1,282
Current Financial Liabilities
Accounts payable
Suppliers and contractors		65,379		53		65,326
Carriers and others		7,335		4,378		2,957
Total		72,714		4,431		68,283

December 31, 2023 (Audited)
Current Financial Assets
Trade and other receivables
Foreign administrations		4,606		3,480		1,126
Domestic carriers		332		145		187
Total		4,938		3,625		1,313
Current Financial Liabilities
Accounts payable
Suppliers and contractors		74,542		24		74,518
Carriers and others		4,713		2,351		2,362
Total		79,255		2,375		76,880

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There are no financial instruments subject to an enforceable master netting arrangement as at September 30, 2024 and
December 31, 2023.

The following table sets forth our consolidated carrying values and estimated fair values of our financial assets and liabilities recognized as at September 30, 2024 and December 31, 2023 other than those whose carrying amounts are reasonable approximations of fair values:


	Carrying Value				Fair Value
	September 30, 2024		December 31, 2023		September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)		(Unaudited)		(Audited)
	(in million pesos)
Noncurrent Financial Assets
Debt instruments at amortized cost		370		395		366		387
Other financial assets – net of current portion		2,835		3,481		2,687		3,184
Total		3,205		3,876		3,053		3,571
Noncurrent Financial Liabilities
Interest-bearing financial liabilities:
Long-term debt – net of current portion		251,476		243,152		241,755		232,195
Customers' deposits		2,255		2,238		1,439		1,425
Deferred credits and other noncurrent liabilities		205		229		177		225
Total		253,936		245,619		243,371		233,845

Below is the list of our consolidated financial assets and liabilities carried at fair value that are classified using a fair value hierarchy as required for our complete sets of consolidated financial statements as at September 30, 2024 and
December 31, 2023. This classification provides a reasonable basis to illustrate the nature and extent of risks associated with those financial statements.


	September 30, 2024								December 31, 2023
	(Unaudited)								(Audited)
	Level 1(1)		Level 2(2)		Level 3(3)		Total		Level 1(1)		Level 2(2)		Level 3(3)		Total
	(in million pesos)
Noncurrent Financial Assets
Financial assets at FVPL		—		1,136		3		1,139		—		575		3		578
Derivative financial assets – net of current portion		—		232		—		232		—		96		—		96
Current Financial Assets
Short-term investments		—		—		—		—		—		269		—		269
Current portion of derivative financial assets		—		11		—		11		—		—		—		—
Total		—		1,379		3		1,382		—		940		3		943

Noncurrent Financial Liabilities
Derivative financial liabilities – net of current portion		—		—		—		—		—		12		—		12
Current Financial Liabilities
Accrued expenses and other current liabilities		—		2		—		2		—		—		—		—
Current portion of derivative financial liabilities		—		413		—		413		—		1,021		—		1,021
Total		—		415		—		415		—		1,033		—		1,033

(1)

Fair values determined using observable market inputs that reflect quoted prices in active markets for identical assets or liabilities.

(2)

Fair values determined using inputs other than quoted market prices that are either directly or indirectly observable for the assets or liabilities.

(3)

Fair values determined using discounted values of future cash flows for the assets or liabilities.

As at September 30, 2024 and December 31, 2023, there were no transfers into and out of Level 3 and between Level 1 and
Level 2 fair value measurements.

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate such value:

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Long-term financial assets and liabilities:

Fair value is based on the following:


Type	Fair Value Assumptions	Fair Value Hierarchy
Noncurrent portion of advances and other noncurrent assets	Estimated fair value is based on the discounted values of future cash flows using the applicable zero-coupon rates plus counterparties’ credit spread.	Level 3
Fixed rate loans: U.S. Dollar notes	Quoted market price.	Level 1
Investment in debt securities	Fair values were determined using quoted prices. For non-quoted securities, fair values were determined using discounted cash flow based on market observable rates.	Level 1 Level 2
Other loans in all other currencies	Estimated fair value is based on the discounted value of future cash flows using the applicable Commercial Interest Reference Rate and BVAL rates for similar types of loans plus PLDT’s credit spread.	Level 3
Variable rate loans	The carrying value approximates fair value because of recent and regular repricing based on market conditions.	Level 2

Derivative Financial Instruments

Forward foreign exchange contracts, foreign currency swaps, foreign currency options and interest rate swaps: The fair values were computed as the present value of estimated future cash flows using market U.S. Dollar and Philippine Peso interest rates as at valuation date.

The valuation techniques considered various inputs including the credit quality of counterparties.

Due to the short-term nature of the transactions, the fair value of cash and cash equivalents, short-term investments, trade and other receivables, accounts payable, accrued expenses and other current liabilities and dividends payable approximate their carrying values as at the end of the reporting period.

Our derivative financial instruments are accounted for as either cash flow hedges or transactions not designated as hedges. Cash flow hedges refer to those transactions that hedge our exposure to variability in cash flows attributable to a particular risk associated with a recognized financial asset or liability and exposures arising from forecast transactions. Changes in the fair value of these instruments representing effective hedges are recognized directly in other comprehensive income until the hedged item is recognized in our consolidated income statements. For transactions that are not designated as hedges, any gains or losses arising from the changes in fair value are recognized directly to income for the period.

As at September 30, 2024 and December 31, 2023, we have taken into account the counterparties’ credit risks (for derivative assets) and our own non-performance risk (for derivative liabilities) and have included a credit or debit valuation adjustment, as appropriate, by assessing the maximum credit exposure and taking into account market-based inputs which considers the risk of default occurring and corresponding losses once the default event occurs. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.

F-117

The table below sets out the information about our consolidated derivative financial instruments as at September 30, 2024 and December 31, 2023:


								September 30, 2024					December 31, 2023
								(Unaudited)					(Audited)
	Original Notional Amount	Trade Date	Underlying Transaction in U.S. Dollar	Termination Date	Weighted Average Hedge Cost		Weighted Average Foreign Exchange Rate	Notional Amount		Net Mark-to- market Gains (Losses) in Php			Notional Amount		Net Mark-to- market Gains (Losses) in Php
	(in millions)		(in millions)					(in millions)
Transactions not designated as hedges:
PLDT
Forward foreign exchange contracts	US$396	Various dates in October to December 2023	U.S. Dollar Liabilities	Various dates in January to June 2024		—	Php56.56	US$—			—		US$396			(448	)
	US$795	Various dates in January 2024 to September 2024	U.S. Dollar Liabilities	Various dates in March to December 2024		—	Php57.12		275		(319	)		—		—
	US$114	Various dates in October to November 2024	U.S. Dollar Liabilities	Various dates in January to April 2025		—	Php57.72		—		—			—		—
	US$9	Various dates in October to November 2024	U.S. Dollar Revenues	Various dates in July to October 2025		—	Php58.21		—		—			—		—
Foreign exchange options seagull(a)	US$13	Various dates in March to September 2024	U.S. Dollar Liabilities	Various dates in September 2024 to February 2025		—	Php55.62		8		4			—		—
						—	Php56.07		—		—			—		—
						—	Php57.07		—		—			—		—
	US$5	Various dates in October to November 2024	U.S. Dollar Liabilities	Various dates in December 2024		—	Php57.93		—		—			—		—
						—	Php58.25		—		—			—		—
						—	Php59.25		—		—			—		—

											(315	)				(448	)
Smart
Forward foreign exchange contracts	US$449	Various dates in June 2023 to December 2024	U.S. Dollar Liabilities	Various dates in January to October 2024		—	Php56.55	US$2			1		US$449			(493	)
	US$614	Various dates in January to September 2024	U.S. Dollar Liabilities	Various dates in March to December 2024		—	Php56.74		186		(61	)		—		—
	US$89	Various dates in October to November 2024	U.S. Dollar Liabilities	Various dates in January to April 2025		—	Php57.33		—		—			—		—
	US$3	Various dates in October to November 2024	U.S. Dollar Revenues	Various dates in July to October 2025		—	Php58.05		—		—			—		—
Foreign exchange options seagull(b)	US$15	Various dates in June 2023	U.S. Dollar Liabilities	Various dates in February 2024		—	Php55.17 Php55.85 Php56.87		—		—		US$15			(1	)
	US$34	Various dates in March to September 2024	U.S. Dollar Liabilities	Various dates in September 2024 to March 2025		—	Php55.87 Php56.17 Php57.17		29		8			—		—
											(52	)				(494	)
											(367	)				(942	)
Transactions designated as hedges:
PLDT
Long-term foreign currency options(c)	US$290	Various dates in July 2020 and February to March 2021	300M Notes 2031	January 23, 2031	1.20%		Php49.61 Php55.28	US$290			71		US$290			(87	)
											71					(87	)
Smart
Long-term foreign currency options(d)	US$109	February to April 2021	US$140 PNB Loan	December 13, 2030	1.63%		Php48.00 Php53.34	US$69			126		US$77			92
											126					92
											197					5
											(170	)				(937	)

(a)

If the Philippine Peso to U.S. dollar spot exchange rate on fixing date settles between Php56.07 to Php57.07, PLDT will purchase the U.S. Dollar for Php56.07. However, if on maturity, the exchange rate settles above Php57.07, PLDT will purchase the U.S. Dollar for Php56.07 plus the excess above Php57.07, and if the exchange rate is lower than Php56.07, PLDT will purchase the U.S. Dollar at the prevailing Philippine peso to U.S. Dollar spot exchange rate, subject to a floor of Php55.62.

(b)

If the Philippine Peso to U.S. Dollar spot exchange rate on fixing date settles between Php56.17 to Php57.17, Smart will purchase the U.S. Dollar for Php56.17. However, if on maturity, the exchange rate settles above Php57.17, Smart will purchase the U.S. Dollar for Php56.17 plus the excess above Php57.17, and if the exchange rate is lower than Php56.17, Smart will purchase the U.S. Dollar at the prevailing Philippine Peso to U.S. Dollar spot exchange rate, subject to a floor of Php55.87.

(c)

PLDT’s long-term foreign currency option agreements outstanding as at September 30, 2024 and December 31, 2023 were designated as cash flow hedges, wherein the effective portion of the movements in fair value is recognized in our consolidated statements of other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. Settlement of the foreign currency option agreements will depend on the spot exchange rate on the fixing date. If the Philippine peso to U.S. dollar spot exchange rate on fixing date is between Php49.61 and Php55.28, PLDT will purchase the U.S. dollar at Php49.61. However, if on fixing date, the exchange rate is beyond

F-118

Php55.28, PLDT will purchase the U.S. dollar at the prevailing Philippine peso to U.S. dollar spot exchange rate minus a subsidy of Php5.67, and if the exchange rate is lower than Php49.61, PLDT will purchase the U.S. dollar at the prevailing Philippine peso to U.S. dollar spot exchange rate. The mark-to-market gains amounting to Php104 million and mark-to-market losses amounting to Php119 million were recognized in our consolidated statement of other comprehensive income as at September 30, 2024 and December 31, 2023, respectively. Hedge cost accrual on the long-term foreign currency option agreements amounting to Php33 million were recognized as at September 30, 2024 and December 31, 2023, respectively. The intrinsic value of the long-term foreign currency options recognized as other comprehensive income is transferred to profit or loss when the hedged loan is revalued for changes in the foreign exchange rate. The hedge cost portion of the movements in the fair value amounting to Php58 million gain and
Php60 million loss were recognized in our consolidated income statements for the nine months ended
September 30, 2024 and 2023, respectively.

(d)

Smart’s long-term foreign currency option agreements outstanding as at September 30, 2024 and December 31, 2023 were designated as cash flow hedges, wherein the effective portion of the movements in fair value is recognized in our consolidated statements of other comprehensive income, while any ineffective portion is recognized immediately in our consolidated income statements. Settlement of the foreign currency option agreements will depend on the spot exchange rate on the fixing date. If the Philippine Peso to U.S. Dollar spot exchange rate on fixing date is between Php48.00 and Php53.34, Smart will purchase the U.S. Dollar at Php48.00. However, if on fixing date the exchange rate is beyond Php53.34, Smart will purchase the U.S. Dollar for Php48.00 plus the excess above Php53.34, and if the exchange rate is lower than Php48.00, Smart will purchase the U.S. Dollar at the prevailing Philippine Peso to U.S. Dollar spot exchange rate. The mark-to-market gains amounting to Php129 million and Php96 million were recognized in our consolidated statement of other comprehensive income as at September 30, 2024 and December 31, 2023, respectively. Hedge cost accrual on the long-term foreign currency option agreements amounting to Php3 million each were recognized as at September 30, 2024 and December 31, 2023. The intrinsic value of the long-term foreign currency options recognized as other comprehensive income are transferred to profit or loss when the hedged loan is revalued for changes in the foreign exchange rate. The hedge cost portion of the movements in the fair value gain amounting to
Php39 million each were recognized in our consolidated income statements for the nine months ended
September 30, 2024 and 2023, respectively.

Our derivative financial instruments as at September 30, 2024 and December 31, 2023 are presented in the statements of financial position as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Asset:
Noncurrent assets		232			96
Current assets		11			—
Liabilities:
Noncurrent liabilities (Note 28)		—			(12	)
Current liabilities (Note 28)		(413	)		(1,021	)
Net		(170	)		(937	)

Movements of our consolidated mark-to-market gains (losses) for the nine months ended September 30, 2024 and
for the year ended December 31, 2023 are summarized as follows:


	September 30, 2024			December 31, 2023
	(Unaudited)			(Audited)
	(in million pesos)
Net mark-to-market losses at beginning of the period		(937	)		(1,069	)
Gains on derivative financial instruments		2,238			1,436
Settlements, accretion and others		(213	)		436
Effective portion recognized in the profit or loss for the cash flow hedges		(44	)		(66	)
Net fair value losses on cash flow hedges charged to other comprehensive income		(1,214	)		(1,674	)
Net mark-to-market losses at end of the period		(170	)		(937	)

Our consolidated analysis of gains on derivative financial instruments for the nine months ended September 30, 2024 and 2023 are as follows:


	September 30,
	2024				2023
	(Unaudited)
				(in million pesos)
Gains on derivative financial instruments		2,238				2,386
Hedge costs		(172	)			(179	)
Net gains on derivative financial instruments (Notes 5)		2,066				2,207

F-119

Financial Risk Management Objectives and Policies

The main risks arising from our financial instruments are liquidity risk, foreign currency exchange risk, interest rate risk and credit risk. The importance of managing those risks has significantly increased in light of the considerable change and volatility in both the Philippine and international financial markets. Our Board of Directors reviews and approves policies for managing each of these risks, which are summarized below. We also monitor the market price risk arising from all financial instruments.

Liquidity Risk

Our exposure to liquidity risk refers to the risk that our financial requirements, working capital requirements and planned capital expenditures will not be met.

We manage our liquidity profile to be able to finance our operations and capital expenditures, service our maturing debts and meet our other financial obligations. To cover our financing requirements, we use internally generated funds and proceeds from debt and equity issues and sales of certain assets.

As part of our liquidity risk management program, we regularly evaluate our projected and actual cash flows, including our loan maturity profiles, and continuously assess conditions in the financial markets for opportunities to pursue fund-raising initiatives. These activities may include bank loans, export credit agency-guaranteed facilities, debt capital and equity market issues.

Any excess funds are primarily invested in short-term and principal-protected bank products that provide flexibility of withdrawing the funds anytime. We also allocate a portion of our cash in longer tenor investments such as fixed income securities issued or guaranteed by the Republic of the Philippines, and Philippine banks and corporates and managed funds. We regularly evaluate available financial products and monitor market conditions for opportunities to enhance yields at acceptable risk levels. Our investments are also subject to certain restrictions contained in our debt covenants. Our funding arrangements are designed to keep an appropriate balance between equity and debt and to provide financing flexibility while enhancing our businesses.

Our cash position remains sufficient to support our planned capital expenditure requirements and service our debt and financing obligations; however, we may be required to finance a portion of our future capital expenditures from external financing sources. We have cash and cash equivalents, and short-term investments amounting to Php12,306 million and
Php102 million, respectively, as at September 30, 2024, which we can use to meet our short-term liquidity needs. See
Note 15 – Cash and Cash Equivalents.

F-120

The following table summarizes the maturity profile of our financial assets based on our consolidated undiscounted claims outstanding as at September 30, 2024 and December 31, 2023:


	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in million pesos)
September 30, 2024 (Unaudited)
Financial instruments at amortized cost:		54,641		51,174		3,306		10		151
Debt instruments at amortized cost		395		25		360		10		—
Other financial assets		3,944		847		2,946		—		151
Temporary cash investments		2,412		2,412		—		—		—
Short-term investments		102		102		—		—		—
Retail subscribers		21,038		21,038		—		—		—
Corporate subscribers		18,319		18,319		—		—		—
Foreign administrations		1,068		1,068		—		—		—
Domestic carriers		297		297		—		—		—
Dealers, agents and others		7,066		7,066		—		—		—
Financial instruments at FVPL:		1,139		—		—		—		1,139
Financial assets at fair value through profit or loss		1,139		—		—		—		1,139
Total		55,780		51,174		3,306		10		1,290

December 31, 2023 (Audited)
Financial instruments at amortized cost:		54,271		50,127		3,530		412		202
Debt instruments at amortized cost		595		200		45		340		10
Other financial assets		4,069		320		3,485		72		192
Temporary cash investments		6,184		6,184		—		—		—
Short-term investments		122		122		—		—		—
Retail subscribers		19,894		19,894		—		—		—
Corporate subscribers		15,934		15,934		—		—		—
Foreign administrations		1,250		1,250		—		—		—
Domestic carriers		188		188		—		—		—
Dealers, agents and others		6,035		6,035		—		—		—
Financial instruments at FVPL:		1,021		443		—		—		578
Financial assets at fair value through profit or loss		578		—		—		—		578
Short-term investments		443		443		—		—		—
Total		55,292		50,570		3,530		412		780

The following table summarizes the maturity profile of our financial liabilities based on our consolidated contractual undiscounted obligations outstanding as at September 30, 2024 and December 31, 2023:


	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in million pesos)
September 30, 2024 (Unaudited)
Debt:		369,373		15,670		90,397		57,949		205,357
Principal		272,589		15,060		51,112		37,325		169,092
Interest		96,784		610		39,285		20,624		36,265
Lease obligations		77,283		16,956		18,936		15,803		25,588
Various trade and other obligations:		140,850		138,363		404		25		2,058
Suppliers and contractors		65,434		65,326		108		—		—
Utilities and related expenses		59,119		59,092		27		—		—
Carriers and others		2,957		2,957		—		—		—
Employee benefits		6,441		6,441		—		—		—
Customer deposits		2,255		—		172		25		2,058
Dividends		2,004		2,004		—		—		—
Others		2,640		2,543		97		—		—
Total contractual obligations		587,506		170,989		109,737		73,777		233,003

December 31, 2023 (Audited)
Debt:		341,848		7,430		77,131		65,342		191,945
Principal		256,927		7,250		43,292		47,648		158,737
Interest		84,921		180		33,839		17,694		33,208
Lease obligations		72,686		15,651		15,767		13,673		27,595
Various trade and other obligations:		151,062		148,560		427		28		2,047
Suppliers and contractors		74,716		74,518		194		4		—
Utilities and related expenses		61,079		61,044		35		—		—
Carriers and others		2,362		2,362		—		—		—
Employee benefits		5,510		5,510		—		—		—
Customers’ deposits		2,238		—		167		24		2,047
Dividends		1,912		1,912		—		—		—
Others		3,245		3,214		31		—		—
Total contractual obligations		565,596		171,641		93,325		79,043		221,587

F-121

Debt

See Note 20 – Interest-bearing Financial Liabilities – Long-term Debt for a detailed discussion of our debt.

Our consolidated future minimum lease commitments payable with non-cancellable leases as at as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Within one year		16,956		15,651
After one year but not more than five years		34,739		29,440
More than five years		25,588		27,595
Total		77,283		72,686

Various Trade and Other Obligations

Commercial Commitments

Major Network Vendors

Since the last quarter of 2022, we have engaged in discussions with the major network vendors regarding the status of the PLDT Group's capital expenditure commitments and related outstanding balances. These discussions resulted in a number of Settlement and Mutual Release Agreements, or SMRAs, signed between us and the vendors, taking into consideration our program priorities and current business requirements. The significant commitment in respect of major network vendors amounted to about Php33,000 million, net of advances, as a result of the signing of the SMRAs in March 2023. As at
September 30, 2024, such commitment has been reduced to Php4,200 million, net of advances and deliveries.

Moreover, new purchase orders relating to the same major network vendors issued in 2023 and 2024 amounted to
Php16,600 million, net of advances and deliveries.

Other Capital Expenditure Vendors

Commitments related to non-major capital expenditure vendors amounted to Php19,600 million, net of advances and deliveries as of September 30, 2024.

We have no outstanding commercial commitments, in the form of letters of credit, as at September 30, 2024 and
December 31, 2023.

Collateral

There are no pledges as collaterals with respect to our financial liabilities as at as at September 30, 2024 and
December 31, 2023.

Foreign Currency Exchange Risk

Foreign currency exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The revaluation of our foreign currency-denominated financial assets and liabilities as a result of the appreciation or depreciation of the Philippine Peso is recognized as foreign exchange gains or losses as at the end of the reporting period. The extent of foreign exchange gains or losses is largely dependent on the amount of foreign currency denominated financial assets and liabilities. While a certain percentage of our revenues are either linked to or denominated in U.S. Dollars, a

F-122

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 foreign currencies, mostly in U.S. Dollars. As such, a strengthening or weakening of the Philippine Peso against the U.S. Dollar will decrease or increase in Philippine Peso terms both the principal amount of our foreign currency-denominated debts and the related interest expense, our foreign currency-denominated capital expenditures and operating expenses as well as our U.S. Dollar-linked and U.S. Dollar-denominated revenues. In addition, many of our financial ratios and other financial tests are affected by the movements in the Philippine Peso to U.S. Dollar exchange rate.

To manage our foreign exchange risks and to stabilize our cash flows in order to improve investment and cash flow planning, we enter into forward foreign exchange contracts, currency swap contracts, currency option contracts and other hedging products aimed at reducing and/or managing the adverse impact of changes in foreign exchange rates on our operating results and cash flows. Further details of the risk management strategy are recognized in our hedge designation documentation. We use forward foreign exchange purchase contracts, currency swap contracts and currency option contracts to manage the foreign currency risks associated with our foreign currency-denominated financial liabilities. We accounted for these instruments as either cash flow hedges, wherein changes in the fair value are recognized in our consolidated other comprehensive income until the hedged transaction affects our consolidated income statements or transactions not designated as hedges, wherein changes in the fair value are recognized directly as income or expense for the year.

The impact of the hedging instruments on our consolidated statements of financial position as at September 30, 2024 and
December 31, 2023 are as follows:


	Notional Amount		Carrying Amount			Line item in our Consolidated Statements
	(U.S. Dollar)		(Php)			of Financial Position
	(in million pesos)
September 30, 2024 (Unaudited)
Long-term foreign currency options		359		232		Derivative financial assets – net of current portion
		359		232

December 31, 2023 (Audited)
Long-term foreign currency options		367		96		Derivative financial assets – net of current portion
		—		(12	)	Derivative financial liabilities – net of current portion
		367		84

The impact of the hedged items on our consolidated statements of financial position as at September 30, 2024 and
December 31, 2023 are as follows:


		September 30, 2024					December 31, 2023
		(Unaudited)					(Audited)
		Cash flow hedge reserve			Cost of hedging reserve		Cash flow hedge reserve			Cost of hedging reserve
	(in million pesos)
PLDT:
US$300M Notes 2031			(5,494	)		33		(4,546	)		75
			(5,494	)		33		(4,546	)		75

Smart:
US$140M PNB			(1,864	)		3		(1,599	)		3
			(1,864	)		3		(1,599	)		3

The effect of the cash flow hedge on our consolidated statements of financial position as at September 30, 2024 and
December 31, 2023 are as follows:


	Total hedging loss recognized in OCI			Line item in our Consolidated Statements of Financial Position
	(in million pesos)
September 30, 2024 (Unaudited)
Long-term foreign currency options		(7,358	)	Other comprehensive loss
		(7,358	)

December 31, 2023 (Audited)
Long-term foreign currency options		(6,145	)	Other comprehensive loss
		(6,145	)

F-123

The following table shows our consolidated foreign currency-denominated monetary financial assets and liabilities and their Philippine Peso equivalents as at September 30, 2024 and December 31, 2023:


	September 30, 2024				December 31, 2023
	(Unaudited)				(Audited)
	U.S. Dollar		Php(1)		U.S. Dollar		Php(2)
	(in millions)
Noncurrent Financial Assets
Derivative financial assets – net of current portion		4		232		2		96
Total noncurrent financial assets		4		232		2		96
Current Financial Assets
Cash and cash equivalents		66		3,707		76		4,232
Short-term investments		—		—		5		269
Trade and other receivables – net		81		4,556		115		6,411
Derivative assets		—		11		—		—
Current portion of other financial assets		—		11		—		12
Total current financial assets		147		8,285		196		10,924
Total Financial Assets		151		8,517		198		11,020
Noncurrent Financial Liabilities
Interest-bearing financial liabilities – net of current portion		670		37,560		681		37,719
Derivative financial liabilities – net of current portion		—		—		—		12
Other noncurrent liabilities		1		48		—		27
Total noncurrent financial liabilities		671		37,608		681		37,758
Current Financial Liabilities
Accounts payable		1,239		69,416		1,314		72,797
Accrued expenses and other current liabilities		230		12,865		207		11,481
Current portion of interest-bearing financial liabilities		14		772		39		2,149
Current portion of derivative financial liabilities		7		413		18		1,021
Total current financial liabilities		1,490		83,466		1,578		87,448
Total Financial Liabilities		2,161		121,074		2,259		125,206

(1)

The exchange rate used to convert the U.S. Dollar amounts into Philippine Peso was Php56.02 to US$1.00, the Philippine Peso-U.S. Dollar exchange rate as quoted through the Bankers Association of the Philippines, or BAP, as at September 30, 2024.

(2)

The exchange rate used to convert the U.S. Dollar amounts into Philippine Peso was Php55.42 to US$1.00, the Philippine Peso-U.S. Dollar exchange rate as quoted through the BAP as at December 31, 2023.

As at November 12, 2024, the Philippine Peso-U.S. Dollar exchange rate was Php58.55 to US$1.00. Using this exchange rate, our consolidated net foreign currency-denominated financial liabilities would have increased in Philippine Peso terms by Php6,286 million as at September 30, 2024.

Approximately 14% and 15% of our total consolidated debts (net of consolidated debt discount) was denominated in U.S. Dollars as at September 30, 2024 and December 31, 2023, respectively. Our consolidated foreign currency-denominated debt decreased to Php37,955 million as at September 30, 2024 from Php39,479 million as at December 31, 2023. See
Note 20 – Interest-bearing Financial Liabilities. The aggregate notional amount of our consolidated outstanding long-term principal only-currency swap contracts, long-term foreign currency options and short-term forwards allocated for debt were US$366 million and US$485 million as at September 30, 2024 and December 31, 2023, respectively. Consequently, the unhedged portion of our consolidated debt amounts were approximately 7% (or 5%, net of consolidated U.S. Dollar cash balances allocated for debt) and 5% (or 5%, net of consolidated U.S. Dollar cash balances allocated for debt) as at
September 30, 2024 and December 31, 2023, respectively.

Approximately 15% and 13% of our consolidated revenues were denominated in U.S. Dollars and/or were linked to U.S. Dollars for the nine months ended September 30, 2024 and 2023, respectively. Approximately 15% and 12% of our consolidated expenses were denominated in U.S. Dollars and/or linked to the U.S. Dollar for the nine months ended September 30, 2024 and 2023, respectively. In this respect, the higher weighted average exchange rate of the Philippine Peso against the U.S. Dollar increased our revenues and expenses, and consequently, affects our cash flow from operations in Philippine Peso terms. In view of the anticipated continued decline in dollar-denominated/dollar-linked revenues, which provide a natural hedge against our foreign currency exposure, we are progressively refinancing our dollar-denominated debts in Philippine Pesos.

The Philippine Peso depreciated by 1.08% against the U.S. Dollar to Php56.02 to US$1.00 as at September 30, 2024 from Php55.42 to US$1.00 as at December 31, 2023. As a result of our consolidated foreign exchange movements, as well as the amount of our consolidated outstanding net foreign currency financial assets and liabilities, we recognized net consolidated foreign exchange gains of Php1,389 million and Php28 million for the nine months ended September 30, 2024 and 2023, respectively.

Management conducted a survey among our banks to determine the outlook of the Philippine Peso-U.S. Dollar exchange rate until September 30, 2024. Our outlook is that the Philippine Peso-U.S. Dollar exchange rate may weaken/strengthen by 2.65% as compared to the exchange rate of Php56.02 to US$1.00 as at September 30, 2024. If the Philippine Peso-U.S. Dollar exchange rate had weakened/strengthened by 2.65% as at September 30, 2024, with all other variables held constant,

F-124

consolidated profit after tax for the nine months ended September 30, 2024 and stockholders’ equity as at September 30, 2024 would have been approximately Php1,974 million and Php290 million, respectively, lower/higher, mainly as a result of consolidated foreign exchange gains and losses on conversion of U.S. Dollar-denominated net assets/liabilities and
mark-to-market valuation of derivative financial instruments.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Our exposure to the risk of changes in market interest rates relates primarily to our long-term debt obligations with floating interest rates.

Our policy is to manage interest costs through a mix of fixed and variable rate debts. We evaluate the fixed to floating ratio of our loans in line with movements of relevant interest rates in the financial markets. Based on our assessment, new financing will be priced either on a fixed or floating rate basis. We enter into interest rate swap agreements in order to manage our exposure to interest rate fluctuations. Further details of the risk management strategy are recognized in our hedge designation documentation. We make use of hedging instruments and structures solely for reducing or managing the financial risk associated with our debt obligations and not for trading purposes.

There are no outstanding interest rate hedges as at September 30, 2024 and December 31, 2024.

F-125

The following tables set out the carrying amounts, by maturity, of our financial instruments that are expected to have exposure to interest rate risk as at September 30, 2024 and
December 31, 2023. Financial instruments that are not subject to interest rate risk were not included in the table.

As at September 30, 2024 (Unaudited)


	In U.S. Dollars																		Fair Value
	Below 1 year		1-2 years		2-3 years		3-5 years		Over 5 years		Total		In Php		Discount/ Debt Issuance Cost In Php		Carrying Value In Php		In U.S. Dollar		In Php
															(in millions)
Assets:
Debt Instruments at Amortized Cost
Philippine Peso		1		—		6		—		—		7		395		—		395		7		391
Interest rate	4.250%		6.250%		4.625% - 4.875%		6.500%			—		—		—		—		—		—		—
Cash in Bank
U.S. Dollar	14			—		—		—		—		14		791		—		791		14		791
Interest rate	0.0500% - 0.5000%			—		—		—		—		—		—		—		—		—		—
Philippine Peso	63			—		—		—		—		63		3,549		—		3,549		63		3,549
Interest rate	0.0500% - 5.1000%			—		—		—		—		—		—		—		—		—		—
Temporary Cash Investments
U.S. Dollar	26			—		—		—		—		26		1,472		—		1,472		26		1,472
Interest rate	4.5000% - 5.2500%			—		—		—		—		—		—		—		—		—		—
Philippine Peso	17			—		—		—		—		17		940		—		940		17		940
Interest rate	0.2500% - 6.0000%			—		—		—		—		—		—		—		—		—		—
Short-term Investments
Philippine Peso	2			—		—		—		—		2		102		—		102		2		102
Interest rate	6.0000% - 6.1000%			—		—		—		—		—		—		—		—		—		—
		123		—		6		—		—		129		7,249		—		7,249		129		7,245

Liabilities:
Long-term Debt
Fixed Rate
U.S. Dollar Notes		—		—		—		—		600		600		33,610		534		33,076		484		27,122
Interest rate		—		—		—		—	2.5000% - 3.4500%			—		—		—		—		—		—
Philippine Peso		244		274		407		261		278		1,464		82,005		624		81,381		1,370		76,766
Interest rate	4.0000% to 4.6500%		4.0000% to 5.3500%		4.0000% to 5.3500%		4.0000% to 5.2000%		4.0000% to 5.1560%			—		—		—		—		—		—
Variable Rate
U.S. Dollar Loans		—		28		14		32		14		88		4,902		23		4,879		88		4,902
Interest rate		—	SOFR+ 1.31161%		SOFR+ 1.31161%		SOFR+ 1.31161%		SOFR+ 1.31161%			—		—		—		—		—		—
Philippine Peso		25		83		107		374		2,126		2,715		152,072		825		151,247		2,715		152,072
Interest rate	BVAL + 1.0000%		0.6000% to 1.0000% over PHP BVAL (floor rate 4.5000% to 4.6250%)		0.6000% to 1.0000% over PHP BVAL (floor rate 4.5000% to 4.6250%)		0.6000% to 1.0000% over PHP BVAL (floor rate 4.5000% to 4.6250%)		0.6000% to 0.9000% over PHP BVAL (floor rate 4.5000% to 4.6250%)			—		—		—		—		—		—
		269		385		528		667		3,018		4,867		272,589		2,006		270,583		4,657		260,862

F-126

As at December 31, 2023 (Audited)


	In U.S. Dollars																			Fair Value
	Below 1 year		1-2 years		2-3 years		3-5 years		Over 5 years			Total		In Php		Discount/ Debt Issuance Cost In Php		Carrying Value In Php		In U.S. Dollar		In Php
																(in millions)
Assets:
Debt Instruments at Amortized Cost
Philippine Peso		4		—		—		6		—			10		595		—		595		10		587
Interest rate	2.3750% to 2.9000%		4.2500%		6.2500%		4.6250% to 4.8750%			6.5000	%		—		—		—		—		—		—
Cash in Bank
U.S. Dollar	15			—		—		—		—			15		850		—		850		15		850
Interest rate	0.0500% to 0.5000%			—		—		—		—			—		—		—		—		—		—
Philippine Peso	128			—		—		—		—			128		7,082		—		7,082		128		7,082
Interest rate	0.0500% to 1.5000%			—		—		—		—			—		—		—		—		—		—
Temporary Cash Investments
U.S. Dollar	35			—		—		—		—			35		1,933		—		1,933		35		1,933
Interest rate	4.9000% to 5.1250%			—		—		—		—			—		—		—		—		—		—
Philippine Peso	77			—		—		—		—			77		4,251		—		4,251		77		4,251
Interest rate	0.2500% to 6.2500%			—		—		—		—			—		—		—		—		—		—
Short-term Investments
Philippine Peso	2			—		—		—		—			2		122		—		122		2		122
Interest rate	0.5000% to 6.1000%			—		—		—		—			—		—		—		—		—		—
		261		—		—		6		—			267		14,833		—		14,833		267		14,825

Liabilities:
Long-term Debt
Fixed Rate
U.S. Dollar Notes		—		—		—		—		600			600		33,251		560		32,691		466		25,845
Interest rate		—		—		—		—	2.5000% to 3.4500%				—		—		—		—		—		—
Philippine Peso		72		377		227		564		334			1,574		87,225		748		86,477		1,471		81,545
Interest rate	5.1021% to 5.2813%		4.0000% to 5.3500%		4.0000% to 5.3500%		4.0000% to 5.2000%		4.0000% to 5.1560%				—		—		—		—		—		—
Variable Rate
U.S. Dollar Loans		25		28		14		42		14			123		6,816		28		6,788		123		6,816
Interest rate	SOFR + 1.47826%		SOFR + 1.31161%		SOFR + 1.31161%		SOFR + 1.31161%		SOFR + 1.31161%				—		—		—		—		—		—
Philippine Peso		33		99		36		254		1,916			2,338		129,635		793		128,842		2,339		129,635
Interest rate	0.5000% over PHP BVAL		0.6000% to 1.0000% over PHP BVAL (floor rate 4.5000% to 4.6250%)		0.6000% to 1.0000% over PHP BVAL (floor rate 4.5000% to 4.6250%)		0.6000% to 1.0000% over PHP BVAL (floor rate 4.5000% to 4.6250%)		0.6000% to 0.9000% over PHP BVAL (floor rate 4.5000% to 4.6250%)				—		—		—		—		—		—
Short-term Debt
Notes Payable
		130		504		277		860		2,864			4,635		256,927		2,129		254,798		4,399		243,841

F-127

Fixed rate financial instruments are subject to fair value interest rate risk while floating rate financial instruments are subject to cash flow interest rate risk.

Repricing of our regular floating rate financial instruments is done on intervals of three months while repricing of our structured floating rate instruments is done every one year or up to five years. Interest on fixed rate financial instruments is fixed until maturity of the particular instrument.

Approximately 58% and 53% of our consolidated debts (net of consolidated debt discount) were variable rate debts as at September 30, 2024 and December 31, 2023, respectively. Our consolidated variable rate debt increased to
Php156,126 million as at September 30, 2024 from Php135,630 million as at December 31, 2023.

Management conducted a survey among our banks to determine the outlook of the U.S. Dollar and Philippine Peso interest rates until September 30, 2024. Our outlook is that the U.S. Dollar and Philippine Peso interest rates may move 30 basis points, or bps, and 50 bps higher/lower, respectively, as compared to levels as at September 30, 2024. If the U.S. Dollar interest rates had been 30 bps higher/lower as compared to market levels as at September 30, 2024, with all other variables held constant, consolidated profit after tax for the nine months ended September 30, 2024 and stockholders’ equity as at September 30, 2024 would have been approximately Php8 million and Php43 million, respectively, lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings and loss/gain on derivative transactions. If the Philippine Peso interest rates had been 50 bps higher/lower as compared to market levels as at September 30, 2024, with all other variables held constant, consolidated profit after tax for the nine months ended September 30, 2024 and stockholders’ equity as at September 30, 2024 would have been approximately Php1 million and Php48 million, respectively, lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings and loss/gain on derivative transactions.

Credit Risk

Credit risk is the risk that we will incur a loss arising from our customers, clients or counterparties that fail to discharge their contracted obligations. We manage and control credit risk by setting limits on the amount of risk we are willing to accept for individual counterparties and by monitoring exposures in relation to such limits.

We trade only with recognized and creditworthy third parties. It is our policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis to reduce our exposure to bad debts.

We established a credit quality review process to provide regular identification of changes in the creditworthiness of counterparties. Our credit quality review process allows us to assess the potential loss as a result of the risks to which we are exposed and allows us to take corrective actions.

Maximum exposure to credit risk of financial assets not subject to impairment

The gross carrying amount of financial assets not subject to impairment as at September 30, 2024 and December 31, 2023 are as follows:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Financial assets at fair value through profit or loss		1,139		578
Derivative financial assets – net of current portion		232		96
Current portion of derivative financial assets		11		—
Short-term investments		—		269
Total		1,382		943

Maximum exposure to credit risk of financial assets subject to impairment

The table below shows the maximum exposure to credit risk for the components of our consolidated statements of financial position, including derivative financial instruments as at September 30, 2024 and December 31, 2023. The maximum exposure is shown gross before both the effect of mitigation through use of master netting and collateral arrangements. The extent to which collateral and other credit enhancements mitigate the maximum exposure to credit risk is described in the footnotes to the table.

For financial assets recognized on our consolidated statements of financial position as at September 30, 2024 and
December 31, 2023, the gross exposure to credit risk equal their carrying amount.

F-128

For financial guarantees granted, the maximum exposure to credit risk is the maximum amount that we would have to pay if the guarantees are called upon. For loan commitments and other credit related commitments that are irrevocable over the life of the respective facilities, the maximum exposure to credit risk is the full amount of the committed facilities.


	September 30, 2024
	(Unaudited)
	Stage 1 12-Month ECL		Stage 2 Lifetime ECL		Stage 3 Lifetime ECL		Total
	(in million pesos)
High grade		15,975		13,093		—		29,068
Standard grade		510		6,038		—		6,548
Substandard grade		—		9,465		—		9,465
Default		262		3,533		15,659		19,454
Gross carrying amount		16,747		32,129		15,659		64,535
Less allowance		262		3,533		15,659		19,454
Carrying amount		16,485		28,596		—		45,081

	December 31, 2023
	(Audited)
	Stage 1 12-Month ECL		Stage 2 Lifetime ECL		Stage 3 Lifetime ECL		Total
	(in million pesos)
High grade		20,424		11,070		—		31,494
Standard grade		271		3,683		—		3,954
Substandard grade		—		11,333		—		11,333
Default		442		4,190		13,025		17,657
Gross carrying amount		21,137		30,276		13,025		64,438
Less allowance		442		4,190		13,025		17,657
Carrying amount		20,695		26,086		—		46,781

Maximum exposure to credit risk after collateral held or other credit enhancements

Collateral held as security for financial assets depends on the nature of the instrument. Debt investment securities are generally unsecured. Estimates of fair value are based on the value of collateral assessed at the time of borrowing and are regularly updated according to internal lending policies and regulatory guidelines. Generally, collateral is not held over loans and advances to us except for reverse repurchase agreements. Collateral usually is not held against investment securities, and no such collateral was held as at September 30, 2024 and December 31, 2023.

Our policies regarding obtaining collateral have not significantly changed during the reporting period and there has been no significant change in the overall quality of the collateral held by us during the year.

We have not identified significant risk concentrations arising from the nature, type or location of collateral and other credit enhancements held against our credit exposures.

An analysis of the maximum exposure to credit risk for the components of our consolidated statements of financial position, including derivative financial instruments as at September 30, 2024 and December 31, 2023:


	September 30, 2024 (Unaudited)
	Gross Maximum Exposure		Collateral and Other Credit Enhancements*		Net Maximum Exposure
	(in million pesos)
Financial instruments at amortized cost:		45,081		434		44,647
Debt instruments at amortized cost		395		—		395
Other financial assets		3,682		—		3,682
Cash and cash equivalents		12,306		63		12,243
Short-term investments		102		—		102
Corporate subscribers		12,342		334		12,008
Retail subscribers		9,243		37		9,206
Foreign administrations		985		—		985
Domestic carriers		297		—		297
Dealers, agents and others		5,729		—		5,729
Financial instruments at FVPL:		1,382		—		1,382
Financial assets at FVPL		1,139		—		1,139
Forward foreign exchange contracts		11		—		11
Long-term foreign currency options		232		—		232
Total		46,463		434		46,029

* Includes bank insurance and customer deposits. We have no collateral held as at September 30, 2024.

F-129


	December 31, 2023 (Audited)
	Gross Maximum Exposure		Collateral and Other Credit Enhancements*		Net Maximum Exposure
	(in million pesos)
Financial instruments at amortized cost:		46,781		521		46,260
Debt instruments at amortized cost		595		—		595
Other financial assets		3,801		—		3,801
Cash and cash equivalents		16,177		146		16,031
Short-term investments		122		—		122
Corporate subscribers		9,988		338		9,650
Retail subscribers		10,196		37		10,159
Foreign administrations		1,126		—		1,126
Domestic carriers		187		—		187
Dealers, agents and others		4,589		—		4,589
Financial instruments at FVPL:		943		—		943
Financial assets at FVPL		578		—		578
Long-term foreign currency options		96		—		96
Short-term investments		269		—		269
Total		47,724		521		47,203

* Includes bank insurance, security deposits and customer deposits. We have no collateral held as at December 31, 2023.

The table below provides information regarding the credit quality by class of our financial assets according to our credit ratings of counterparties as at September 30, 2024 and December 31, 2023:


			Neither past due nor credit impaired					Past due but not
	Total		Class A(1)			Class B(2)		credit impaired		Impaired
	(in million pesos)
September 30, 2024 (Unaudited)
Financial instruments at amortized cost:		64,535		29,068			6,548		9,465		19,454
Debt instruments at amortized cost		395		395			—		—		—
Other financial assets		3,944		3,681			1		—		262
Cash and cash equivalents		12,306		11,797			509		—		—
Short-term investments		102		102			—		—		—
Retail subscribers		21,038		7,484			231		1,528		11,795
Corporate subscribers		18,319		4,069			2,717		5,556		5,977
Foreign administrations		1,068		107			542		336		83
Domestic carriers		297		—			155		142		—
Dealers, agents and others		7,066		1,433			2,393		1,903		1,337
Financial instruments at FVPL:		1,382		163			743		476		—
Financial assets at FVPL		1,139		(80	)		743		476		—
Forward foreign exchange contracts		11		11			—		—		—
Long-term foreign currency options		232		232			—		—		—
Total		65,917		29,231			7,291		9,941		19,454

December 31, 2023 (Audited)
Financial instruments at amortized cost:		64,264		31,494			3,954		11,333		17,483
Debt instruments at amortized cost		595		595			—		—		—
Other financial assets		4,069		3,800			1		—		268
Cash and cash equivalents		16,177		15,907			270		—		—
Short-term investments		122		122			—		—		—
Retail subscribers		19,894		8,083			266		1,847		9,698
Corporate subscribers		15,934		2,341			1,390		6,257		5,946
Foreign administrations		1,250		90			529		507		124
Domestic carriers		188		1			92		94		1
Dealers, agents and others		6,035		555			1,406		2,628		1,446
Financial instruments at FVPL:		1,117		701			242		—		174
Financial assets at FVPL		578		336			242		—		—
Long-term foreign currency options		96		96			—		—		—
Short-term investments		443		269			—		—		174
Total		65,381		32,195			4,196		11,333		17,657

(1)

This includes low risk and good paying customer accounts with no history of account treatment for a defined period and no overdue accounts as at report date; and deposits or placements to counterparties with good credit rating or bank standing financial review.

(2)

This includes medium risk and average paying customer accounts with no overdue accounts as at report date, and new customer accounts for which sufficient credit history has not been established; and deposits or placements to counterparties not classified as Class A.

F-130

The aging analysis of past due but not impaired class of financial assets as at September 30, 2024 and December 31, 2023 are as follows:


					Past due but not credit impaired
	Total		Neither past due nor credit impaired		1-60 days		61-90 days		Over 91 days			Impaired
	(in million pesos)
September 30, 2024 (Unaudited)
Financial instruments at amortized cost:		64,535		35,616		3,838		1,007		4,620			19,454
Debt instruments at amortized cost		395		395		—		—		—			—
Other financial assets		3,944		3,682		—		—		—			262
Cash and cash equivalents		12,306		12,306		—		—		—			—
Short-term investments		102		102		—		—		—			—
Retail subscribers		21,038		7,715		1,461		171		(104	)		11,795
Corporate subscribers		18,319		6,786		1,877		678		3,001			5,977
Foreign administrations		1,068		649		249		19		68			83
Domestic carriers		297		155		75		29		38			—
Dealers, agents and others		7,066		3,826		176		110		1,617			1,337
Financial instruments at FVPL:		1,382		906		476		—		—			—
Financial assets at FVPL		1,139		663		476		—		—			—
Forward foreign exchange contracts		11		11		—		—		—			—
Long-term foreign currency options		232		232		—		—		—			—
Total		65,917		36,522		4,314		1,007		4,620			19,454

December 31, 2023 (Audited)
Financial instruments at amortized cost:		64,264		35,448		3,505		618		7,210			17,483
Debt instruments at amortized cost		595		595		—		—		—			—
Other financial assets		4,069		3,801		—		—		—			268
Cash and cash equivalents		16,177		16,177		—		—		—			—
Short-term investments		122		122		—		—		—			—
Retail subscribers		19,894		8,349		1,603		223		21			9,698
Corporate subscribers		15,934		3,731		1,500		248		4,509			5,946
Foreign administrations		1,250		619		164		87		256			124
Domestic carriers		188		93		39		20		35			1
Dealers, agents and others		6,035		1,961		199		40		2,389			1,446
Financial instruments at FVPL:		1,117		943		—		—		—			174
Financial assets at FVPL		578		578		—		—		—			—
Long-term foreign currency options		96		96		—		—		—			—
Short-term investments		443		269		—		—		—			174
Total		65,381		36,391		3,505		618		7,210			17,657

Capital Management Risk

We aim to achieve an optimal capital structure in pursuit of our business objectives which include maintaining healthy capital ratios and strong credit ratings and maximizing shareholder value.

Our approach to capital management focuses on balancing the allocation of cash and the incurrence of debt as we seek new investment opportunities for new businesses and growth areas. On August 5, 2014, the PLDT Board of Directors approved an amendment to our dividend policy, increasing the dividend payout rate to 75% from 70% of our core EPS as regular dividends. However, in view of our elevated capital expenditures to build-out a robust, superior network to support the continued growth of data traffic, plans to invest in new adjacent businesses that will complement the current business and provide future sources of profits and dividends, and management of our cash and gearing levels, the PLDT Board of Directors approved on August 2, 2016, the amendment of our dividend policy, reducing the regular dividend payout to 60% of core EPS. Starting 2019, we base our dividend payout on telco core income. In declaring dividends, we take into consideration the interest of our shareholders, as well as our working capital, capital expenditures and debt servicing requirements. The retention of earnings may be necessary to meet the funding requirements of our business expansion and development programs.

As part of the dividend policy, in the event no investment opportunities arise, we may consider the option of returning additional cash to our shareholders in the form of special dividends or share buybacks. Philippine corporate regulations prescribe, however, that we can only pay out dividends or make capital distribution up to the amount of our unrestricted retained earnings.

Some of our debt instruments contain covenants that impose maximum leverage ratios. In addition, our credit ratings from the international credit ratings agencies are based on our ability to remain within certain leverage ratios.

No changes were made in our objectives, policies or processes for managing capital during the nine months ended
September 30, 2024 and 2023.

F-131

28.

Notes to the Statements of Cash Flows

The following table shows the changes in liabilities arising from financing activities as at September 30, 2024 and
December 31, 2023:


	January 1, 2024					Foreign exchange movement						September 30, 2024
	(Audited)		Cash flows						Others			(Unaudited)
	(in million pesos)
Interest-bearing financial liabilities (Note 20)		254,798		15,066			443			276			270,583
Lease liabilities (Notes 3 and 10)		47,546		(8,994	)		—			14,023			52,575
Derivative financial liabilities		1,033		84			—			(704	)		413
Accrued interests and other related costs (Note 23)		2,157		(7,285	)		—			7,711			2,583
Dividends (Note 19)		1,912		(20,744	)		—			20,836			2,004
		307,446		(21,873	)		443			42,142			328,158

	January 1, 2023					Foreign exchange movement						December 31, 2023
	(Audited)		Cash flows						Others			(Audited)
	(in million pesos)
Interest-bearing financial liabilities (Note 20)		249,580		5,175			(319	)		362			254,798
Lease liabilities (Notes 3 and 10)		42,435		(10,707	)		—			15,818			47,546
Derivative financial liabilities		1,150		(607	)		—			490			1,033
Accrued interests and other related costs (Note 23)		1,868		(9,715	)		—			10,004			2,157
Dividends (Note 19)		1,821		(23,328	)		—			23,419			1,912
		296,854		(39,182	)		(319	)		50,093			307,446

Others include the effect of accretion of long-term borrowings, effect of recognition and accretion of lease liabilities, unrealized mark-to-market losses of derivative financial instruments, effect of accrued but not yet paid interest on interest-bearing loans and borrowings and accrual of dividends that were not yet paid at the end of the period.

Non-cash Investing Activities

The following table shows our significant non-cash investing activities and corresponding transaction amounts as at
September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Acquisition of property and equipment on account		16,776		37,133
Additions to ROU assets (Note 10)		11,302		15,759
Capitalization to property and equipment of:
Inventories		3,120		2,169
Foreign exchange differences – net (Note 9)		635		195
		31,833		55,256

Non-cash Financing Activities

The following table shows our significant non-cash financing activities and corresponding transaction amounts as at
September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
	(in million pesos)
Additions to lease liabilities (Note 10)		11,302		15,759

F-132

PLDT (PHI) 6-KCurrent report (foreign)