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PLDT Inc. (NYSE:PHI)
Q4 2019 Earnings Call
Mar 5, 2020, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the PLDT Conference Call. [Operator Instructions]

At this point, I would like to turn you over to Melissa Vergel de Dios, Head of Investor Relations of PLDT for the introductions. Please go ahead. Thank you.

Melissa V. Vergel de Dios -- Head, PLDT Investor Relations Center

Good afternoon, and thank you for joining us today to discuss the company's financial and operating results for the full year of 2019. As mentioned in the conference call invitation, a copy of today's presentation is posted in our website. For those have not been able to do it so, you may download the presentation from www.pldt.com under the Investor Relations section. Broadcast of this briefing will be available at our website after the call.

For today's presentation we have on stage members of the PLDT Group management team, namely, Mr. Al Panlilio, Chief Revenue Officer and President of Smart Communications; Ms. Anabelle Lim Chua, Chief Finance Officer and Mr. Ray Espinosa, Senior Adviser to the Chairman and CEO.

At this point, let me turn the floor over to Ms. Anabelle Chua to start the presentation.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

Thank you, Melissa. Welcome everyone to PLDT's full year 2019 results briefing. Let me first run you through the key highlights of our results for the fourth quarter of 2019. We are pleased to report that our fourth quarter service revenues crossed the PHP40 billion mark and came in at PHP41.4 billion, which is 10% or PHP3.8 billion ahead of prior year and 5% or PHP1.8 billion higher than the third quarter.

Breaking this down by business segments, revenues from our Wireless Individual business rose by 18%, Enterprise came in 3% higher and Home business is up 6% over prior year. Even our International segment saw an increase of 6% year-on-year. Compared to the third quarter, our Individual Service revenues increased by PHP1.2 billion, Home is up by PHP0.4 billion and Enterprise higher by PHP0.2 billion. With the increase in revenues, coupled with lower opex, our fourth quarter EBITDA grew by 39% to hit PHP22.8 billion. Even without the benefit of PFRS 16, the new accounting standard for leases, our fourth quarter EBITDA was higher year-on-year by 33%. As a result of the higher EBITDA, our Telco Core income, which excludes the Voyager results rose to PHP7.7 billion in the fourth quarter, the highest quarter for the year.

Turning now to our full year 2019 financial results. Our service revenues came in at PHP157.7 billion, which is 8% or PHP11.9 billion ahead of prior year. Revenue growth was led by the Wireless Individual business with a 20% boost in service revenues of PHP72.1 billion. Our Enterprise Business Group posted steady growth with a 5% increase over previous year to hit PHP39.2 billion. Our Home segment grew to PHP37.2 billion, up 3% year-on-year as we ramp up our installed capacity.

On a combined basis, our Consumer and Enterprise segment revenues, which account for 94% of total revenues, registered an 11% growth year-on-year, equivalent to a PHP14.8 billion rise. EBITDA in 2019 amounted to PHP83.1 billion, up by 22% due to the combined impact of higher service revenues and lower cash opex. EBITDA margin improved to 52% from 45% in 2018. The EBITDA for the current year reflects the impact of the PFRS 16, which reduced rent expense by PHP5.3 billion for the year. On a bottom line basis, our Telco Core income climbed 13% to PHP27.1 billion, PHP3 billion higher than the core income amount registered in 2018. Our reported net income also jumped 19% to PHP22.5 billion.

We show in the next slide our consolidated service revenues for the last eight years. We are pleased to report that the 2019 service revenues is the highest full year revenue that PLDT has attained, having steadily improved from 2017, up 2% in 2018 and then a higher 8% in 2019. Before this, our previous peak was PHP153.5 billion revenues in 2014, but compared to 2014 and year-on-years when we had as much as PHP18 billion to PHP20 billion per annum in ILD revenues, what we have seen now is a growth in data and other non-ILD voice revenues, which shielded us completely from the decline in our ILD revenues for the comparative period.

Now Slide 5 moving on, viewing our revenues on a quarterly basis, service revenues in the fourth quarter of 2019 rose 10% year-on-year and an impressive 5% quarter-on-quarter to hit PHP41.4 billion. We have had a sustained trend of improving revenue performance each quarter in the last three years. Also noteworthy is that we have seen an acceleration in the growth rate when you compare the latest increase in Q4 of 10% versus prior year versus of revenue growth a year ago, which was at 5% year-on-year and then 1% year-on-year back in Q4 2017.

Looking at our consolidated service revenues by service type, data and broadband revenues at the PHP105.2 billion purely powered the rapid growth in 2019, rising 20% year-on-year and now comprise 67% of our consolidated revenues. If we exclude the International segment, data and broadband already account for 70% share of the Consumer and Enterprise revenue.

Contributing to the rise in data revenues are the following. Mobile Internet revenues are up 45%, home broadband is higher by 7%, corporate data rose by 5% and data center revenues grew by 14%. The balance of 33% of our revenues consist then of 25% from domestic voice at PHP39.7 billion, 5% of SMS and international voice down to 3%.

On the back of our higher service revenues, our consolidated EBITDA came in 22% higher to reach PHP83.1 billion for the year with EBITDA of PHP22.8 billion in Q4. As mentioned earlier, there is a PHP5.3 billion increase in EBITDA with the reclassification of rent expense. Without that, our pro forma EBITDA is still 14% higher year-on-year with an increase of PHP9.6 billion. Our EBITDA margin rose to 52% on a PFRS 16 basis. Even on a pro forma basis, our EBITDA margin would have been 48%, still higher than the 45% registered in 2018. The EBITDA here excludes the one-time expenses for our Manpower Reduction Program or MRP, which amounted to PHP3.3 billion of expenses in 2019. We have undertaken a significant rightsizing program as part of our manpower efficiency measures, which helps lower our people cost base for 2020 onwards.

Turning on to the next page. When you look at the EBITDA over the years, we have seen an improvement from a low in 2016 to 2019 now being close to a record high and margins now over 50%. This is despite the change in revenue mix with decline in the higher margin services like ILD and SMS. Moving on, our core income from telco operations hit PHP27.1 billion, up PHP3 billion or 13% year-on-year. This was driven by a 14.8 billion uplift in EBITDA, offset by higher depreciation expense and higher financing costs. The adoption of PFRS 16 and the net basis absolute result and a fairly neutral impact of only PHP0.2 billion. Our Telco Core income, as mentioned, excludes the impact of our share, the losses of Voyager, which amounted to PHP1.8 billion in 2019 and gains from the sale of Rocket shares of about PHP0.2 billion.

Now with respect to our reported net income, which came in at PHP22.5 billion, this is higher versus prior year by PHP3.6 billion, largely due to the higher Telco Core income, as well as low lower losses from Voyager by PHP1.2 billion, offset by higher MRP costs and lower gains from our sale of certain assets like a rocket shares. So with our fourth quarter Telco Core income of PHP7.7 billion, we hit PHP27.1 billion $Telco Core income for the year. And clearly, we've seen a steady rise in our core income numbers over the last few years from PHP21 billion in 2016, now PHP27.1 billion in 2019.

In like with our dividend policy of paying out 60% of our Telco Core earnings, the PLDT board this morning, a final cash dividend of PHP0.39 for payout on the 3rd April. Combined with the interim dividend we paid at the half year, so the dividend per share at is PHP0.75 and the core EPS of PHP0.125. This result in a dividend yield of around 7.4% to 7.5% based on current share price.

Moving on as of end December 2019, our consolidated net debt amounted to $3.3 billion, while the net debt to EBITDA ratio stood at two times. Gross debt was $3.8 billion with maturity fairly well spread off. Only 8% of our debts are unhedged or exposed to the U.S. dollar, while 88% of our debts are fixed rate in nature. Our average cost of debt stood at 4.8% per annum. PLDT has maintained its credit rating at investment-grade levels.

Now the next few slides, I'll talk about capex and some of the highlights from network perspective. So PLDT and Smart have continued to invest behind our fixed and mobile networks in order to significantly raise our service quality levels and to provide a stronger revenue growth. So our capex for 2019, while lower than our original guidance, still came in at a record high of PHP72.9 billion, of which PHP61 billion were spent on network and IT expansion and other transformation programs, while close to PHP12 billion was spent for our business installation-driven capex.

The capex investments we made over the last nine years of as much as PHP388 billion allowed PLDT's network to continue to be recognized for its superiority in serving the fast-growing data usage of our customers. For 2020, we expect to allocate an even larger capex budget of PHP83 billion to widen PLDT's lead in network quality to also provide superior data CX. Of the PHP83 billion, PHP64.6 billion are earmarked for network, IP and other general capex, while PHP18.5 billion is to be spent for business installation capex in order to support a higher level of broadband connection this year.

5G's and investment we will start to make in a more meaningful manner this year. So we have several pilot deployments of 5G with various equipment vendors; Huawei, Nokia, Ericsson, Samsung. We have fired up 5G base stations for ongoing pilots, namely at the PLDT headquarters here in Makati in the Ateneo Campus at Araneta in Quezon City and in Clark City, Pampanga. Early applications for 5G include into esports and mobile games. Also, we're working closely with Cisco to transform our transport network into a fully automated software-defined 5G-ready network.

In the next slide, we show some selected metrics of our fixed and wireless networks. That's an indication of how we continue to strengthen our network advantage. As of December 2019, PLDT increased the coverage of our fixed fiber broadband networks to reach 7.2 million homes faster. So that's up 16% from 6.3 million a year ago. We boosted our ports capacity to 3.5 million ports. We have ready 1.2 million fiber-to-the-home ports that we intend to sell this year and next year in support of a higher revenue contribution from our home business. The total footprint of PLDT's fiber optics network grew 32% to 322,000 cable kilometers, still by far the most extensive digital backbone in this country.

In mobile, Smart have installed over 24,600 LTE, 4G base stations and another 13,800 3G base stations. So the step-up rollout of LTE and 3G allowed Smart to cover 94% of our population with 4G and 3G and meet our commitment to provide high-speed wireless data services in almost all of the country's cities and municipalities.

Moving on to the next slide, our sustained network improvement efforts have enabled us to offer compelling data services and carry the growing demand for data. Here you will see that our mobile traffic has risen to 1.6 exabytes or 1,600 petabytes in the full year 2019, double the traffic we saw in 2018 and four times that of 2017. Notwithstanding, the dramatic surge in traffic, several independent international entities continue to sight the superiority of our network. One of them is Opensignal, which reported that Smart provided the country's best video experience, the fastest data download and upload speeds, as well as the highest 4G availability in both urban and rural areas.

At this point, I'll turn over the presentation to Al Panlilio.

Alfredo S. Panlilio -- Chief Revenue Officer

Thank you, Anabelle. Good afternoon to all investor MVP. Thank you for being here also today to be with us. I just wanted to just highlight I guess the summary what Anabelle said earlier in terms of 2019 performance. We did achieve PHP157.5 billion revenues last year, growth of almost PHP12 billion or 8% compared to 2018 and broken down into the four pillars; Individual, contributing PHP72 billion last year, 20% increase versus the same period of 2018. That's almost an increase of PHP11.8 billion. Home grew by a modest 3% or PHP37.2 billion. Enterprise also grew modestly at 5% at PHP39.2 billion and International PHP9 billion.

When I came in about eight months ago, I did say that there were three focus areas last year that I wanted to just focus on revenue growth, driving data adoption, targeting passion points in the Individual, Home and International segments, while Enterprise grew wireless beyond its core products. We also -- I also said that we will focus on CX optimization, customer experience. And we started implementing operational efficiencies in Home business to hopefully an enhance installation repair process, really focusing on service delivery, improving installation rates, addressing churn and strengthening leadership in the Home segment. So we have spent quite in those directions and because of that I think we've been able to deliver the promised revenues last year.

For 2020, as we embarked, of course, the expectation of MVP in the board is to increase performance and drive growth again in 2020, but if I may just share the key initiatives for us in 2020 across the four pillars. For Individual, we continue to drive customer engagement to customer who get the offers to support the different passions and interest. So this is really the more personalized service across our customer base in wireless.

For Home, we will redesign customer service throughout the customer journey and be the driver for smart homes in 2020. And for Enterprise, play a more active role in enabling all businesses to grow and maximize the potential of being the trusted advisor to creating partnerships for our Enterprise business, both big and small enterprises. And for International, to maximize partnerships to deliver seamless connectivity for customers, whether here or abroad.

So we spent the first two months basically focusing on what we have to do in 2020, but really beyond and we had a strategic planning with top management and also our seniors in Feb and we looked into three key pillars that will drive our business not only in 2020, but in beyond and making sure that we're able to future proof our revenues and shield our subscribers in 2020.

The three main pillars that we feel that we should be good at will be of course, starting from the right side, building the business of tomorrow. So we have to continue to innovate and become relevant for our customers. We need to operate excellently. So we're doing -- has a lot of initiatives to improve our efficiencies for them and also productivity in terms of operations. And really improving customer experience. So we have to be good in all three, but we have to world-class in one and that we have identified to be in customer experience.

So as part of our planning session, we are continuing the journey that MVP started in 2016 in terms of -- a transformation journey for PLDT. And we are just really enhancing the plan that MVP has put in place. And we have defined, since we want to be world-class in customer experience, we have defined our purpose, and our purpose is as follows. Customer centricity is our true north. We enable every Filipino's dreams and passions to provide products [Phonetic] and services and solutions by building an ecosystem that uplifts Filipinos to consistent parts of experiences.

So this will be our core. We will be customer obsessed. And we want to make sure that we're able to address all the concerns for customers and deliver the service that is deserving of our customers. Thank you. Anabelle?

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

Just by way of recap in terms of our view for 2020. As indicated earlier, we have set aside PHP83 billion for capex spend this year, PHP64.6 billion for network, IT and other general capex and PHP18.5 billion for installations related to business grow. We expect the upward momentum in our revenues to continue across the Wireless, Home and Enterprise segments and we expect our Telco Core income to be higher in 2020 than 2019. But we are not giving a firm number in terms of our profit guidance at this point in time just given a lot of uncertainties in the current environment.

So hopefully, maybe when we see each other in May or some time middle of the year, we'll be able to give you a better sense of what to expect for this year by way of the core profit. But certainly our expectation is that it will be a better year in terms of Telco Core income in 2020 than 2019. And last year of course, we affirmed our dividend payout of 60%. Melissa?

Melissa V. Vergel de Dios -- Head, PLDT Investor Relations Center

We're now ready to take your questions. We'll first take questions from those who have joined us through the conference facility before we take questions from the floor. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Arthur Pineda from Citi. Your line is now open.

Arthur Pineda -- Citigroup, Inc. -- Analyst

Hi. Thanks for the opportunity. Three questions please. Firstly, can I clarify, your capex have been rising for the last two years, yet your D&A expenses have actually been shrinking over the last few years, which appears to be counterintuitive. What's driving this divergence and where should we see this heading into 2020? Second question I had is with regard to the labor costs, you put in PHP2.4 billion MRP charges this year. How much should that reduce your labor costs into the next year? And do we expect more MRP charges as well? Last question I had is with regard to what you're seeing on the ground on competition. Are you seeing any progress from your competitors' network build out? When I say competitor, I mean this the new operator. Thank you.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

I'll probably take the first two questions and then I'll let -- I'll hand over the third one. So on the depreciation expense, it will be higher in 2020 than 2019. Now if you kind of look back over the last couple of years, there were certain times when we had accelerated a depreciation of certain items that have -- may have increased the number. So there was -- I don't know exactly now, there was a year where we had to depreciate the Metro Manila wireless network when we swap out of the previous provider into Huawei platform. That was one big one that we had, I don't remember what year it was, 2017? '17, right? Yeah. And then a few other things along the way. But certainly with the higher capex, the depreciation expense will be higher.

Now on the labor MRP costs that was actually PHP3.3 billion in 2019, although there was smaller amounts of I think PHP1.7 billion or PHP1.8 billion in the year before that. So essentially, we continue to look at how we can be more efficient in terms of our manpower. But when you look at what we do, it allows us to be able to support a certain level of increase in our content benefits by doing a bit on the rightsizing. We did hire more employees in 2019 as a result of some of the developments along the contractualization issue. But in terms of just the amount, the people who aspire tend to have much higher salary based than the people that we hire. So overall, we're able to manage the overall manpower costs that way.

Maybe, Al, can take the next one.

Alfredo S. Panlilio -- Chief Revenue Officer

On your third question on the competition, I guess for the third player, Dito, we just know what we also really in the media. And I guess we know they have a plan to rollout in -- my guess is, just follow their own plans. For Globe, obviously, I'm sure they're not sleeping and they will continue to also enhance their network. I guess our focus is in -- based on your first question on capex, I think our focus is also just making sure our network is better than our competition. And I think we have gotten recognition that we are the fastest and the widest nationwide network today. And we will continue to drive that obviously and be ahead of the curve. Our main priority really is to ensure that the customer experience is remain at the level that satisfies our existing base. And we will continue to invest in our network.

Arthur Pineda -- Citigroup, Inc. -- Analyst

Thank you very much.

Operator

Thank you, Arthur. Our next question comes from Ranjan Sharma from J.P. Morgan. Your line is now open.

Ranjan Sharma -- JPMorgan Chase & Co. -- Analyst

Hi. Good afternoon, and thank you for the presentation. Two questions from my side. Firstly, what is the disruption that you're seeing or think that could come through from COVID-19, which does not allow you to give a guidance for this year, because I think we are seeing telcos around the region who have been giving guidance for 2020? The second one is, I think you mentioned the use case of 5G is esports and mobile gaming. And that's quite interesting because I don't think I've heard other companies talk about it unless it's cloud gaming, but that becomes a very, very developed market use case. So how do you think you will be able to monetize gaming, especially because of 5G services? Thank you.

Ray C. Espinosa -- Executive Director

I'll have Jane, who heads our wireless business answer the question on the 5G.

Jane J. Basas -- Senior Vice President for Consumer Individual Wireless Business, Smart Communications

Hi, good afternoon. We've actually been working with our technology and networking to plan out a rollout strategy for 5G this year. We are targeting a few thousand some sites. But given the limitation of that deployment, our priority is to actually rollout those sites in areas where we feel there's a high incidence of high-end handsets because these are the guys that will probably be able to pay for 5G services, which we expect to be charged at much higher prices than 4G given that it's a new investment in capex.

We've also planned to actually rollout 5G facilities in esports hub. In Manila, in particular, we're looking at partnerships with companies like [Indecipherable] because these are the guys that actually have a need for 5G networks as they do compete in games like Mobile Legends and other mobile-based games. Just an example, we actually did the first live esports competition running on a 5G network here in Makati. It was a competition between PLDT, Smart Omega and CIgnal Ultra. It was a live fight and it was running on powered by our 5G network. And that particular experience prove that the latency for the game was as low as three millisecond and it was an average of actually five milliseconds. Whereas if they were to play it in a primary environment, they would typically play with the latency of around 9 milliseconds to around 11. So that was a good successful trial of the network.

Ray C. Espinosa -- Executive Director

On your first question, to clear about the question, you're talking about the disruption. I think today when you talk about coronavirus affecting our business, we don't see much of that really in our supply chain. Also maybe a little disruption maybe on the Pogo side, but it's still also very small. But in terms of maybe first two months of the year, we are doing well. So maybe most probably after the first quarter, we can give some guidance on how the year will look like.

Ranjan Sharma -- JPMorgan Chase & Co. -- Analyst

Okay. Maybe a follow-up question for the 5G use case. Do we actually need like five milliseconds latency or seven millisecond latency? I thought many of these games can operate at 50 milliseconds latency. So do gamers actually need that kind of latency and will they pay for it? Just wondering, if how you will monetize your 5G investment?

Ray C. Espinosa -- Executive Director

Juan, will answer the question, but I mean this -- my view also is -- I mean I think, again, we really want to test this use cases and that's why we're going to all these pilots. And hopefully, obviously, the -- our objective is to monetize 5G also. Juan?

Juan Victor I. Hernandez -- Senior Vice President

I think the question you have to ask the gamers, of course. But they have been very excited about the low latency, because the lower the latency, the better, the smoother the gaming experience. And it's really about how fast the screen react to my push of the button or move of the joystick or whatever it is. And it has been proven that if the latency is super low, ideally zero, that's the best experience. And if it's half compared to what it was before, the gamers actually feel it, they love it and that's then where they are going. And so do they need it? I don't know, but they love it.

Ranjan Sharma -- JPMorgan Chase & Co. -- Analyst

Okay. Thank you.

Operator

Thank you. Ranjan. Our next question comes from Rama Maruvada from Daiwa. Your line is now open.

Rama Maruvada -- Daiwa Securities Co. Ltd. -- Analyst

Hi, good afternoon. I have a couple questions please. Firstly, with regards to the full financials, I apologize for this. I can't find the divisional breakdowns. I'm just wondering when they would be made available? And with regards to these two questions, number one is your overall cash position, it looks like for 2020 given PHP83 billion in capex, you're going to be free cash flow negative. So just wondering how you're thinking about managing the business on a cash basis for 2020? Are there any asset divestments or non-core assets that you still have that you could monetize?

Second one is with regards to the revenue growth in fourth quarter vis-a-vis the third quarter. Unclear to me if it is led by mobile, I assume that is the case? And if that is the case then wondering what is the driver? Are there any specific promotions that happened in the fourth quarter led that -- led to this revenue growth?

The third one is with regards to your costs side.,Again just following up on Author's questions, are there any other major items or initiatives that you have for 2020 in terms of the cost trends? That is, are there any cost saving initiatives that could potentially come through or vis-a-vis are there any other one-offs that you expect to 2020? Thank you.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

Rama, the full sets of MD&A and financial statements should be available today. I think it's just we're filing at the Philippine SEC and it will be uploaded as soon as that is confirmed the filing here. I think the question on the free cash flow, certainly with the higher capex is an expectation that EBITDA will rise. Now as we highlighted PHP18.5 billion of that capex or more than 20% of that is sales driven. So as you saw in 2019, we gave a higher number before to the extent we connect, we encourage, to the extent we don't connect, we don't encourage much. But for everything that we connect and spend for, effectively there is a live customer at the end of the day who will pay us a monthly recurring revenue that will support that spend. So that's kind of the way we look at it. That type of capex returns cash fairly quickly.

Now we do recognize that there are still some supplementary activities we need to do with respect to asset sales. So there are a number of initiatives going on. We have identified at least five real estate properties that we are in the midst of disposing, two or three of them might close actually as early as this first quarter. And there are -- we could raise a few billion pesos from that.

So I guess, maybe jump into the third question before we go back to the mobile drivers. On the cost side, yeah, aside from manpower induction program, which is something effectively we continue to undertake, we continue to review our manpower compliment where we can be more efficient. What are the new ways of working. We continue also to look at the efficiency of our -- for example our installed and repair activities. We are tracking very closely how much each person or each crew able to deliver per day.

So there are certain metrics that we have set internally for our Home and Enterprise crews and we track it down area by area in terms of what kind of productivity we are achieving, what kind of sports do they need to support, faster dispatch, what kind of customer support systems do we need to put in place so that we can address also more quickly the source of trouble for example for our customers.

So there are lots of things we need to do on the operation side across all the businesses to improve our efficiency, our turnaround time, our cost base and effectively not just the cost, but our ability to provide a better customer experience to our customers. So that's kind of a key initiative, one of the key initiatives the group has. I think I'll highlight it under the heading Operational Excellence as one of the encore priorities for the business this year.

Jane J. Basas -- Senior Vice President for Consumer Individual Wireless Business, Smart Communications

For the fourth quarter of 2019, there are actually two primary drivers of the growth of data revenues. The first is there's actually a higher migration from 2G to 3G -- 2G, 3G phones to LTE devices. That is actually a portion they're also doing on ground. Secondly, there's also a higher adoption of our data, promo code stories for all. This is a bundle of social media apps, which includes Facebook, Instagram, and TikTok. So those were the primary drivers.

Alfredo S. Panlilio -- Chief Revenue Officer

I think just to add on the wireless. I think the basket size per subscriber also increased, about 20%. And also the number of customers who are topping up referrals are high.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

And those promos under the Giga portfolio are actually being sold anywhere between PHP50 to high of PHP499. So imagine the legacy promos on data were being sold anywhere between PHP10 to PHP30. So this is really an upward migration to a higher value data promos.

Rama Maruvada -- Daiwa Securities Co. Ltd. -- Analyst

Okay. Got it. Thank you very much. I'll come back again.

Operator

Thank you, Rama. Our next question comes from Arthur Pineda from Citi. Your line is now open.

Arthur Pineda -- Citigroup, Inc. -- Analyst

Hi, sorry. Just one follow-up related to Rama's earlier question on free cash. It seems that you've been borrowing to sustain the 60% payout, and that will likely sustain into 2020 given that your capex is even higher. How comfortable are you with a 60% payout? And how sustainable it is over the longer run? Is this the final year basically where we see capex growing to this level? Thank you.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

I think Arthur like to highlight that our net debt to EBIT ratio stood at two times and that's where we've guided that that's where we're comfortable with, right? So effectively, we've not sort of gone off from that guidance that we've given in terms of the kind of leverage that we are carrying. So effectively, yes, we are investing behind our network and our IC platforms and we're incurring capex. We do -- we have affirmed the dividend guidance and we are at the same time maintaining our leverage ratios in line with our policies. So we're trying to do everything right.

Arthur Pineda -- Citigroup, Inc. -- Analyst

Understood. Okay. Thank you.

Operator

Thank you, Arthur. At this time there are no further questions. Speakers please continue.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

We'll take questions from the floor. There are microphones on the floor if you would like to ask question. No questions?

Unidentified Participant

Hi, good afternoon. Thanks for the briefing. First question is related to the home broadband segment. I think during the last nine months, you mentioned that you're going to roll out the fixed wireless service. So I would like to get an update or how's that development going? And then still going to ask about the promos. Right now your mobile data revenue is at PHP52 billion, against the competitor around, down by around PHP19 billion. So how do we catch up that gap? How do we slowly close that gap between you guys and the competitor? What steps are we moving to in the mobile data space? And then I also forgot on the home broadband. You mentioned the churn rate of subscribers, I think was around 27,000, 28,000 per month. Has the churn rates gone down? And should we expect the growth rate of the home broadband to go back from around 8% to 10% again like in previous years?

Ray C. Espinosa -- Executive Director

Now I'll let Butch [Phonetic] answer the home broadband questions.

Menardo G. Jimenez -- Senior Vice President

Good afternoon. I think in the last briefing, I did say that from one weapon, which was really just fiber, we're going to move into three weapons that we're going to attack 2020 with and one of them was prepaid home WiFi. We just started launching prepaid home WiFi toward the end of last year. And so the growth in that space was a little bit muted, maybe about 10,000, 11,000 subs. However, good news for the opening of 2020, we're actually already hitting nearly 25,000, 30,000 subscribers a month. And that's huge for prepaid home WiFi for PLDT because we've not even come out with a mature and fully structured channel for selling that. But we're already hitting about that level, 30,000 or so. We think that's going to continue to go up. We haven't even launched postpaid home WiFi as well or fixed wireless. The moment we launched that then you're going to now see all three weapons going after the market. So definitely prepaid, fixed wireless doing well, doing better than what we expected.

In terms of the churn, same. I think the last time I talked to everybody, we showed you that the churn for fourth quarter, there was a churn of about even 29,000 for that month. January was a bit difficult for us, primarily because of certain post-major issues like the Taal volcano eruption and also our churn was at about 27,000. However, when we started looking at our operational deficiencies and we've started making moves toward fixing the operational programs of PLDT, churn for February is probably going to be under 24,000, 23,000 maybe even under 22,000 or so. Definitely strong push for churn, strong advancements on the churn. So it's setting us up for a quite a strong 2020. Now guidance for the full year, 8%. Are we going to go back to the 8%? We're really going to try to push for higher than that. We'll see eventually what we can do, but starting off strong for home.

Ray C. Espinosa -- Executive Director

Just to add to that. I think there's a major effort, Anabelle, you did to the installation repair. We're focusing a lot of our efforts also in making sure that we're able to address those issues. Again, customer experience is our mantra. And we're really pushing hard and making sure that we're able -- we're more productive and we're able to address general repairs basically that into our churn. Question on mobile data?

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

It's actually not the secret that the competitors started pushing thier data services and digital services much earlier than we did. In fact, one of the primary platforms for buying digital promos, beta promos, which we call USSP was something that they launched I think around six to seven years ago as we launched ours only last year.

So to be quite honest, the beta adoption among our base actually came in quite late. But we're very, very excited because on a year-on-year basis we're seeing very, very strong growth in terms of the adoption of all our promos. The utilization of our USSP has increased 85% on a year-on-year basis and it still just accounts for less than 50% of our total transactions. So there's a lot of growth that we are actually looking forward to as we upgrade more subscribers into owning LTE phones, LTE SIMs and learning more and more about our data offers.

Unidentified Participant

Thank you.

Melissa V. Vergel de Dios -- Head, PLDT Investor Relations Center

Anymore questions from the floor before we go back to the conference facility?

Operator

Excuse me. Our question over the phone comes from Rama Maruvada from Daiwa. Your line is now open.

Rama Maruvada -- Daiwa Securities Co. Ltd. -- Analyst

Hi, I have a quick follow-up on the broadband space please, I know you have launched fixed wireless broadband products. Just wondering, what the broader strategy here is? You have like Globe in terms of articulating a strategy on wireless, broadband fixed wireless broadband. So wondering whether there's a change in heart here or how do you -- how do you scope the opportunity ahead for you for 2020 on this?

Menardo G. Jimenez -- Senior Vice President

Well, since we do have, like I shared earlier, we do have three strong weapons now that we're launching. We have the fixed and the prepaid and postpaid fixed wireless. We need to come out with a strategy that will maximize all three or optimize all three and make sure that cannibalization doesn't happen. Secondly, congestion of our wireless network doesn't happen. So the strategy that we are putting forth is to make sure that we continue to grow fixed wireless. Sorry, we continue to grow fix because that is really the driver of our revenue, number one. That is where we have a huge competitive advantage. And not -- none of our competitors at this point in time comes close to us. For us to give that up as the number one priority of our strategy doesn't make sense. So that will continue to be the main focus of how we're going to grow the business.

However, we now have both postpaid and fixed and prepaid fixed wireless to be able to complement and supplement the growth of our fixed strategy. So how we're going to do that is, our postpaid fixed wireless is going to attack the areas where we do not have fiber or where fiber is eventually going to be rolled out. We'll roll out our postpaid fixed wireless first. The prepaid fixed wireless is going to go after a lower segment of the market that cannot afford either postpaid fixed wireless or prepaid -- or our fixed fiber.

So generally that's how we're going to attack the market. It's not going to be we'll let all the horses run and see how we can sell as many as we can everywhere and anywhere. It's really going to be a balanced calibrated attack to make sure that all our three weapons are optimized and maximize. And therefore, both our facilities, our infrastructure and our revenue will be maximized as well. So that's how we're looking at it, that's how we're planning it and that's how we're going to execute it.

Rama Maruvada -- Daiwa Securities Co. Ltd. -- Analyst

Okay. Got it. Thank you very much.

Operator

Thank you, Rama. Our next question comes from German de la Paz from Abacus Securities. Your line is now open.

German de la Paz -- Abacus Securities Corporation -- Analyst

Hello. Good afternoon. Thank you for the presentation. Three questions for me, first on the capex figures. Just wanted to ask the reason why the target capex figures for 2019 was not met? Second, you mentioned lower losses for Voyager for 2019. Just wanted to ask if there is a target timeline on when we can expect positive bottom line contribution from this segment? Third question is, should we expect anymore MRP expenses for 2020 and how much? That's all.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

In terms of the 2019, we were PHP5.5 billion lower than the original guidance. So that essentially relates more to the business side. So basically we had certain assumption in terms of how many new broadband connects we will have and we effectively undershot that. So -- but the net effect of that is really pushing that PHP5.5 billion into 2020.

On Voyager, there was a lower loss in 2019 given that we now equity account about 48% of Voyager versus we were carrying 100% of Voyager losses in the past. The new management team of Voyager led by S.B. [Phonetic] who is here today with us and Doy Vea have laid out a business plan that has been signed off by all the shareholders with respect to where they want to bring the business. But we have a ramp up in the both the consumer and the enterprise side. And I guess they can talk about that in more detail, but I think the expectation is that a few more years of cash burn as they ramp up the acquisition targets, but hopefully to be positive EBITDA by around 2023. On MRP, we probably will still have some MRP expense this year, but not at the level that we booked last year. So it will be more certain particular areas of our HR team is focused on.

German de la Paz -- Abacus Securities Corporation -- Analyst

Okay. Thank you.

Operator

Thank you, German. Our next question comes from Varun Ahuja from Credit Suisse. Your line is now open.

Varun Ahuja -- Credit Suisse -- Analyst

Yeah, hi. Good afternoon management, and thanks for the opportunity. I've got three questions. First, I think the line wasn't clear, but if you have answered that, it will be helpful if you can give little bit more color. The mobile service revenue looks strong this quarter and your guidance is also for a growth in next year. Just wanted to understand what is leading to this growth. Is the competition stable, there has been price increases or there has been more frequent recharges by consumer on the data side and hence you are getting a growth in the revenue? So appreciate if you can give some more color. Apologies if you have already commented on this scene. And on 2020, any guidance, any clarity on what will lead to the growth in revenue?

Second on the tower side. Your competitor had a very good growth in tower in 2019. Just wanted to see how many towers have been rolled out during this year? And had you seen some improvement in the rollout process or from the government side in terms of speeding up of license approval? Any clarity on that that will be helpful. And if you can also comment, I know you said that your Dito, you know only what is happening on public side, whatever the comment they're making. But on the ground when you go and see, is there any tower that you're seeing that have been coming across from Dito? Any color that will be helpful?

And lastly, I see you're still spending on 3G, but in some of the other markets you see more investments on the 4G side and few markets are closing down the 3G network. So what's your view on this 3G capex spend and how soon do you think the 3G can shut down in Philippines? So that will be all. Thank you.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

Pangilinan, can take the questions.

Ray C. Espinosa -- Executive Director

What was the first question?

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

How many towers have been done this year.

Ray C. Espinosa -- Executive Director

Okay. Our tower roll out, we actually are increasing the number of towers we are building, while we at the same point in time moved the focus from outdoor to large towers more to indoor and microsat because of the significant traffic increase and more and more data usage is actually performed indoor. So that's substantially increase. Of course, we are also working with tower companies and if there are opportunities where tower companies can help us, we will take these opportunities.

On the 3G, that's interesting question. What we are actually really doing is reducing the frequencies we allocate for 3G and 2G. Thanks to the technology we have deployed in the Philippines in all our base stations, we are actually able just by reconfiguration to allocate spectrum or reform spectrum from 2G and 3G to LTE and later even to 5G. So from that angle, we are already taking benefit from significantly reduce -- I think 2G and 3G, the traffic is actually stable as for the time being, but we are seeing the number of 3G phones going down rapidly. And as we match the LTE coverage with the 3G coverage by end of this quarter, there will be exactly the same coverage. We expect more and more traffic moving out of 3G.

Now the fact that we can reallocate the frequencies already, doesn't actually put a lot of pressure off shutting these down completely. So that's something we have to find also consensus with the regulator because that is a significant impact on the customer base as well. But what we are doing is taking the opportunity to take the spectrum which is the most important asset we have in this context and reallocate it wherever possible.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

Anything that you're seeing on the ground with respect to...

Ray C. Espinosa -- Executive Director

I would say there are activities. The main thing we see, we cannot speak for Dito, of course. What we see is there's a lot of hiring going on or attempt to hire. And that's a challenge for some of us as contractors. The impact on us is limited, I would say until now. We can go back to it very well. We haven't seen a lot of towers coming up. We have heard a lot of claims, but in reality what we see down on the street is quite limited now. We don't know exactly where they are building. And so far it's a very subjective view. Until now, I don't think they have a lot built.

Varun Ahuja -- Credit Suisse -- Analyst

Thank you.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

On the question on increase in data revenue, I think I've answered that, but allow me to answer it again. The primary growth drivers of the increase in data revenue is really because we've observed significant increase in activity rate among our subscribers. So we have more and more customers actually transacting with us and actually paying us. The second driver is the fact that they're actually paying us more. So on a per transaction basis, the consumption basket size has actually increased roughly around 23% on a year-on-year basis. So you have more customers buying and they're actually buying higher price per month. So the impact of that is increased data revenues and in fact increased top-up for the business.

Ray C. Espinosa -- Executive Director

And just to add on the revenue setting as a group, I think we see a good year in terms of revenues. And aside from the mobile growth, I think we're addressing the issues on Home. So we see also growth in 2020 in same exact prices. Our focus also is on operational side with also growing the business with our Enterprise customers. So we hopefully are seeing a good year or same types of revenues for the group.

Melissa V. Vergel de Dios -- Head, PLDT Investor Relations Center

Off to the floor for more questions.

Varun Ahuja -- Credit Suisse -- Analyst

Just to follow-up. So when you say that you're seeing a lot more activity and lot more higher price point, were these customer dormant or these are new customers as in now there you're using more -- as in, they're spending now more with you versus your competitor? Is there any insight that you can give?

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

It's a combination. A lot of our subscribers are adopting LTE phones, a lot of our subscribers were previous data users, but non-video users. And we're actually getting some customers from global security in our postpaid segment as well. So it's a combination of all those things.

Ray C. Espinosa -- Executive Director

I'm not sure whether Anabelle has a chart on this. But on terms of data revenues, I think for Home its 77% data, for Mobile its 69% and for Enterprise its 67%.

Varun Ahuja -- Credit Suisse -- Analyst

Okay. Thank you. Thank you very much.

Melissa V. Vergel de Dios -- Head, PLDT Investor Relations Center

Last chance for questions from the floor. If there are none, we'll have the operator read the replay facility.

Operator

[Operator Instructions] We now turn the floor back over to Mr. Pangilinan for his closing remarks.

Ray C. Espinosa -- Executive Director

Again, thank you again for being here this afternoon on behalf of MVP. And we look forward to the briefing after the first quarter. Thank you. Thank you very much.

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

Thank you. Join us for refreshments outside.

Operator

[Operator Closing Remarks]

Duration: 60 minutes

Call participants:

Melissa V. Vergel de Dios -- Head, PLDT Investor Relations Center

Anabelle L. Chua -- Senior Vice President, Chief Financial Officer and Chief Risk Management Officer

Alfredo S. Panlilio -- Chief Revenue Officer

Ray C. Espinosa -- Executive Director

Jane J. Basas -- Senior Vice President for Consumer Individual Wireless Business, Smart Communications

Juan Victor I. Hernandez -- Senior Vice President

Menardo G. Jimenez -- Senior Vice President

Arthur Pineda -- Citigroup, Inc. -- Analyst

Ranjan Sharma -- JPMorgan Chase & Co. -- Analyst

Rama Maruvada -- Daiwa Securities Co. Ltd. -- Analyst

Unidentified Participant

German de la Paz -- Abacus Securities Corporation -- Analyst

Varun Ahuja -- Credit Suisse -- Analyst

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