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PLDT Inc. (NYSE:PHI)
Q1 2020 Earnings Call
May 7, 2020, 3:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon and thank you for joining us today to discuss the company's financial and operating results for the first quarter of 2020. Copy of today's presentation is posted on our website. But those who have not been able to do so, you may download a copy of the presentation from www.pldt.com under the Investor Relations section.

For today's presentation, we have with us Mr. Man Pangilinan, Chairman and CEO; Mr. Al Panlilio, Chief Revenue Officer; Ms. Anabelle Lim Chua, Chief Finance Officer; Mr. [Phonetic] Ray Espinosa, Special Assistant to the CEO; as well as members of the PLDT management team. Before we start the presentation, we just like to remind everyone that later in the Q&A session, you will have to type in your questions, which we will read out loud. At this point, let me turn the presentation over to Ms. Anabelle Chua to start. I'll turn floor over to Anabelle Chua to start the presentation.

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

Good afternoon everyone. Welcome today to PLDT's first quarter 2020 results briefing by Microsoft teams. I hope everybody can see the slides that are being flashed on the screen. Let me start by saying that we saw the continued growth momentum from 2019 in the first quarter of 2020 with limited impact from the enhanced community quarantine or ECQ, which took effect only toward the tail end of the first quarter.

Our service revenues rose by 9% to PHP41.5 billion in the first quarter; a new high in quarterly revenues. This increase was primarily driven by data and broadband services. The Consumer Individual business group once more set the pace for growth, posting PHP20.2 billion in revenues; 20% up from the first quarter of 2019. PLDT Enterprise generated PHP10.1 billion in revenues; 3% higher than the previous year while PLDT Home increased its revenues by 5% to PHP9.6 billion. The Consumer and Enterprise business groups combined grew by 11% to generate PHP39.9 billion of service revenues; 96% of the total. To make up the balance, the International and Carrier business group posted PHP1.6 billion of service revenues, which are 25% lower than prior year.

Next slide. With a 9% increase in our service revenues, our EBITDA increased 8% to PHP21.6 billion in Q1 2020, as the increase in our revenues more than compensate for the increases in our operating expenses. EBITDA margin remained at a healthy 52%. Our first quarter telco core income is PHP6.9 billion, lower by 5% year-on-year as the rise in EBITDA was offset by higher depreciation and financing costs resulting from higher capital expenditures, the offshoot of the PLDT Group's sustained network roll-out program.

Next slide. Viewed from the vantage point of the last three years, we've seen our service revenues climb each year and at an accelerated rate of growth. Notwithstanding the onset of COVID-19 and the government's imposition of the ECQ started in the second half of March, the first quarter 2020 service revenues surpassed our fourth quarter revenues and represented a historic high for the company.

Next slide please. The achievement of such record high of PHP41.5 billion service revenues in the first quarter was underpinned mainly by the rise in data revenues, which now account for 71% of our revenues versus a 45% contribution back in the first quarter of 2017.

Moving on to the next slide, please. The 9% revenue growth in the first quarter of 2020 reflects the continued importance of data revenues, which have become the key driver of top-line growth, offsetting the impact of declining legacy revenues from voice and SMS. In Q1, data services maintained its upward momentum with a year-on-year growth of 19%. The share of data revenues out of total revenues has risen to 71%. In particular mobile Internet revenues dropped nearly 40% versus the level a year ago. Mobile data usage continued to be driven by customer demand for video services, social media, mobile games and other services delivered to subscribers through our various GIGA load packages. About 71% of the handsets being used by mobile phone customers today are smartphones. Home broadband posted a 9% increase in revenues, with improved installations of fixed and fixed wireless broadband connections. Corporate data is up 2% and data service center revenues are up by 6%.

Moving on to the next slide, we show how our EBITDA and telco core income has changed from prior year. Our EBITDA increased 8% or PHP1.6 billion from PHP20.1 billion in 2019 to PHP21.6 billion in the first quarter of 2020 as the increase in our service revenues of PHP3.5 billion fully absorbed the rise in cash opex and subsidies of about PHP2 billion. EBITDA margin remained at 52%. Looking at the bottom half of the chart, our first quarter telco core income is lowered by PHP0.8 billion year-on-year, because higher depreciation and financing costs resulting from higher higher capex offset the PHP1.6 billion increase in EBITDA.

Next slide please. When viewed against the quarterly EBITDA results over the last two years, our PHP21.6 billion EBITDA in the first quarter is the highest for a quarter other than the EBITDA in the fourth quarter of last year. It's also higher than the average quarterly EBITDA of PHP20.8 billion registered last year.

Next slide please. Our telco core income of PHP6.9 billion, while lower than last year's first quarter earnings, is still ahead of the average quarterly telco core income of PHP6.8 billion last year. In light of uncertainty surrounding the impact of COVID-19, we have not provided earnings guidance for the year.

Next slide. Next slide shows our statutory reported income results. Reported income was PHP5.9 billion, 12% lower than last year after taking into account our equity share in the results of Voyager Innovations and the reval losses on our investment in Rocket Internet years. We're also pleased to note that Voyager has received a strong support from its current shareholders to the tune of $120 million in new investments that will meet their funding requirements. Current shareholders continue to believe in the prospects of Voyager, particularly with a good traction that's been seen during this period for digital financial services.

Now moving on to the next slide, we show our balance sheet metrics. PLDT's net debt as of the end of March amounted to about $3.4 billion, while net debt-to-EBITDA stood at 2.03 times. The gross debt of the company was $4.05 billion with maturities well spread out and only 6.7% of which were unhedged. Fixed rate loans accounted for 84% of our total debt. And our average interest cost of debt is 4.8%. Of our PHP46 billion planned borrowings for the year, PHP30 billion has been signed and we are currently in final documentation stage for another PHP10 billion of local bank long-term loan facilities. We availed PHP4 billion of short-term loans in March as during the lockdown period, we have allowed an extension of payment periods of the monthly bills of our postpaid subscribers, and paid subscriber balances are being amortized over a six-month period.

Next slide please. Our capex in the first quarter came in at PHP19.6 billion. While PLDT's original capex guidance for 2020 was PHP83 billion, we now anticipate that 20% to 25% of our capex budget will be deferred due to the impact of the ECQ restrictions on movement and on supply chain. Our network roll-out activities have been constrained by the reduced mobility of our network teams since the ECQ was imposed. While the lifting of the restrictions is expected to be a prolonged process, we also expect the pace for the restarting of our network roll-out activities to be drawn out. So we do continue to prioritize projects that uphold our service quality in order to support our customers, and the public for their business and social activities under these new conditions. The imposition of ECQ also compelled people at home to turn to Internet and online collaboration tools in order to work and study from home. Our network has held up pretty well with a surge in data traffic of about 20% and the shape of data traffic from offices to homes with the rapid move to work-from-home.

In April 2020, we allocated 2G assigned frequencies in 1,800 megahertz from 2G to 4G, thus further increasing the mobile data capacity of smart network.

Now the next slide, we show here some selected highlights of our network. So in the first quarter of 2020, PLDT Smart continued our efforts to expand and modernize our fixed and mobile networks. As of the end of March, PLDT increased the coverage of our fixed network to pass 7.5 million homes, 4% more than what we had at the end of 2019. We have a build capacity of 3.6 million fixed broadband ports available to serve those working or studying at home. In the same period, the total footprint of PLDT's fiber optic network expanded by 5% to about 338,500 kilometers of fiber cables. We also are pleased to note that PLDT had undertaken an upgraded modernization of our transport network and we have just completed the first phase of that transformation program in time to serve the increased requirements of data traffic during this period. For Smart, we further enhanced our mobile data coverage by adding about 1,400 new 4G-powered base stations, raising the total to about 26,000. We also added about 700 base stations to get to about 14,400 3G base stations. So together, we are able to serve more than 94% of our country's population with mobile.

Next slide please. We saw Smart's mobile data traffic explode compared to previous periods. Our mobile data payload rose to 634 petabytes in the first quarter of 2020; double the traffic in the first quarter of 2019 and 25% higher than the traffic at the end of last year. We continue to see a surge in traffic and we expect the demand for data services to remain high with the growing dependence on online and the expected more extensive adoption of digital solutions by our customers under the new normal. As traffic rose, our network has remained resilient. The superiority of our network was validated by the latest Mobile Network Experience report released in April by OpenSignal, which founded Smart remained ahead of competition in terms of video experience, upload and download speed experience, voice app experience, games experience and 4G availability.

Now at this point, I turn over the presentation to Al Panlilio, our Chief Revenue Officer.

Alfredo S. Panlilio -- Chief Revenue Officer

Hi, good afternoon. Thank you for being here today and I hope everybody's keeping safe. Again just to -- just highlight what Anabelle said, I think we had a very strong performance for the first quarter. There was a weakness in the second -- over the last two weeks of March. But I think we ended the first quarter even higher than our highest quarter last year, fourth quarter. And so that's pretty good news for us. Again, we are delivering this to -- again, it shows that the company is very resilient. A lot of collaboration done internally to be able to continue to serve our customers, and that has been our focus now. So if I may go to the next page, please.

So, during the first quarter, we continued with our programs, the 80 million [Phonetic] connections and I'll go deep into this in the next few charts, but really making sure that we push on our Wireless business, being -- again, Anabelle said 77% of our business there on data. Home, we continue to also provide connectivity obviously through fiber and fixed wireless and really the focus and what is here in the room with us, focus on enhancing the customer experience by making sure that we're able to install quicker and repair quickly on the store.

Enterprise has been a focus area also for us, pushing fixed line broadband and data, and also wireless broadband, which has been a requirement till end of the first quarter and into April when lockdown was in place. And again Enterprise offering solutions that are already becoming the next normal, the BCP, business continuity program, and I think this will be part of every business' way of working on work-from-home component together with office environment, and we deliver this through automation obviously.

Next page please. Second quarter, we continue to push this. We push dependable connectivity when it really matters most to all our customers, where Individual Wireless engaging our subscribers, making sure that we're able to address their needs, focus again more on data services, allowing our people to work from home and solutions, as I said earlier, that is serving workers who are working from home.

For Home, despite the -- initially, our main focus was for safety of our employees, of our customers. So we tapered off in our connections early part of the lockdown and really focused just on repairs, outside plant repairs that we can improve service. But as we -- I think post holy win [Phonetic], we're able to ramp up on installation and repair and with the proper PPEs and the safety protocols, we've been able to improve that as we speak. And obviously, we also offer home offers to a lot of programs also to address the stay home requirement. Enterprise being a part of our business, we've launched a #ONEwithYOU campaign, making sure that we address all your requirements, providing universal offerings depending on the business that you are in and obviously enabling virtual sessions like this for our customers as we -- as companies continue to operate through virtual means.

Next page please. So I won't go into detail here, but these are the programs that we had during the COVID. As you are aware, we -- rather payments extended now up to May 31 and our billing that will come out in June is really your current and a balance of payment that will be divided into six equal months, so that we don't have a bill shock as far as customers are concerned. We offered free speed boost, free data boost, discounted for other services, free access to certain government websites, news, and hotlines on DOH, on DPWH, even Red Cross and also DepEd. And again, as I said earlier, enhancing and continuing to improve our installation repair, especially now that our field personnel are well equipped to have -- to take care of themselves, and also free calls that we offer to our OFWs by a Free Bee app that's being offered by PLDT Global.

Next page, please. So just to run through again, these are the programs, updating in engaging customers to data with our Smart LTE fast network, which is a network that's been considered by third parties as the fast mobile network in the Philippines. We have a program to upgrade LTE SIMS and devices, so that more customers can -- will be able to use data and our major push on GIGA and GIGA stories specifically during this period.

Quarter two, please, forward. Next page, please. And these are the things we are doing in the second quarter for Wireless Individual. Our productivity made possible through digital solutions. And online has been a platform that we're focused on in this next new normal. This will be a driver of our business and we are focused on delivering a good platform in online, pushing for smart GIGA Work and GIGA Work+, again work from home. Talk 'N Text is offering cashback rewards for Talk 'N Text 20th anniversary, that's TNT Big Bente. And lastly, again a lot of demand now. So we are relaunching Smart Bro LTE and LTE-advance Pocket WiFi again to address the connectivity requirements of our customers.

For -- next page please for Home. This has been -- we started the year right, we're pushing hard on fixed wireless. Of course, our competitive advantage is fiber. We still have a lot of fiber capacity that we can offer our customers. So that will be a main priority, but we will be able to offer also fixed wireless. And as I said, Smart Bro, our Pocket WiFi as we drive the market depending on the customer segment that needs our service.

Next page please. Quarter two continues to enable everyone from home, shifting -- like wireless shifting online selling and servicing through our online platforms. We have a stay home campaign where we have fiber speed boost, prepaid WiFi double data and installment payment programs and we will continue to still enhance our operations for the increased demand and we are trying to fulfill the demands of our customers.

Next page, please. For Enterprise, we're trying to make sure that the businesses are able to work simply. So, our productivity made simple offering packages a new product, that's to -- in terms of, I guess, collaborative suites, a telecommunication using Meraki and Fibrbiz with Meraki. As I said, we ignited a campaign for SMEs, #ONEwithYOU and making sure we're able to help them grow, especially in this time of pandemic and the use of support of 0365 launch that we've had in the first quarter.

Next page, please. And we will continue to push this, equipping business for the new normal, and we are partnering with large, medium and small enterprises across to be able to address the needs and requirements and to help them recover during this pandemic after the lockdown will be enhanced -- lifted or relaxed in the next few weeks.

So that's it. Thank you very much.

Manuel V. Pangilinan -- President and Chief Executive Officer

I think I am the last speaker here. So good afternoon to all of you and thank you for joining us in this briefing. I only have three points to make in terms of conclusion. First is on the full-year prospects. We think it is a little early for us to give you a clear view on how the full-year core income would pan out. We have indeed ran several scenarios internally, but we're finding out there are many variables to deal with in this context environment. Some of which are unknown at this point, such as, for example, the quarantine period will be extended and to what extent, if it's going to get lifted, the government stimulus package, credit availability from financial institutions and overall economic conditions. I believe the government has reported out that the first quarter economy has -- GDP has contracted by 0.2%. [Indecipherable]

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

No [Indecipherable].

Manuel V. Pangilinan -- President and Chief Executive Officer

So that's where we are in terms of the guidance on our telco core. But the second point relates to the revenues. The momentum that we saw in 2019 continues to be carried forward in 2020. First quarter revenues, the aggregate of Home, Wireless and Enterprise grew by 11%; 9% if you include the international business. The second quarter outlook on revenue, we expect the growth rate to soften by low-to-single digit growth, principally because of the ECQ impact but higher compared to last year. So if you combine the 1Q growth and the 2Q revenue projections, the first half revenues will be ahead of last year.

The capex, we are expecting the capex spend to be down by 20% to 25%, up to PHP83 billion we disclosed late last year or early this year, so it will be down to about PHP60-plus billion range. That is not a matter of choice for us. It just reflects the current conditions, where there are supply chain difficulties from abroad in terms of the shipment of the relevant equipment that we are importing and supply chain conditions or difficulties locally as well, and of course the ability of our -- of the labor force -- of our labor force to install and repair in the relevant barangays.

On dividend payout, we are maintaining our policy of 60% of telco core. That's of course subject to no significant changes -- adverse changes in the economy or in the financial position of the company moving forward, which we don't see actually. So it's just about it. Man.

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Okay.

Questions and Answers:

Operator

We are now ready to take your questions. [Operator Instructions] So the first question, would like to clarify how much is the decrease from the planned PHP83 billion capex in 2020 and which business segment is affected by the decrease in capex and why?

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Yes. Okay. So good afternoon. As MVP said, capex decline is about 20% and that is mainly driven by our inability to spend. It's not the choice. The normal business we'd like roll out -- connecting our customers will not be as much impacted by the capex spend as much as it is impacted currently by the inability to access certain locations, which are restricted at the moment because of ECQ and generally quarantine. So the delay will not be felt too much this year as it probably will be felt next year, but it gives us also substantial time to catch up in the second half of this year. So it will be -- it is too early to say what -- exactly which business will be impacted. From a current perspective, I personally believe that the business as usual will be able to continue with only slight impact, maybe some of the new projects, 5G, for example, will see few months of delay because of the delay of being able to spend.

Operator

The second question is, can we get some insights on current subscriber behavior? What kind of plans are consumers subscribing?

Alfredo S. Panlilio -- Chief Revenue Officer

View on subscriber base.

Manuel V. Pangilinan -- President and Chief Executive Officer

What kind of plans are subscribers picking up?

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Okay. Well --

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

And insights on behavior.

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Yes. For mobile, it's real GIGA offers that are picking up. And I think 50% to 55% of our top-ups are now coming from the GIGA packages. Jane is also in the line. So she can also add. For Home, it's fiber and fixed wireless that are growing. Both are growing, and office connectivity at home, which is here also.

Unidentified Speaker

Yes. If I can share for Home, the biggest product that exploded post lockdown was really fixed wireless and it was good that we were able to start launching our fixed wireless product toward the end of the year. So we were able to somehow capitalize on that demand and that explosion. On the fiber, definitely our programs and our plans at the 1299, 1500 level is also gaining a lot of traction. But what we are foreseeing is that in post COVID, now that we have been able to do a speed boost, where our subscribers at 1299 are able to feel the impact of a 25 Mbps minimum speed. We feel that with the new normal, they are going to require this kind of speed as well and not be content with the original speed of about 10 Mbps. So for Home, these are the plans and products that are actually gaining a lot of traction. We hope to launch postpaid fixed wireless very soon. So we feel that will be another product that is going to hit the market and have strong demand.

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

So if I may for Individual, we actually did experience some initial challenges in terms of usage during the early parts of the ECQ, right, given the mobility issues and maybe cash liquidity issues, but we've actually managed to address some of those challenges and therefore from lower top-up -- our top-up for the month of April actually went down 7% [Phonetic], but this May, we're actually seeing [Technical Issues] levels that we had observed in the first quarter of 2020. In fact, the top-up performance most likely will be higher than a year ago. So this is really driven by customers using more data products and our data products are actually priced higher than our legacy products and there is -- we've observed that they're actually buying higher denominations of 200 and above. So these are higher denominations with longer validity. So the focus [Technical Issues] that we create more data products that address the needs of customers. So, even if we had observed lower activity because some customers had no access to load, on an average basis for those [Technical Issues] buying more.

Unidentified Speaker

But if I may just add to that, on Wireless, especially on top-ups, I think we had a very strong first quarter in top-ups. And as we went into the second half of March, that's slowed down significantly obviously because of what Jane is saying, and -- but post Easter, so Easter Monday up to this day, the volume has picked up again and it's the level at the level of the first two and a half months of this year. So...

Unidentified Speaker

Pre-COVID.

Unidentified Speaker

Pre-COVID. So it's been good take-up again lately and I think there are more retailers now that have zero balances and are able to sell. It's really more of a supply issue rather than demand. The demand is there.

Operator

Okay. The next question, do you have any idea how much PLDT spent on the virus, the nation, supports for the community, and how much was expensed in the first quarter and how much more do you expect in the second quarter?

Manuel V. Pangilinan -- President and Chief Executive Officer

Well, we do have -- if I could speak to that. We do have an idea of how much PLDT has so far spent, and not only of course PLDT but the other group companies, Meralco, the Tollways, Maynilad and so forth, but we don't -- as a matter of policy, we don't publicize that. We're just there. I think if there is one particular governor call and say, we're really in need of food. Can you supply us rice, etc., etc.? I said, yes, of course. We'll do that. So it's across the board. Our hospitals, we are participating actively, for example, in testing because the government wants to ramp up to up to 30,000 tests a day. Our hospitals and the groups are participating in acquiring test kits and in upgrading the laboratories. Our hospitals located in the hotspots, and we intend to mobilize mobile laboratories in order to supplement the capacities of our laboratories for testing. So I don't know what does we -- in quarantine facilities, we'll equip them with water, power, telcos and whatever else...

Unidentified Speaker

It was used to be government following different [Speech Overlap]

Manuel V. Pangilinan -- President and Chief Executive Officer

Again -- yes. Access because of the Tollways. I'd rather not give you a number. We're there. I think we -- in every tragedy that has struck this country, I think we are proud to say that we're there. You will see the Meralco linemen repair people and trucks and equipment. These tend to areas -- typhoon areas for example, typhoon affected areas, even if they're outside our franchise, like the -- nobody saw...

Unidentified Participant

[Indecipherable]

Manuel V. Pangilinan -- President and Chief Executive Officer

[Indecipherable]. So we just -- we don't -- we have an idea of the costs, but I think it's -- I think it's sufficient to say that was there, you know?

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Yes.

Operator

Okay. Here's the next question. With regards to fixed installations, how much of the installation team is out versus people with levels?

Juan Victor I. Hernandez -- Senior Vice President

Yes, I can take that. So we are probably at 60% to 70% on a daily basis and that's because of the COVID rules we have implemented to protect our customers and also our teams down. But what we did was we moved to a seven-days shift. So we have every day people going out for five days a week and then the teams change. So we have one-third typically doing back-office work and two-thirds are out. Together with our suppliers, which help us on ground in serving our customers, we're also at the moment at about 60% to 70% of the capacity before ECQ and it's going up every week. We are almost back in terms of total installed capacity to where we have been before ECQ. The main constraint we have today is that there are pretty high number of locations who do not allow us access despite of the IATF IDs we have and special letters from the ICT, who want to encourage the borrowing guys who give us access, but we cannot go everywhere. So we are not able to repair everywhere and to serve every customer need.

Otherwise, I think our capacity is coming back. And I think by end of this month, we will be back to normal roll-out capacity.

Operator

The next question. Can we get clarification on the guidance of low-mid single-digit quarter-on-quarter contraction. How is this split between fixed and mobile and what assumptions are being brought in? I'm wondering what's driving the material difference in guidance between yourself and your compare?

Manuel V. Pangilinan -- President and Chief Executive Officer

Also I think a difficult question.

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Well, I think, all three segments as MVP mentioned will show growth vis-a-vis 2019. And I think it's been really a collaborative effort across the company to make that happen in terms of even during the lockdown. I mean it wasn't only the CRO team. Network was there. The legal [Phonetic] was there to get our IoT efforts. We are able to get out there as soon as possible with finance to help out legal inventory. I mean everybody just chipped in and really the focus for us is really just to serve the customer, really just focus on what we can do and best we can, and thus serving our customer. So hopefully, with that, and the past decisions on a very good network, investment that has been made past two years is benefiting us today even though there is a surge of about 20%, 25% in traffic across the board in both Home and obviously Wireless. Our customer experience remains to be very good. And we just have to continue that and continue to serve our customers. Enterprise for sure, our customers are challenged, and we will continue to hold the hands with them and help them pick up where they left off, and we will just continue to serve whatever solutions, connectivity, out-of-family [Phonetic], for example BPO, during the start of the lockdown, they were forced to work from home and there were massive requirements on work-from-home devices and that's why about 40,000 to 50,000 of the fixed wireless solutions from home have to be transferred to the requirements of Enterprise because there was a demand. So again, there is a major portion of fiber. We still have a lot of course we can sell. That is still our competitive advantage. Right now, fiber, I think is still a more solid service, dedicated service for you and in guaranteed speeds that we can offer you vis-a-vis fixed wireless. But we are offering both and a third offering we have is the pocket WiFi. So it's just really focusing on what we can do best for our customers, and that's -- just our main objective is to serve our customers.

Manuel V. Pangilinan -- President and Chief Executive Officer

Yes. Maybe just a comment on competition. So -- of course, we do compare our performance with their performance on a periodic basis because that's a reference point and while it is an important consideration for us, I reminded our management team that the standards we should set for ourselves are related to the potential of our business. Right? So if we have a superior network now and we think there is latent demand still for the Wireless side, the Home side and the Enterprise side, we should push the business to the standards we are setting for ourselves. So that for me is the main criterion, by which we should plan, especially at this inflection point, where whether by choice or not, behavior and practices are pivoting toward the digital kind of -- or things. So -- and that should give us opportunities. Opportunities have emerged for the Group to really take advantage of the potential that lies ahead for us.

Operator

There is a similar question here. It seems like more resilient with regard to the ECQ than a competitor, especially on the mobile side. In fact, there were higher mobile data subscribers quarter-on-quarter and good growth in overall data traffic. Some loss in ARPU but not significant. Do you think there is some element of market share gains in the second quarter numbers? Other factors behind the instability in mobile spend in particular?

Manuel V. Pangilinan -- President and Chief Executive Officer

Jane, you want to pick that up?

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

Yes. We've actually seen significant growth in our data users. On a year-on-year basis, we gained around close to 5 million fresh data users and there's a lot more in our base that are still on legacy or basic call index. So we're actually quite confident that our usage for data and therefore our revenues could be -- they will grow in the coming months. And certainly, we've gained some shares on revenues from competition. I think for the period, the growth in the industry for mobile, in particular, was slightly due to our performance in Smart.

Operator

The next question is, for our outlook for Enterprise, are we seeing customers scaling down operations?

Manuel V. Pangilinan -- President and Chief Executive Officer

Is that a question?

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Yes. It's a message.

Manuel V. Pangilinan -- President and Chief Executive Officer

A message. They're not online?

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

No, they -- there is a chat. There's a chat and...

Unidentified Speaker

I feel this [Indecipherable].

Manuel V. Pangilinan -- President and Chief Executive Officer

Anyway, so to the question.

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Sorry. Can you say it again please?

Manuel V. Pangilinan -- President and Chief Executive Officer

That's a question, OK? We're slightly distracted.

Operator

What's the outlook on Enterprise? Are you seeing customers scaling down operations?

Manuel V. Pangilinan -- President and Chief Executive Officer

Yes, I will ask Jovy also to chime in. But just to answer that quickly, I think of course there are customers that are impacted by it and we're thinking also how they progressed post lockdown, but there are also opportunities, as I said, for example, BPOs, opportunities where work-from-home solutions are provided for. And there's a major requirement. And this becomes really part of the new way of working. It's not anymore just a BCP, a business continuity program, but it really becomes a way of working moving forward, a combination of office environment with work-from-home. So there are opportunities in that space, but we're here to obviously help out our challenged customers, the Enterprise customers, where they've been impacted by this pandemic.

Alfredo S. Panlilio -- Chief Revenue Officer

Jovy, you might want to add a little bit more.

Unidentified Speaker

Yes, thank you Al. So yes, the complexion of the Enterprise segment today is kind of mixed. So, there are lot of especially the small and medium enterprises who have really been impacted and predominantly businesses have just shut down. Now that being said, we are seeing pockets of excellence in some industries. I mean like BPO as Al alluded to, in the first two weeks of the lockdown were all scrambling but we have seen a resurgence, in fact, the latent demand that we have on connectivity is quite high. And a lot of discussions are now happening on a per industry basis for us to be able to prepare for a post-COVID scenario. So rather than taking a look at this situation from a pessimistic angle, the Enterprise group of PLDT remains positive and we're very focused now in terms of how we can help, particularly industries, on how they are going to do business moving forward.

Now, the capabilities of the group spans across not only connectivity but also now on the ePLDT side when you take a look at IT systems that are very important in a post-COVID scenario. I think businesses were just not that prepared for a pandemic.

Now, a lot of the companies now are preparing for post-COVID scenarios, wherein they will be more prepared. So we're looking at a surge in our data center revenue. Cybersecurity is a hot topic now. Even our hospitals now are being attacked by hackers even in this time of pandemic. So there's a lot of activities that are ongoing and we think that there's going to be different kind of virus. Yes. So if we have front-liners, the doctors and the hospitals out there, in our data centers, we also have our own front-liners, but they're inside the data center, making sure that all of the systems are up and running 24/7.

So, again to recap, a lot of people can take a pessimistic view of the Enterprise side, but we feel that with all of the activities and all of the discussions we're having with industries, we look very positive in terms of the outlook for the second quarter and also for the second half of the year.

Operator

The next question is on refarming. Just curious which bands are currently being refarmed and which bands right now are actually being used for [Technical Issues] digital capacity in percentage can that provide assuming refarming targets are [Technical Issues]?

Manuel V. Pangilinan -- President and Chief Executive Officer

Juan?

Juan Victor I. Hernandez -- Senior Vice President

Yes. I'm here. Okay. So what we have been doing, this is already completed two weeks ago. We have been taking 5 megahertz of 1,800-megahertz spectrum. We are currently using both for 2G and 4G. We are taking 5 megahertz from 2G and moved it to 4G. That we did on almost 4,000 sites in the Philippines. And depending on how much spectrum was being used before by LTE on those sites, the capacity increase can be between 5% and 15%, 20%. Currently, we are using 700 megahertz, 850, 1,800, 2,100, 2,300 and 2,600 for LTE. So there is a broad variety. The whole process took only 10 days. It could be done completely remotely because of the modern base stations, everything was software defined and people could do it remotely, even the optimization afterwards. No quality impact for GSM. So our GSM customers have the same level of service as before and what we did in digital was also to -- on some 100 sites, like 150 sites, 180 sites, we used actually spectrum dedicated for 5G, that's 2,600 and moved it to LTE. There, the capacity increase is massive because this is massive MIMO technology and we could get into 50% on those sites and we have done this in particular on those sites, which had experienced a lot of traffic. I think that answers the question.

Operator

Okay. The next question is about zero-balance retailers. How prohibitive are the logistical constraints to address the supply side bottlenecks? Is there a way of digitizing the process of replenishing credits of these?

Manuel V. Pangilinan -- President and Chief Executive Officer

Yes, I guess Alex might be on the line also. He can -- I mean if you talk about front-liners being doctors and also the installers and network guys of PLDT Smart, the sales guys also are front-liners. They've had to really put their lives at risk also just to reach out to our retailers. As you know, there are about 1.2 million of them. And at some point, there were a lot of zero-balance retailers. That was the initial -- the lap [Phonetic] was very difficult for us to move around. But -- yet, in times like these, there are also opportunities. In this case, really online has come into play and we're really looking at that. I mean Alex can expand a bit more, but we are also helping our RDs [Phonetic] come up with their online platforms and I think our online websites have been very active. The volume has started to pick up, both from Wireless and Home. So definitely technology will only improve moving forward and from an analog point of view, we are working to more digital.

Operator

Here is the next question. Can you resume your net roll-out during ECQ?

Juan Victor I. Hernandez -- Senior Vice President

So -- yes, we are -- actually, we never really stopped. There was just the first week where it almost came to a still stand, mainly because of lack of protective equipment for our people, but since that supply is guaranteed, we had -- in March, the roll-out went down by 65%. So we had only a third of the original capacity. In April, we were back at about 60%, and I think it will continue to improve in May, so that our roll-out -- this is mainly related to mobile network, will be back on track probably in one or two months from now completely, but we are still able to expand substantial amount of sites. Those who are most challenged with -- if you can access them, we do expand. And on fixed, I mentioned that before, we are almost back on track in terms of roll-out of fiber-to-the-home. So -- and so far, the answer is clearly yes, we can as far as we get the permission to install, and that's the major constraint now going forward.

Operator

The next question is on Voyager. Can you share guidance and how big the profits and losses -- profits or losses we can expect from Voyager?

Manuel V. Pangilinan -- President and Chief Executive Officer

Is Jovy on the line?

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

Yes both [Indecipherable] on the line.

Alfredo S. Panlilio -- Chief Revenue Officer

Yes.

Manuel V. Pangilinan -- President and Chief Executive Officer

Okay.

Unidentified Speaker

Hi, this is SB. So for us in Voyager, when we look at the three lines of business, the wallet, the merchant enterprise and the remittance network, the Smart Padala, all three businesses are showing strong growth even in the current COVID period. We are seeing pockets of some stress, especially with our travel merchants, but across the wallet, we are seeing more than doubling versus last year. Across merchant acceptance, we are seeing strong growth, even in e-commerce and of course in areas like pharmacies and supermarket. And then on the Smart Padala network, the domestic remittance has been very strong because that's been the lifeline for a lot of people to send money and receive money from cities to provinces and the likes of that.

So we have an investment plan to grow aggressively in 2020. But we are realizing efficiencies on our growth side. So at this stage, our plan is to hold our losses to the same level as 2019, while delivering significant growth and realizing efficiencies from the growth at this stage across all the businesses.

Operator

The next question is on bad debt provision levels trending into the second quarter. Given PLDT's larger exposure to contract revenues, given the sizable fixed line component, do you see material rise in defaults. In some other markets, we've seen it ballooned to up to 2 times, even before the impact of quarantine [Phonetic].

Unidentified Speaker

Anabelle.

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

Yes. Let me answer that. During this period, of course, we have suspended what we call treatments and disconnections at this point in time and we have given payment relief and extended payment terms effectively for customers. So as Al mentioned earlier, what we have decided to do as a pragmatic matter is to allow the unpaid balances to be amortized over a six-month period. So clearly, the assessment will be done in terms of the appropriate levels of provisioning depending on what we see in terms of collection rates in the next few months. It will hinge largely on how I guess the economic performance will be, how people are able to come back and pay. So that's something that we will have to assess in the second quarter and in the third quarter going forward depending on our experience when things come back.

Operator

There is a question on, did ECQ affect the daily operating expenses? And if yes, how much has daily expense burn increased?

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

I think there are pluses and minuses. So for example, as mentioned earlier, we have had to put certain facilities in what we call a lockdown mode. So we have asked people to stay in. We have provided for food and other provisions for those who are in lockdown facilities. So in that sense, there is extra spend for those, but there are other areas where we are able to see reduced, let's say, overtime, reduced utilities used in some of our offices, reduced on-ground selling activities. So all told, I guess, there are things that are up are down. So, I think part of the internal [Technical Issues] really to really keep a tight watch on our opex during this period. I think one of the things just to highlight in the first quarter on numbers, we did advance the 13th month pay for our people. So typically, that 13th month is paid in the last quarter of the year. So you typically would accrue the expenses over the year. But because of the advancing of that 13th month pay, then from a timing standpoint that all got booked in the first quarter.

Operator

The next question. I will read two questions together. One is asking about color on how the consumer behavior and competition was during the ECQ, any meaningful change in consumer behavior. And then is there any shift in behavior on the mobile side and the outlook on how consumers will adjust going into the second and third quarters of the year?

Manuel V. Pangilinan -- President and Chief Executive Officer

Jane you might answer the mobile. Yes. I will. So as I actually said earlier, we are seeing higher top-up basket sizes among our consumers. They are essentially buying higher denomination data packages. Our basket size has actually increased on a Q-on-Q basis, at least April comparing it to the first quarter 2020 by around 10%, right? So people are buying higher top-ups, people are buying longer validity loads and the decrease actually was observed among those from the low-value segments, and I think this is really largely because of cash issues on top of the retailers' even-load challenges that we had experienced in the early parts of the ECQ. Once the ECQ is left, because now they are more exposed to the more sophisticated data packages that we have, we do expect that that behavior will continue and we will be using more of our GIGA packages, GIGA Videos, GIGA Stories, GIGA Games, and we just recently introduced GIGA Work actually. So those are higher priced versus our legacy call and text offers.

Operator

[Technical Issues] question, with respect to the current dividend policy, I think this was mentioned by MVP earlier. Will the 60% payout sustain?

Manuel V. Pangilinan -- President and Chief Executive Officer

What's the question Melisa? Where that's...

Operator

Will our dividend policy be sustained?

Manuel V. Pangilinan -- President and Chief Executive Officer

Well, the policy is placed. We are sustaining that policy as we speak. There has been no thinking about changing it. Now, of course, I don't know where the things will get -- could get toward in the course of this thing, this pandemic. But so far, the company is doing well. So I don't see a basis for changing that policy.

Operator

Yes. There are no more questions in the queue. So if there are no further questions, we just want to inform everyone that the podcast of this briefing will be available on our website after the call. We turn the floor back to Mr. Pangilinan for his closing comments.

Manuel V. Pangilinan -- President and Chief Executive Officer

Well, thank you to everybody for joining us in this briefing. I think the next public event of PLDT is the Annual Shareholders Meeting on June 9. And -- but I can hope we could. Right now, we've gotten Board approval to do it online. I hope we could do it not online. So -- anyway, so we hope to see you on the 9th of June, and in the meantime, stay safe, stay healthy. Thank you. Thank you to everybody.

Operator

[Operator Closing Remarks]

Duration: 60 minutes

Call participants:

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

Alfredo S. Panlilio -- Chief Revenue Officer

Manuel V. Pangilinan -- President and Chief Executive Officer

Ray C. Espinosa -- Special Assistant to Chief Executive Officer

Unidentified Speaker

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

Juan Victor I. Hernandez -- Senior Vice President

Unidentified Participant

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