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Issuer Credit Research

Issuer Flash: PLDT Inc.

Issuer: Pldt | Document: Issuer Flash | Date: 2026-09-03 | Event: H1 2026 Results

Report date: 2026-09-03 Event date: 2026-08-13 Event title: 1H 2026 Results

Flash Conclusion

PLDT's 1H 2026 results preserve the investment-grade credit view from the May 2026 issuer summary and Q1 flash. The group retained a 52% EBITDA margin as data and broadband remained the dominant revenue base, while lower capex supported company-reported positive free cash flow. These outcomes show that the reported investment burden moderated in the period, but they do not establish a durable reduction in future network investment or a debt-reduction trend: company-reported net debt/EBITDA was 2.6x at end-June versus 2.56x at end-2025, and debt maturing within one year increased.

For bondholders, cash generation, data mix and lower capex remain credit supports, offset by debt, modest cash, refinancing dependence, dividends and the need to invest in network quality. The release does not change the view on bond protections, committed facilities, rating triggers or regulation.

Operating Performance and Cash-Flow Progress

In the six months ended 30 June 2026, gross service revenues increased 2% year on year to PHP108.7bn and net service revenues, after interconnection costs, increased 1% to PHP97.8bn. Data and broadband revenues totalled PHP84.0bn, or 86% of net service revenues, compared with 85% a year earlier. This mix is important because it shows that PLDT's operating buffer still rests on recurring data, fibre and enterprise connectivity rather than legacy voice and SMS revenues.

Consolidated EBITDA increased 1% to PHP56.1bn and the EBITDA margin was unchanged at 52%. Core Income was stable at PHP17.3bn; the company reported Telco Core Income of PHP16.6bn and reported net income of PHP16.4bn. This is not a high-growth outcome, but it is consistent with operating resilience in a mature, competitive telecom market. The maintained margin supports debt service capacity, while the limited growth means that credit improvement still depends more on capex and capital-allocation discipline than on rapid revenue expansion.

Wireless Consumer revenue was PHP42.1bn, broadly stable year on year, while data revenue increased 2% to PHP38.7bn and fixed wireless access grew 21%. Home revenue was PHP30.0bn and fibre revenue PHP29.4bn; Enterprise revenue grew 5% to PHP24.8bn, supported by corporate data and ICT revenue of PHP18.4bn. These trends support PLDT's dual wireless/fixed franchise, but stable consumer revenue underlines the need to retain pricing, network quality and customer experience rather than assume volume growth will translate into stronger cash generation.

Capex was a clearer positive. Company-reported capex fell to PHP20.7bn in 1H 2026 from PHP27.4bn in 1H 2025. The Form 17-Q reports payments for property and equipment, including capitalised interest, of PHP23.7bn, down from PHP34.1bn, while operating cash flow was PHP45.8bn. PLDT stated that positive free cash flow was sustained. The distinction between the company capex measure and the cash-flow-statement measure should be retained, but both show substantially lower cash investment than a year earlier. The credit benefit is real only if this discipline can coexist with sufficient spending on mobile capacity, fibre, resiliency, cybersecurity and customer experience.

Metric 1H 2026 Year-on-year / comparison Credit read
Gross service revenues PHP108.7bn +2% Recurring revenue remained resilient but growth was modest.
Net service revenues PHP97.8bn +1% Data and broadband offset legacy-service pressure.
Data and broadband revenue PHP84.0bn 86% of net service revenue Supports revenue quality, while raising the importance of monetisation and network investment.
Consolidated EBITDA PHP56.1bn +1%; 52% margin Core operating credit buffer was maintained.
Core Income / Telco Core Income PHP17.3bn / PHP16.6bn Core Income stable Core telecom earnings were broadly stable rather than accelerating.
Company-reported capex PHP20.7bn PHP27.4bn in 1H 2025 Supports cash generation, subject to network-quality execution.
Operating cash flow PHP45.8bn PHP46.7bn in 1H 2025 Remained high despite softer earnings growth.
Cash-flow-statement property-and-equipment payments PHP23.7bn PHP34.1bn in 1H 2025 Confirms lower cash investment under a different accounting measure.

Sources: PLDT 1H 2026 results release and Form 17-Q, both dated 13 August 2026. Amounts are company-reported and in Philippine pesos.

Leverage, Liquidity and Shareholder Distributions

Company-reported consolidated net debt was PHP287.3bn at end-June 2026 and net debt/EBITDA was 2.6x. The Form 17-Q reported a net debt to adjusted EBITDA ratio of 2.57x, compared with 2.56x at end-2025. This broadly flat leverage outcome is consistent with the report's credit conclusion: lower capex has improved the capacity to generate cash, but the release does not demonstrate material balance-sheet deleveraging.

The absolute funding burden remains substantial. The results release reported gross debt of PHP299.7bn, with maturities described as well spread out. The financial statements reported total interest-bearing financial liabilities of PHP297.9bn, including PHP30.9bn due within one year, compared with PHP16.2bn at 31 December 2025. Cash and cash equivalents were PHP11.9bn and short-term investments PHP10m. The difference between the gross-debt figure in the release and the financial-statement liability measure reflects presentation and measurement definitions; this Flash does not reconcile it beyond the respective company disclosures. What matters for credit analysis is that PLDT depends on operating cash flow and continued bank and capital-market access rather than on a large cash reserve.

The group drew PHP8.2bn of long-term debt, repaid PHP7.1bn of principal and paid PHP6.4bn of interest. USD debt represented 14% of gross debt and unhedged debt 5% of total debt; PLDT also said it negotiated bank spreads and tenors to keep net financing costs steady quarter on quarter. The release does not provide the full maturity ladder, committed facilities, average debt cost or bond-specific terms needed for a granular liquidity or security-ranking assessment.

The Board declared a regular cash dividend of PHP46 per common share, characterised by the company as a 60% payout of Telco Core Income. The distribution is consistent with PLDT's established capital-allocation approach and was declared from unaudited unrestricted retained earnings. For creditors, however, sustained free cash flow should be assessed together with dividends, debt maturities and future capex. Lower capex is credit supportive, but it does not automatically translate into retained cash or deleveraging when shareholder distributions and refinancing needs continue.

Credit Read-Through and What To Watch Next

The 1H result supports PLDT's existing profile as a stable, privately financed Philippine telecommunications issuer with high operating profitability and limited financial headroom. It should not be read as a quasi-sovereign credit or as evidence of an explicit government guarantee. The stable EBITDA margin, data/broadband mix and lower capex are the principal supports. The principal constraints remain leverage, limited cash liquidity relative to debt, material current maturities, interest-rate and foreign-exchange exposure, capital-allocation choices, competition and regulatory change.

The PLDT/Smart and DITO resource-sharing MOU could improve asset utilisation and coverage, but its commercial terms, incremental capex, wholesale economics and competitive outcomes remain unconfirmed. The same caution applies to the Konektadong Pinoy Act and any Data Rollover Bill effects. Neither regulation nor telecommunications' public-service role is automatic support for debt repayment.

At the next results update, the key tests are whether EBITDA margin remains near the low-50% range, whether lower capex remains compatible with network quality, whether leverage begins to decline after dividends, and whether the current-debt increase is refinanced without weaker liquidity or funding terms. Bond investors should separately confirm the issuing entity, guarantees, ranking, negative pledge, change-of-control, cross-default, restricted-payments and tax provisions for each security before making security-level conclusions.

Unverified / Pending

Sources