PLDT Inc. (Company s Full Name) Ramon Cojuangco Building Makati Avenue, Makati City. (Company s Address) (632) (Telephone Number)

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4 SEC Number File Number PW-55 PLDT Inc. (Company s Full Name) Ramon Cojuangco Building Makati Avenue, Makati City (Company s Address) (632) (Telephone Number) December 31 st (Fiscal Year Ending) (month & day) SEC Form 17-C (Amended) Form Type Not Applicable Amendment Designation (if applicable) December 31, 2017 Period Ended Date Not Applicable (Secondary License Type and File Number)

5 SECURITIES AND EXCHANGE COMMISSION SECURITIES AND EXCHANGE COMMISSION CURRENT REPORT UNDER SECTION 17 OF THE SECURITIES REGULATION CODE AND SRC RULE March 12, 2018 Date of Report (Date of earliest event reported) 2. SEC Identification Number PW BIR Tax Identification No PLDT INC. Exact name of issuer as specified in its charter 5. PHILIPPINES 6. (SEC Use Only) Province, country or other jurisdiction Industry Classification Code of Incorporation 7. Ramon Cojuangco Building, Makati Avenue, Makati City 1200 Address of principal office Postal Code 8. (632) Issuer's telephone number, including area code 9. Not Applicable Former name or former address, if changed since last report 10. Securities registered pursuant to Sections 8 and 12 of the Securities Regulation Code and Sections 4 and 8 of the Revised Securities Act Title of Each Class Number of Shares of Common Stock Outstanding Common Stock 216,055,775 (1) Amount of Debt Outstanding Php172,611 million as at December 31, 2017 (1) Represents the total outstanding common shares (net of 2,724,111 Treasury shares).

6 TABLE OF CONTENTS PART I FINANCIAL INFORMATION... 1 Item 1. Consolidated Financial Statements... 1 Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations... 1 Financial Highlights and Key Performance Indicators... 2 Performance Indicators... 3 Overview... 4 Management s Financial Review... 5 Results of Operations... 6 Wireless... 9 Revenues... 9 Expenses Other Income (Expenses) Benefit from Income Tax Net Income EBITDA Core Income Fixed Line Revenues Expenses Other Income (Expenses) Provision for Income Tax Net Income EBITDA Core Income Others Revenues Expenses Other Income (Expenses) Net Income Core Income Liquidity and Capital Resources Operating Activities Investing Activities Financing Activities Changes in Financial Conditions Off-Balance Sheet Arrangements Equity Financing Contractual Obligations and Commercial Commitments Quantitative and Qualitative Disclosures about Market Risks Impact of Inflation and Changing Prices PART II OTHER INFORMATION Related Party Transactions ANNEX Aging of Accounts Receivable... A-1 Financial Soundness Indicators... A-2 SIGNATURES... S-1

7 Item 1. Consolidated Financial Statements PART I FINANCIAL INFORMATION Our consolidated financial statements as at and for the years ended December 31, 2017 and 2016 and related notes (pages F-1 to F-156) are filed as part of this report on Form 17-C. Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations In the following discussion and analysis of our financial condition and results of operations, unless the context indicates or otherwise requires, references to we, us, our or PLDT Group mean PLDT Inc. and its consolidated subsidiaries, and references to PLDT mean PLDT Inc., not including its consolidated subsidiaries (please see Note 2 Summary of Significant Accounting Policies to the accompanying unaudited consolidated financial statements for the list of these subsidiaries, including a description of their respective principal business activities and PLDT s direct and/or indirect equity interest). The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and the related notes. Our unaudited consolidated financial statements, and the financial information discussed below, have been prepared in accordance with Philippine Financial Reporting Standards, or PFRS, which is virtually converged with International Financial Reporting Standards as issued by the International Accounting Standards Board. PFRS differs in certain significant respects from generally accepted accounting principles, or GAAP, in the U.S. The financial information appearing in this report and in the accompanying unaudited consolidated financial statements is stated in Philippine pesos. Unless otherwise indicated, translations of Philippine peso amounts into U.S. dollars in this report and in the accompanying unaudited consolidated financial statements were made based on the exchange rate of Php49.96 to US$1.00, the exchange rate as at December 31, 2017 quoted through the Philippine Dealing System. Some information in this report may contain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current beliefs, expectations and intentions as to facts, actions and events that will or may occur in the future. Such statements generally are identified by forward-looking words such as believe, plan, anticipate, continue, estimate, expect, may, will or other similar words. A forward-looking statement may include a statement of the assumptions or bases underlying the forwardlooking statement. We have chosen these assumptions or bases in good faith. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results may differ materially from information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors. When considering forward-looking statements, you should keep in mind the description of risks and other cautionary statements in this report. You should also keep in mind that any forward-looking statement made by us in this report or elsewhere speaks only as at the date on which we made it. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, update or revise the statements in this report after the date hereof. In light of these risks and uncertainties, you should keep in mind that actual results may differ materially from any forward-looking statement made in this report or elsewhere. 4Q 2017 Form 17-C Page 1 of 27

8 Financial Highlights and Key Performance Indicators Years ended December 31, Increase (Decrease) Amount % (in millions, except for EBITDA margin, earnings per common share, net debt to equity ratio and operational data) (Unaudited) (Audited) Consolidated Income Statement Revenues Php159,926 Php165,262 (Php5,336) (3) Expenses 150, ,559 9,856 7 Other income (expenses) 5,058 (2,632) 7, Income before income tax 14,569 22,071 (7,502) (34) Net income 13,466 20,162 (6,696) (33) Core income 27,668 27,857 (189) (1) EBITDA 66,174 61,161 5,013 8 EBITDA margin (1) 44% 39% Reported earnings per common share: Basic (30.72) (33) Diluted (30.72) (33) Core earnings per common share (2) : Basic (0.87) (1) Diluted (0.87) (1) December 31, Increase (Decrease) Amount % (Unaudited) (Audited) Consolidated Statements of Financial Position Total assets Php459,262 Php475,119 (Php15,857) (3) Property and equipment 186, ,188 (16,281) (8) Cash and cash equivalents and short-term investments 33,979 41,460 (7,481) (18) Total equity attributable to equity holders of PLDT 110, ,175 2,650 2 Long-term debt, including current portion 172, ,032 (12,421) (7) Net debt (3) to equity ratio 1.25x 1.33x Years ended December 31, Increase (Decrease) Amount % (Unaudited) (Audited) Consolidated Statements of Cash Flows Net cash provided by operating activities Php58,637 Php48,976 Php9, Net cash used in investing activities (23,583) (41,982) 18, Capital expenditures 39,950 42,825 (2,875) (7) Net cash used in financing activities (40,319) (15,341) (24,978) (163) Operational Data Number of mobile subscribers 58,293,908 62,763,209 (4,469,301) (7) Prepaid (4) 55,776,646 59,952,941 (4,176,295) (7) Postpaid 2,517,262 2,810,268 (293,006) (10) Number of broadband subscribers 1,950,881 1,720, , Fixed Line broadband 1,713,527 1,450, , Wireless home broadband 237, ,203 (32,849) (12) Number of fixed line subscribers 2,663,210 2,438, ,737 9 Number of employees: 17,779 18,038 (259) (1) Fixed Line 10,737 10, LEC 6,832 7,205 (373) (5) Others 3,905 3, Wireless 7,042 7,343 (301) (4) (1) EBITDA margin for the period is measured as EBITDA divided by service revenues. (2) Core earnings per common share, or EPS, for the period is measured as core income divided by the weighted average number of outstanding common shares for the period. (3) Net debt is derived by deducting cash and cash equivalents and short-term investments from total debt (long-term debt, including current portion). (4) Beginning 2Q2017, the prepaid subscriber base excludes subscribers who did not reload within 90 days vis-à-vis 120 days previous cut-off. Exchange Rates per US$ Month end rates Weighted average rates during the year December 31, 2017 Php49.96 Php50.41 December 31, December 31, Q 2017 Form 17-C Page 2 of 27

9 Performance Indicators We use a number of non-gaap performance indicators to monitor financial performance. These are summarized below and discussed later in this report. EBITDA EBITDA for the period is measured as net income excluding depreciation and amortization, amortization of intangible assets, asset impairment on noncurrent assets, financing costs, interest income, equity share in net earnings (losses) of associates and joint ventures, foreign exchange gains (losses) net, gains (losses) on derivative financial instruments net, provision for (benefit from) income tax and other income net. EBITDA is monitored by management for each business unit separately for purposes of making decisions about resource allocation and performance assessment. EBITDA is presented also as a supplemental disclosure because our management believes that it is widely used by investors in their analysis of the performance of PLDT and to assist them in their comparison of PLDT s performance with that of other companies in the technology, media and telecommunications sector. We also present EBITDA because it is used by some investors as a way to measure a company s ability to incur and service debt, make capital expenditures and meet working capital requirements. Companies in the technology, media and telecommunications sector have historically reported EBITDA as a supplement to financial measures in accordance with PFRS. EBITDA should not be considered as an alternative to net income as an indicator of our performance, as an alternative to cash flows from operating activities, as a measure of liquidity or as an alternative to any other measure determined in accordance with PFRS. Unlike net income, EBITDA does not include depreciation and amortization, and financing costs and, therefore, does not reflect current or future capital expenditures or the cost of capital. We compensate for these limitations by using EBITDA as only one of several comparative tools, together with PFRS-based measurements, to assist in the evaluation of operating performance. Such PFRS-based measurements include income before income tax, net income, cash flows from operations and cash flow data. We have significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in EBITDA. Our calculation of EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited. Core Income Core income for the period is measured as net income attributable to equity holders of PLDT (net income less net income attributable to noncontrolling interests), excluding foreign exchange gains (losses) net, gains (losses) on derivative financial instruments net (excluding hedge costs), asset impairment on noncurrent assets, other non-recurring gains (losses), net of tax effect of aforementioned adjustments, as applicable, and similar adjustments to equity share in net earnings (losses) of associates and joint ventures. The core income results are monitored by management for each business unit separately for purposes of making decisions about resource allocation and performance assessment. Also, core income is used by management as a basis of determining the level of dividend payouts to shareholders and basis of granting incentives to employees. Core income should not be considered as an alternative to income before income tax or net income determined in accordance with PFRS as an indicator of our performance. Unlike income before income tax, core income does not include foreign exchange gains and losses, gains and losses on derivative financial instruments, asset impairments and other non-recurring gains and losses. We compensate for these limitations by using core income as only one of several comparative tools, together with PFRS-based measurements, to assist in the evaluation of operating performance. Such PFRS-based measurements include income before income tax and net income. Our calculation of core income may be different from the calculation methods used by other companies and, therefore, comparability may be limited. 4Q 2017 Form 17-C Page 3 of 27

10 Overview We are the largest and most diversified telecommunications company in the Philippines which delivers data and multi-media services nationwide. We have organized our business into business units based on our products and services and have three reportable operating segments which serve as the bases for management s decision to allocate resources and evaluate operating performance: Wireless mobile telecommunications services provided by Smart Communications, Inc., or Smart, and Digitel Mobile Philippines, Inc., or DMPI, our mobile service providers; Voyager Innovations, Inc., or Voyager, and certain subsidiaries, our mobile applications and digital platforms developers and mobile financial services provider; Smart Broadband, Inc., or SBI, and Primeworld Digital Systems, Inc., or PDSI, our wireless broadband service providers; ACeS Philippines Cellular Satellite Corporation, or ACeS Philippines, our satellite information and messaging services provider; and certain subsidiaries of PLDT Global Corporation, or PLDT Global, our mobile virtual network operations, or MVNO, provider; Fixed Line fixed line telecommunications services primarily provided by PLDT. We also provide fixed line services through PLDT s subsidiaries, namely, PLDT Clark Telecom, Inc., PLDT Subic Telecom, Inc., PLDT-Philcom, Inc. or Philcom, and its subsidiaries, or Philcom Group, PLDT-Maratel, Inc., Bonifacio Communications Corporation, PLDT Global and certain subsidiaries and Digitel, all of which together account for approximately 4% of our consolidated fixed line subscribers; data center, cloud, big data, managed security services, managed IT services and resellership provided by epldt, Inc., or epldt, IP Converge Data Services, Inc., or IPCDSI, and subsidiary, or IPCDSI Group, ABM Global Solutions, Inc., or AGS, and its subsidiaries, or AGS Group, Curo Teknika, Inc. and epds, Inc., or epds; business infrastructure and solutions, intelligent data processing and implementation services and data analytics insight generation provided by Talas Data Intelligence, Inc., or Talas; distribution of Filipino channels and content by Pilipinas Global Network Limited and its subsidiaries; and Others PLDT Communications and Energy Ventures, Inc., or PCEV, PLDT Global Investment Holdings, Inc., Mabuhay Investments Corporation, PLDT Global Investments Corporation, or PGIC, PLDT Digital Investments Pte. Ltd., or PLDT Digital, and its subsidiaries, our investment companies. As at December 31, 2017, our chief operating decision maker, or our Management Committee, views our business activities in three business units: Wireless, Fixed Line and Others. 4Q 2017 Form 17-C Page 4 of 27

11 Management s Financial Review In addition to consolidated net income, we use EBITDA and core income to assess our operating performance. The reconciliation of our consolidated EBITDA and our consolidated core income to our consolidated net income for the years ended December 31, 2017 and 2016 are set forth below. The following table shows the reconciliation of our consolidated EBITDA to our consolidated net income for the years ended December 31, 2017 and 2016: (Unaudited) (Audited) Consolidated EBITDA Php66,174 Php61,161 Add (deduct) adjustments: Depreciation and amortization (51,501) (34,455) Noncurrent asset impairment (4,327) (1,074) Financing costs net (7,370) (7,354) Impairment of investments (2,562) (5,515) Provision for income tax (1,103) (1,909) Amortization of intangible assets (835) (929) Foreign exchange losses net (411) (2,785) Gains on derivative financial instruments net Interest income 1,412 1,046 Equity share in net earnings of associates and joint ventures 2,906 1,181 Other income net 10,550 9,799 Total adjustments (52,708) (40,999) Consolidated net income Php13,466 Php20,162 The following table shows the reconciliation of our consolidated core income to our consolidated net income for the years ended December 31, 2017 and 2016: (Unaudited) (Audited) Consolidated core income Php27,668 Php27,857 Add (deduct) adjustments: Accelerated depreciation (12,402) Noncurrent asset impairment (4,327) (1,074) Impairment of investment (2,562) (5,515) Foreign exchange losses net (411) (2,785) Core income adjustment on equity share in net losses of associates and joint ventures (60) (95) Net income attributable to noncontrolling interests Gains on derivative financial instruments net, excluding hedge costs 724 1,539 Net tax effect of aforementioned adjustments 4, Total adjustments (14,202) (7,695) Consolidated net income Php13,466 Php20,162 4Q 2017 Form 17-C Page 5 of 27

12 Results of Operations The table below shows the contribution by each of our business segments to our consolidated revenues, expenses, other income (expense), income (loss) before income tax, provision for (benefit from) income tax, net income (loss)/segment profit (loss), EBITDA, EBITDA margin and core income for the years ended December 31, 2017 and In each of the years ended December 31, 2017 and 2016, majority of our revenues are derived from our operations within the Philippines. Our revenues derived from outside the Philippines consist primarily of revenues from incoming international calls to the Philippines. In 2016, we changed the classification of our revenue mix to provide for a more direct comparison to the current industry presentation in the Philippines by combining or separating certain line items from our service lines, and moving line items from one service line to another. We also changed the classification of our impairment on investments not directly affecting operations (most significantly, the impairment of our investment in Rocket Internet SE, or Rocket Internet), from operating expenses to other expenses. Wireless Fixed Line Others Inter-segment Transactions Consolidated For the year ended December 31, 2017 (Unaudited) Revenues Php93,835 Php78,341 Php16 (Php12,266) Php159,926 Expenses 100,346 63, (13,874) 150,415 Other income (expenses) 217 (3,323) 10,390 (2,226) 5,058 Income (loss) before income tax (6,294) 11,154 10,327 (618) 14,569 Provision for (benefit from) income tax (2,784) 3, ,103 Net income (loss)/segment profit (loss) (3,510) 7,474 10,120 (618) 13,466 EBITDA 35,151 29,478 (63) 1,608 66,174 EBITDA margin (1) 40% 39% (394%) 44% Core income 8,514 8,846 10,926 (618) 27,668 For the year ended December 31, 2016 (Audited) Revenues 104,914 72, (12,400) 165,262 Expenses 93,204 61, (13,972) 140,559 Other income (expenses) (3,517) (291) 2,748 (1,572) (2,632) Income before income tax 8,193 11,152 2,726 22,071 Provision for (benefit from) income tax (1,270) 3, ,909 Net income/segment profit 9,463 8,134 2,565 20,162 EBITDA 32,661 26,950 (22) 1,572 61,161 EBITDA margin (1) 32% 39% (110%) 39% Core income 11,402 7,746 8,709 27,857 Increase (Decrease) Revenues (11,079) 5,613 (4) 134 (5,336) Expenses 7,142 2, ,856 Other income (expenses) 3,734 (3,032) 7,642 (654) 7,690 Income before income tax (14,487) 2 7,601 (618) (7,502) Provision for income tax (1,514) (806) Net income/segment profit (12,973) (660) 7,555 (618) (6,696) EBITDA 2,490 2,528 (41) 36 5,013 Core income (2,888) 1,100 2,217 (618) (189) (1) EBITDA margin for the period is measured as EBITDA divided by service revenues. On a Consolidated Basis Revenues We reported consolidated revenues of Php159,926 million in 2017, a decrease of Php5,336 million, or 3%, as compared with Php165,262 million in 2016, primarily due to lower revenues from mobile and home broadband services in our wireless business, partially offset by higher revenues from data services in our fixed line business. 4Q 2017 Form 17-C Page 6 of 27

13 The following table shows the breakdown of our consolidated revenues by services for the years ended December 31, 2017 and 2016: Wireless Fixed Line Others Inter-segment Transactions Consolidated For the year ended December 31, 2017 Service Revenues Wireless Php88,652 (Php1,301) Php87,351 Mobile 84,439 (1,273) 83,166 Home broadband 2,556 (9) 2,547 Digital platforms and mobile financial services 1,240 (17) 1,223 MVNO and others 417 (2) 415 Fixed Line Php74,757 (10,946) 63,811 Voice 28,500 (3,204) 25,296 Data 44,294 (6,849) 37,445 Home broadband 18,054 (245) 17,809 Corporate data and ICT 26,240 (6,604) 19,636 Miscellaneous 1,963 (893) 1,070 Others Php16 (13) 3 Total Service Revenues 88,652 74, (12,260) 151,165 Non-Service Revenues Sale of computers, phone units, mobile handsets and subscriber identification module, or SIM-packs 5,183 2,724 (18) 7,889 Point-product sales Total Non-Service Revenues 5,183 3,584 (6) 8,761 Total Revenues 93,835 78, (12,266) 159,926 For the year ended December 31, 2016 Service Revenues Wireless 100,582 (1,467) 99,115 Mobile 96,497 (1,431) 95,066 Home broadband 2,772 (14) 2,758 Digital platforms and mobile financial services 728 (19) 709 MVNO and others 585 (3) 582 Fixed Line 69,006 (10,920) 58,086 Voice 29,630 (4,128) 25,502 Data 37,711 (5,984) 31,727 Home broadband 14,896 (167) 14,729 Corporate data and ICT 22,815 (5,817) 16,998 Miscellaneous 1,665 (808) 857 Others 20 (11) 9 Total Service Revenues 100,582 69, (12,398) 157,210 Non-Service Revenues Sale of computers, phone units, mobile handsets and SIMpacks 4,332 2,909 (2) 7,239 Point-product sales Total Non-Service Revenues 4,332 3,722 (2) 8,052 Total Revenues Php104,914 Php72,728 Php20 (Php12,400) Php165,262 The following table shows the breakdown of our consolidated revenues by business segment for the years ended December 31, 2017 and 2016: Change 2017 % 2016 % Amount % Wireless Php93, Php104, (Php11,079) (11) Fixed line 78, , ,613 8 Others (4) (20) Inter-segment transactions (12,266) (8) (12,400) (8) Consolidated Php159, Php165, (Php5,336) (3) Expenses Consolidated expenses increased by Php9,856 million, or 7%, to Php150,415 million in 2017 from Php140,559 million in 2016, primarily due to higher expenses in our wireless business resulting from higher depreciation and amortization, and noncurrent asset impairment. 4Q 2017 Form 17-C Page 7 of 27

14 The following table shows the breakdown of our consolidated expenses by business segment for the years ended December 31, 2017 and 2016: Change 2017 % 2016 % Amount % Wireless Php100, Php93, Php7,142 8 Fixed line 63, , ,579 4 Others Inter-segment transactions (13,874) (9) (13,972) (10) 98 1 Consolidated Php150, Php140, Php9,856 7 Other Income (Expenses) Consolidated other income amounted to Php5,058 million in 2017, a change of Php7,690 million as against other expenses of Php2,632 million in 2016, primarily due to lower impairment on the Rocket Internet investment in our others segment and lower net foreign exchange losses in our wireless segment, partially offset by impairment of investment in Hastings and lower gain on sale of properties in our fixed line business. The following table shows the breakdown of our consolidated other income (expenses) by business segment for the years ended December 31, 2017 and 2016: Change Amount % Wireless Php217 (Php3,517) Php3, Fixed line (3,323) (291) (3,032) (1,042) Others 10,390 2,748 7, Inter-segment transactions (2,226) (1,572) (654) (42) Consolidated Php5,058 (Php2,632) Php7, Net Income (Loss) Consolidated net income decreased by Php6,696 million, or 33%, to Php13,466 million in 2017, from Php20,162 million in 2016, primarily due to the Php12,973 million decrease in net income in our wireless segment, partially offset by Php7,555 million increase in net income from our other business. Our consolidated basic and diluted EPS decreased to Php61.61 for the year ended December 31, 2017 from Php92.33 in Our weighted average number of outstanding common shares was approximately million in each of 2017 and The following table shows the breakdown of our consolidated net income by business segment for the years ended December 31, 2017 and 2016: Change 2017 % 2016 % Amount % Wireless (Php3,510) (26) Php9, (Php12,973) (137) Fixed line 7, , (660) (8) Others 10, , , Inter-segment transactions (618) (5) (618) (100) Consolidated Php13, Php20, (Php6,696) (33) EBITDA Our consolidated EBITDA amounted to Php66,174 million in 2017, an increase of Php5,013 million, or 8%, as compared with Php61,161 million in 2016, primarily due to improved EBITDA in our fixed line and wireless operating segments. 4Q 2017 Form 17-C Page 8 of 27

15 The following table shows the breakdown of our consolidated EBITDA by business segment for the years ended December 31, 2017 and 2016: Change 2017 % 2016 % Amount % Wireless Php35, Php32, Php2,490 8 Fixed line 29, , ,528 9 Others (63) (22) (41) (186) Inter-segment transactions 1, , Consolidated Php66, Php61, Php5,013 8 Core Income Our consolidated core income amounted to Php27,668 million in 2017, a decrease of Php189 million, or 1%, as compared with Php27,857 million in 2016, primarily due to a decrease in core income from our wireless business as a result of higher depreciation expense, partly offset by higher core income in each of the others and fixed line segments. Our consolidated basic and diluted core EPS decreased to Php in 2017 from Php in The following table shows the breakdown of our consolidated core income by business segment for the years ended December 31, 2017 and 2016: Change 2017 % 2016 % Amount % Wireless Php8, Php11, (Php2,888) (25) Fixed line 8, , , Others 10, , , Inter-segment transactions (618) (2) (618) (100) Consolidated Php27, Php27, (Php189) (1) On a Business Segment Basis Wireless Revenues We generated revenues of Php93,835 million from our wireless business in 2017, a decrease of Php11,079 million, or 11%, from Php104,914 million in The following table summarizes our total revenues from our wireless business for the years ended December 31, 2017 and 2016 by service: Increase (Decrease) 2017 % 2016 % Amount % Service Revenues: Mobile Php84, Php96, (Php12,058) (12) Home broadband 2, ,772 3 (216) (8) Digital platforms and mobile financial services 1, MVNO and others (1) (168) (29) Total Wireless Service Revenues 88, , (11,930) (12) Non-Service Revenues: Sale of mobile handsets, SIM-packs and broadband data modems 5, , Total Wireless Revenues Php93, Php104, (Php11,079) (11) (1) Includes service revenues generated by MVNOs of PLDT Global subsidiaries. Service Revenues Our wireless service revenues in 2017 decreased by Php11,930 million, or 12%, to Php88,652 million as compared with Php100,582 million in 2016, mainly as a result of lower revenues from mobile services, home broadband services, partially offset by higher revenues from digital platforms mobile financial services and others. As a percentage of our total wireless revenues, service revenues accounted for 94% and 96% for the years ended December 31, 2017 and 2016, respectively. 4Q 2017 Form 17-C Page 9 of 27

16 Mobile Services Our mobile service revenues amounted to Php84,439 million in 2017, a decrease of Php12,058 million, or 12%, from Php96,497 million in Mobile service revenues accounted for 95% and 96% of our wireless service revenues for the years ended December 31, 2017 and 2016, respectively. Increase (Decrease) 2017 % 2016 % Amount % Mobile Services: Voice Php30, Php37, (Php6,370) (17) SMS 26, , (6,700) (20) Data 26, , Inbound roaming and others (1) 1, , Total Php84, Php96, (Php12,058) (12) (1) Refers to other non-subscriber-related revenues consisting primarily of inbound international roaming fees and share in revenues from Smart Money. Voice Services Mobile revenues from our voice services, which include all voice traffic, decreased by Php6,370 million, or 17%, to Php30,724 million in 2017 from Php37,094 million in 2016, mainly on account of lower domestic and international voice revenues due to the availability of alternative calling options and other over-the-top, or OTT, services such as Viber, Facebook Messenger and similar services. Mobile voice services accounted for 36% and 38% of our mobile service revenues for the years ended December 31, 2017 and 2016, respectively. Domestic voice service revenues decreased by Php4,530 million, or 16%, to Php24,136 million in 2017 from Php28,666 million in 2016, due to lower domestic outbound and inbound voice service revenues. International voice service revenues decreased by Php1,840 million, or 22%, to Php6,588 million in 2017 from Php8,428 million in 2016, primarily due to lower international inbound and outbound voice service revenues as a result of lower international voice traffic, partially offset by the effect of higher weighted average rate of the Philippine peso relative to the U.S. dollar. SMS Services Mobile revenues from our SMS services, which include all SMS-related services and value-added services, or VAS, decreased by Php6,700 million, or 20%, to Php26,045 million in 2017 from Php32,745 million in 2016 mainly due to declining SMS volumes. Mobile SMS services accounted for 31% and 34% of our mobile service revenues for the years ended December 31, 2017 and 2016, respectively. Data Services Mobile revenues from our data services, which include mobile internet, mobile broadband and other data services, increased by Php764 million, or 3%, to Php26,281 million in 2017 from Php25,517 million in The following table shows the breakdown of our mobile data service revenues for the years ended December 31, 2017 and 2016: Increase (Decrease) 2017 % 2016 % Amount % Data Services: Mobile internet (1) Php20, Php17, Php2, Mobile broadband 6, , (2,117) (26) Other data (38) (19) Total Php26, Php25, Php764 3 (1) Includes revenues from web-based services, net of discounts and content provider costs. Mobile internet Mobile internet service revenues increased by Php2,919 million, or 17%, to Php20,086 million in 2017 from Php17,167 million in 2016 as a result of the increase in smartphone ownership and greater data adoption among our subscriber base leading to the increase in mobile internet browsing and prevalent use of mobile apps, social networking sites and other OTT services. Mobile internet services accounted for 24% and 18% of our mobile service revenues for the years ended December 31, 2017 and 2016, respectively. 4Q 2017 Form 17-C Page 10 of 27

17 Mobile broadband Mobile broadband revenues amounted to Php6,030 million in 2017, a decrease of Php2,117 million, or 26%, from Php8,147 million in 2016, primarily due to a decrease in the number of subscribers, mainly Sun Broadband. Mobile broadband services accounted for 7% and 9% of our mobile service revenues for the years ended December 31, 2017 and 2016, respectively. Other data Revenues from our other data services, which include domestic leased lines and share in revenue from PLDT WeRoam, decreased by Php38 million, or 19%, to Php165 million in 2017 from Php203 million in Inbound Roaming and Others Mobile revenues from inbound roaming and other services increased by Php248 million, or 22%, to Php1,389 million in 2017 from Php1,141 million in The following table shows the breakdown of our mobile service revenues by service type for the years ended December 31, 2017 and 2016: Increase (Decrease) Amount % Mobile service revenues Php84,439 Php96,497 (Php12,058) (12) By service type Prepaid 59,862 67,304 (7,442) (11) Postpaid 23,188 28,052 (4,864) (17) Inbound roaming and others 1,389 1, Prepaid Revenues Revenues generated from our mobile prepaid services amounted to Php59,862 million in 2017, a decrease of Php7,442 million, or 11%, as compared with Php67,304 million in Mobile prepaid service revenues accounted for 71% and 70% of mobile service revenues for the years ended December 31, 2017 and 2016, respectively. The decrease in revenues from our mobile prepaid services was primarily driven by a lower mobile prepaid subscriber base resulting in lower voice and SMS revenues, partially offset by the increase in mobile internet revenues. Postpaid Revenues Revenues generated from mobile postpaid service amounted to Php23,188 million in 2017, a decrease of Php4,864 million, or 17%, as compared with Php28,052 million in 2016, and accounted for 27% and 29% of mobile service revenues for the years ended December 31, 2017 and 2016, respectively. The decrease in our mobile postpaid service revenues was primarily due to a lower postpaid subscriber base. Subscriber Base, Average Revenue Per User, or ARPU, and Churn Rates The following table shows our wireless subscriber base as at December 31, 2017 and 2016: Increase (Decrease) Amount % Mobile subscriber base 58,293,908 62,763,209 (4,469,301) (7) Smart (1) 21,821,441 23,027,793 (1,206,352) (5) Postpaid 1,388,090 1,383,830 4,260 Prepaid (2) 20,433,351 21,643,963 (1,210,612) (6) TNT 28,807,964 29,845,509 (1,037,545) (3) Sun (1) 7,664,503 9,889,907 (2,225,404) (23) Postpaid 1,129,172 1,426,438 (297,266) (21) Prepaid (2) 6,535,331 8,463,469 (1,928,138) (23) Home broadband subscriber base 237, ,203 (32,849) (12) Total wireless subscribers 58,531,262 63,033,412 (4,502,150) (7) (1) Includes mobile broadband subscribers. (2) Beginning 2Q2017, the prepaid subscriber base excludes subscribers who did not reload within 90 days vis-à-vis 120 days previous cut-off. 4Q 2017 Form 17-C Page 11 of 27

18 Our current policy is to recognize a prepaid subscriber as active only when the subscriber activates and uses the SIM card. Beginning the second quarter of 2017, a prepaid mobile subscriber is considered inactive if the subscriber does not reload within 90 days after the full usage or expiry of the last reload, revised from the previous 120 days. The average monthly churn rate for Smart Prepaid subscribers in 2017 and 2016 were 6.7% and 7.6%, respectively, while the average monthly churn rate for TNT subscribers were 6.8% and 6.3% in 2017 and 2016, respectively. The average monthly churn rate for Sun Prepaid subscribers were 7.7% and 8.8% in 2017 and 2016, respectively. The average monthly churn rate for Smart Postpaid subscribers were 2.3% and 4.8% in 2017 and 2016, respectively, and 3.5% and 6.4% in 2017 and 2016, respectively, for Sun Postpaid subscribers. The following table summarizes our average monthly ARPUs for the years ended December 31, 2017 and 2016: Gross (1) Increase (Decrease) Net (2) Increase (Decrease) Amount % Amount % Prepaid Smart Php118 Php117 Php1 1 Php108 Php TNT (1) (1) (2) (3) Sun (2) (2) (1) (1) Postpaid Smart 1, Sun (21) (5) (19) (4) (1) Gross monthly ARPU is calculated by dividing gross cellular service revenues for the month, including interconnection income but excluding inbound roaming revenues, gross of discounts, and content provider costs, by the average number of subscribers in the month. (2) Net monthly ARPU is calculated by dividing gross cellular service revenues for the month, including interconnection income, but excluding inbound roaming revenues, net of discounts and content provider costs, by the average number of subscribers in the month. Home Broadband Revenues from our Home Ultera services decreased by Php216 million, or 8%, to Php2,556 million in 2017 from Php2,772 million in 2016, due mainly to the continued migration of our high-value fixed wireless subscribers from legacy technologies (Canopy & Wimax) to wired broadband (digital subscriber line, or DSL/FTTH). In addition, we offered lower-priced plan offerings as part of our efforts to expand our customer base to include lower income home segments. Subscribers of our Home Ultera services decreased by 32,849, or 12%, to 237,354 subscribers as at December 31, 2017 from 270,203 subscribers as at December 31, Digital Platforms and Mobile Financial Services Revenues from digital platforms and mobile financial services, as reported by Voyager, increased by Php512 million, or 70%, to Php1,240 million in 2017 from Php728 million in 2016, primarily due to the increase in PayMaya mobile payment transactions. MVNO and Others Revenues from our MVNO and other services decreased by Php168 million, or 29%, to Php417 million in 2017 from Php585 million in 2016, primarily due to lower revenue contribution from MVNOs of PLDT Global and ACeS Philippines, partially offset by the impact of higher weighted average rate of the Philippine peso relative to the U.S. dollar. Non-Service Revenues Our wireless non-service revenues consist of sales of mobile handsets, SIM-packs, mobile broadband data modems, tablets and accessories. Our wireless non-service revenues increased by Php851 million, or 20%, to Php5,183 million in 2017 from Php4,332 million in 2016, primarily due to lower revenues from the sale of mobile broadband data modems and mobile handsets. 4Q 2017 Form 17-C Page 12 of 27

19 Expenses Expenses associated with our wireless business amounted to Php100,346 million in 2017, an increase of Php7,142 million, or 8%, from Php93,204 million in A significant portion of the increase was mainly attributable to higher depreciation and amortization, and noncurrent asset impairment, partially offset by lower provisions, cost of sales and services, interconnection costs, and selling, general and administrative expenses. As a percentage of our total wireless revenues, expenses associated with our wireless business accounted for 107% and 89% for the years ended December 31, 2017 and 2016, respectively. The following table summarizes the breakdown of our total wireless-related expenses for the years ended December 31, 2017 and 2016 and the percentage of each expense item in relation to the total: Increase (Decrease) 2017 % 2016 % Amount % Selling, general and administrative expenses Php42, Php42, (Php426) (1) Depreciation and amortization 36, , , Noncurrent asset impairment 4, , , Cost of sales and services 8, , (5,571) (39) Interconnection costs 6, ,035 9 (1,662) (21) Provisions 2, ,246 9 (6,004) (73) Total Php100, Php93, Php7,142 8 Selling, general and administrative expenses decreased by Php426 million, or 1%, to Php42,046 million, primarily due to lower expenses related to selling and promotions, repairs and maintenance, and insurance and security services, partly offset by higher rent expenses and compensation and employee benefits. Depreciation and amortization charges increased by Php17,516 million, or 92%, to Php36,500 million, primarily due to higher depreciable asset base and accelerated depreciation on service delivery platforms and packet core assets in line with our ongoing transformation initiatives, as well as access and transport equipment as a result of our converged and simplified network. Noncurrent asset impairment increased by Php3,289 million to Php4,327 million, primarily due to impairment of radio access network, decommissioning of base transceiver stations and other network equipment, which were rendered obsolete, due to technological advancements. Cost of sales and services decreased by Php5,571 million, or 39%, to Php8,858 million, primarily due to lower issuances of mobile handsets and mobile broadband data modems, partly offset by higher cost of licenses from various partnership with content providers. Interconnection costs decreased by Php1,662 million, or 21%, to Php6,373 million, primarily due to lower interconnection cost on domestic voice and SMS services, mainly as a result of lower interconnection rates, and lower interconnection costs on international voice and SMS services, partially offset by an increase in interconnection charges on international data roaming. Provisions decreased by Php6,004 million, or 73%, to Php2,242 million, primarily due to lower provisions for doubtful accounts and inventory obsolescence. Other Income (Expenses) The following table summarizes the breakdown of our total wireless-related other income (expenses) for the years ended December 31, 2017 and 2016: Change Amount % Other Income (Expenses): Financing costs net (Php2,260) (Php2,487) Php227 9 Equity share in net losses of associates (129) (237) Foreign exchange losses net (46) (1,702) 1, Gain on derivative financial instruments net (203) (42) Interest income Other income net 2, ,909 1,240 Total Php217 (Php3,517) Php3, Q 2017 Form 17-C Page 13 of 27

20 Our wireless business other income amounted to Php217 million in 2017, an increase of Php3,734 million, or 106%, as against other expenses of Php3,517 million in 2016, primarily due to the combined effects of the following: (i) higher other income net by Php1,909 million mainly due to higher miscellaneous income, partly offset by the impairment on Smart s investment in AFPI, and lower income from consultancy; (ii) lower net foreign exchange losses by Php1,656 million on account of revaluation of foreign currency-denominated assets and liabilities due to the lower level of depreciation of the Philippine peso relative to the U.S. dollar; (iii) lower net financing costs by Php227 million; (iv) lower equity share in net losses of associates by Php108 million; (v) higher interest income by Php37 million; and (vi) lower net gains on derivative financial instruments by Php203 million. Benefit from Income Tax Benefit from income tax amounted to Php2,784 million in 2017, an increase of Php1,514 million from Php1,270 million in 2016, primarily due to the tax impact of accelerated depreciation and asset impairment recognized for the year. Net Income (Loss) As a result of the foregoing, our wireless business net loss amounted to Php3,510 million in 2017, lower by Php12,973 million as against net income of Php9,463 million in EBITDA Our wireless business EBITDA increased by Php2,490 million, or 8%, to Php35,151 million in 2017 from Php32,661 million in EBITDA margin increased to 40% in 2017 from 32% in Core Income Our wireless business core income decreased by Php2,888 million, or 25%, to Php8,514 million in 2017 from Php11,402 million in 2016 on account of higher depreciation expense, partially offset by higher EBITDA. Fixed Line Revenues Revenues generated from our fixed line business amounted to Php78,341 million in 2017, an increase of Php5,613 million, or 8%, from Php72,728 million in The following table summarizes our total revenues from our fixed line business for the years ended December 31, 2017 and 2016 by service segment: Increase (Decrease) 2017 % 2016 % Amount % Service Revenues: Voice Php28, Php29, (Php1,130) (4) Data 44, , , Miscellaneous 1, , , , ,751 8 Non-Service Revenues: Sale of computers, phone units and SIM packs, and point-product sales 3, ,722 5 (138) (4) Total Fixed Line Revenues Php78, Php72, Php5,613 8 Service Revenues Our fixed line service revenues increased by Php5,751 million, or 8%, to Php74,757 million in 2017 from Php69,006 million in 2016, due to higher revenues from our data and miscellaneous services, partially offset by lower voice service revenues. 4Q 2017 Form 17-C Page 14 of 27

21 Voice Services Revenues from our voice services decreased by Php1,130 million, or 4%, to Php28,500 million in 2017 from Php29,630 million in 2016, primarily due to lower international, (partly due to the continued popularity of services such as Skype, Uber, Line, FB Messenger, Googletalk and Whats App, offering free on-net calling services, and other similar services), and domestic services, partially offset by higher revenues from local exchange. Data Services The following table shows information of our data service revenues for the years ended December 31, 2017 and 2016: Increase Amount % Data service revenues Php44,294 Php37,711 Php6, Home broadband 18,054 14,896 3, Corporate data and ICT 26,240 22,815 3, Our data services posted revenues of Php44,294 million in 2017, an increase of Php6,583 million, or 17%, from Php37,711 million in 2016, primarily due to higher home broadband revenues from DSL and Fibr, an increase in corporate data and leased lines primarily i-gate, Fibernet, Internet Protocol-Virtual Private Network, or IP-VPN, Metro Ethernet and Shops.Work, and higher data center and IT revenues. The percentage contribution of this service segment to our fixed line service revenues accounted for 59% and 55% for the years ended December 31, 2017 and 2016, respectively. Home Broadband PLDT HOME remains to be the nation s leading home broadband service provider, now serving 1.6 million subscribers nationwide as at December 31, 2017 from 1.3 million subscribers as at December 31, PLDT HOME s broadband data services include Home DSL and Home Fibr. Home broadband data revenues amounted to Php18,054 million in 2017, an increase of Php3,158 million, or 21%, from Php14,896 million in This growth is driven by increasing demand for broadband services which the company is providing through its existing copper network and a nationwide roll-out of its FTTH network. Home broadband revenues accounted for 41% and 39% of total data service revenues in the years ended December 31, 2017 and 2016, respectively. PLDT s FTTH nationwide network rollout reached over four million homes passed in Corporate Data and ICT Corporate data services amounted to Php22,889 million in 2017, an increase of Php2,909 million, or 15%, as compared with Php19,980 million in 2016, mainly due to sustained market traction of broadband data services and growth on Fibr, as a result of higher internet connectivity requirements, and key Private Networking Solutions such as IP-VPN, Metro Ethernet and Shops.Work. Corporate data and leased line revenues accounted for 52% and 53% of total data services in the years ended December 31, 2017 and 2016, respectively. ICT services include data centers which provide colocation and related connectivity services, managed server hosting, disaster recovery and business continuity services, managed security services, cloud services, big data services and various managed IT solutions. The epldt Group has a total of 8,341 rack capacity in nine locations covering Metro Manila, Subic, Clark, Cebu and Davao. ICT revenues increased by Php516 million, or 18%, to Php3,351 million in 2017 from Php2,835 million in 2016 mainly due to higher revenues from colocation and managed IT services. Cloud services include cloud contact center, cloud infrastructure as a service, cloud software as a service and cloud professional services. The percentage contribution of this service segment to our total data service revenues was 8% in each of 2017 and Q 2017 Form 17-C Page 15 of 27

22 Miscellaneous Services Miscellaneous service revenues are derived mostly from rental, outsourcing and facilities management fees. These service revenues increased by Php298 million, or 18%, to Php1,963 million in 2017 from Php1,665 million in 2016 mainly due to higher outsourcing and management fees. The percentage contribution of miscellaneous service revenues to our total fixed line service revenues accounted for 3% and 2% in 2017 and 2016, respectively. Non-service Revenues Non-service revenues decreased by Php138 million, or 4%, to Php3,584 million in 2017 from Php3,722 million in 2016, primarily due to lower sale of PLDT Landline Plus, or PLP, and Telpad units, and FabTab for mydsl retention, partly offset by higher computer-bundled, hardware and software sales. Expenses Expenses related to our fixed line business totaled Php63,864 million in 2017, an increase of Php2,579 million, or 4%, as compared with Php61,285 million in The increase was primarily due to higher selling, general and administrative expenses, cost of sales and services, and provisions, partly offset by lower interconnection costs, and depreciation and amortization expenses. As a percentage of our total fixed line revenues, expenses associated with our fixed line business accounted for 82% and 84% for the years ended December 31, 2017 and 2016, respectively. The following table shows the breakdown of our total fixed line-related expenses for the years ended December 31, 2017 and 2016 and the percentage of each expense item to the total: Increase (Decrease) 2017 % 2016 (1) % Amount % Selling, general and administrative expenses Php37, Php34, Php3,142 9 Depreciation and amortization 15, , (470) (3) Cost of sales and services 4, , Interconnection costs 4, , (1,353) (23) Provisions 2, , Noncurrent asset impairment 36 (36) (100) Total Php63, Php61, Php2,579 4 (1) Certain expenses in 2016 were reclassified to conform with the current presentation. Selling, general and administrative expenses increased by Php3,142 million, or 9%, to Php37,390 million primarily due to higher professional and other contracted services, and compensation and employee benefits, partly offset by lower repairs and maintenance costs, and selling and promotions. Depreciation and amortization charges decreased by Php470 million, or 3%, to Php15,001 million mainly due to a lower depreciable asset base. Cost of sales and services increased by Php920 million, or 24%, to Php4,788 million, primarily due to various partnerships with content providers. Interconnection costs decreased by Php1,353 million, or 23%, to Php4,587 million, primarily due to lower international interconnection costs, as a result of a decrease in international inbound calls that terminated to other domestic carriers, and lower domestic interconnection costs. Provisions increased by Php376 million, or 22%, to Php2,098 million, mainly due to higher provision for doubtful accounts, partly offset by lower provision for inventory obsolescence. Noncurrent asset impairment amounted to Php36 million in Q 2017 Form 17-C Page 16 of 27