Table of Contents

I. Profile of the Company ..................................................................................................................... 2

COMPANY DESCRIPTION (1st) ........................................................................................................ 2
MISSION ............................................................................................................................................... 3
VISION .................................................................................................................................................. 3
CORE VALUES .................................................................................................................................... 3
CORPORATE STRUCTURE.................................................................................................. 5
FUTURE PLANS .............................................................................................................................. 5
................................................................................................................................................................ 8
COMPANY DESCRIPTION (2nd) ....................................................................................................... 8
MISSION............................................................................................................................................ 9
VISION .................................................................................................................................................. 9
CORE VALUES .................................................................................................................................... 9
CORPORATE STRUCTURE ............................................................................................................ 10
FUTURE PLANS ................................................................................................................................ 11
II. Financial Statements and Financial Ratios Analysis .................................................................. 13
A. HORIZONTAL ANALYSIS (BALANCE SHEET) ............................................................ 13
HORIZONTAL ANALYSIS (INCOME STATEMENT) ................................................................. 15
HORIZONTAL ANALYSIS (BALANCE SHEET) ......................................................................... 17
HORIZONTAL ANALYSIS (INCOME STATEMENT) ................................................................. 18
B. VERTICAL ANALYSIS (BALANCE SHEET) ................................................................... 19
VERTICAL ANALYSIS (BALANCE SHEET) ................................................................................ 23
VERTICAL ANALYSIS (INCOME STATEMENT) ....................................................................... 24
C. FINANCIAL RATIO ANALYSIS ......................................................................................... 25
1. Analysis of Liquidity or Short-term Solvency .............................................................................. 27
2. Analysis of the Liquidity and Asset Management Efficiency ................................................. 29
3. Analysis of Leverage: Debt Financing Coverage ...................................................................... 35
4. Operating Efficiency and Profitability .......................................................................................... 37
5. Financial Leverage Index ............................................................................................................... 45
.............................................................................................................................................................. 45
III. Overall Comparative Financial Statements ............................................................................... 47
IV. References ..................................................................................................................................... 50
I. Profile of the Company

COMPANY DESCRIPTION (1st)

PLDT is a major provider of telecommunications and digital services in the Philippines,
catering to the fixed line, wireless, and broadband sectors. Operating through three main
segments—Wireless, Fixed Line, and Others—the company delivers a broad range of services
via its extensive fiber optic infrastructure and network systems. As of December 31, 2024,
PLDT had 66.6 million customers using its mobile, fixed line, and data services. Its common
shares are traded on the Philippine Stock Exchange (PSE), while its American Depositary
Shares (ADSs) are listed on the New York Stock Exchange (NYSE).

Their operations are categorized into three business units. First, the wireless business,
which prioritizes expanding data services while overseeing its traditional voice and SMS
operations. Data revenues are generated across all areas of the wireless segment, including
mobile internet via smartphones, mobile broadband through pocket WiFi, and home internet
using fixed wireless broadband devices. Second is the fixed line, which is the leading provider
servicing retail, corporate, and small and medium-sized (SME) clients. Our fixed line business
group offers data services, voice services, and miscellaneous services. Lastly, their other
business consists primarily of their interests in digital platforms and other technologies,
including our interests in MIH and Kayana.

PLDT was established in the Philippines on November 28, 1928, following the merger
of four U.S.-owned telephone companies, and was originally known as the Philippine Long
Distance Telephone Company. Under the Revised Corporation Code, it now has a perpetual
corporate existence. Its franchise, first granted in 1928 and last amended in 1991, is valid until
2028 and allows the company to offer a wide array of telecommunications services. These
include mobile, wired, and wireless systems; fiber optics; multi-channel transmission; value-
added services (like voice, data, audio, and video transmission); and other advanced telecom
technologies, both within the Philippines and internationally. PLDT’s subsidiaries, such as
Smart and DMPI, also hold their separate franchises, each with varying scopes and durations.
 MISSION

Our people deliver meaningful connections and experiences for our customers to live a fuller
life.

VISION

We aspire to be a happy space using technology to empower and build bridges of

collaboration across sectors and communities towards a sustainable future.

CORE VALUES

• The customer is our North Star

• We trust each other to do the right thing
• We are one
• Our people are our family
• Malasakit is our strength
• Together we can do great things at speed

HISTORICAL BACKGROUND

1928 PLDT was incorporated to unify fragmented telephone systems in the

Philippines

1929 The first national long-distance call between Manila and Baguio was
established.

1933 Overseas radio-telephone service between the Philippines and the US was
launched.

1941 PLDT’s infrastructure was destroyed during WWII to prevent Japanese use

1968 Filipinos, led by Ramon Cojuangco, gained control of PLDT, marking a shift
in leadership and national pride
 1987 PLDT established the first cellular telephone network

1997 The first Philippine communication satellite, Agila II, was launched

1998 First Pacific Co. Ltd., led by Manuel V. Pangilinan, took over PLDT

Smart Communications was acquired, strengthening PLDT’s mobile

segment

2000-2004 PLDT introduced DSL and prepaid landline services

2005 The Next Generation Network (NGN) upgrade started in 2005 to improve
service efficiency.

2010 Smart launched the first 3G network, followed by LTE in 2012

2011 The acquisition of Digitel (Sun Cellular) expanded PLDT’s reach

2014 Broadband and digital services saw massive growth, with PLDT’s broadband
subscriber base reaching 3.6 million.

2015 The "Digital Philippines" campaign (2015) emphasized digital services.

PLDT and Smart underwent a network modernization program to support
LTE and fiber expansion.

2018 The first 5G rollout began in 2018, positioning PLDT as a leader in mobile
internet speed and coverage

2020-2024 PLDT played a crucial role during the COVID-19 pandemic by providing
stable internet services. 5G network expansion accelerated, and fiber
infrastructure surpassed 1.1 million [Link] initiatives,
including green energy-powered cell sites, were prioritized. The company
set a target of ₱35 billion in core profits for 2024 while achieving all-time
highs in revenue and digital transformation effort.
Table 1.
 CORPORATE STRUCTURE

Board of Directors

Chairman of the Board, President and Manuel V. Pangilinan

CEO

Director, Senior Vice President, Chief Marilyn A. Victorio-Aquino

Legal Counsel and Corporate Secretary

Non-Executive Director Robert M. de Claro

Non-Executive Director Helen Y. Dee

Non-Executive Director Ray Espinosa

Non-Executive Director James L. Go

Non-Executive Director Kazuyuki Kozu

Independent Director Bernido H. Liu

Lead Independent Director Artemio V. Panganiban

Non-Executive Director Alfredo S. Panlilio

Non-Executive Director Kazutoshi Shimizu

Independent Director Bernadine T. Siy

Non-Executive Director Marife B. Zamora

Table 2.

FUTURE PLANS

PLDT Inc., the Philippines' largest fully integrated telecommunications giant, has six
key elements in its business strategy. These key elements include focusing on the customer and
improving customer experience, building on their strong positions in the fixed line and wireless
businesses, capitalizing on their strength as a fully integrated Telecommunications Service
Provider, maintaining a strong financial position, identifying new areas for growth, and
committing to sustainability. The key elements shaped the future plans of the company.

One of PLDT's core strategic initiatives is customer focus and improving the overall
customer experience. This is readily apparent in its continued push to deploy 5G coverage in
the Philippines by 2025, which will bring low-latency, high-speed mobile broadband to more
communities, including far-flung and underserved communities. In addition, PLDT's move to
expand fiber services with the support of a US$34.4 million social loan from HSBC reflects a
determination to narrow the digital divide, so that even remote and disadvantaged areas benefit
from high-quality internet services. Home consumers are also advantaged by PLDT Home's
provision of gigabit-ready fiber upgrades, allowing them to enjoy affordable 1 Gbps internet
speeds. These projects not only foster enhanced connectivity but also validate PLDT's
commitment to delivering personalized, dependable, and value-oriented services that address
the changing needs of its subscriber base directly.

The other fundamental aspect of PLDT's business model is to leverage its solid niche
in both wireless and fixed-line markets. The firm maintains its proven market leadership and
reliable brand by advancing its fixed and wireless infrastructure. Its countrywide deployment
of 5G technology and the growth of fiber connectivity are concrete actions in consolidating its
leadership in both service segments. Through enhancing the extent and quality of its broadband
offerings, PLDT keeps it as the most desirable one for both mobile and wireline subscribers.

Given that it is a wholly integrated telecommunications service provider, PLDT also

focuses on maximizing synergies across its rich array of services. This strategic emphasis is
reflected in the investment of the company in hyperscale data center infrastructure. The recently
opened Vitro Sta. Rosa facility—declared as the first AI-ready data center in the country—
boasts 50 MW capacity and offers advanced services such as GPU-as-a-Service. The proposed
100-MW General Trias, Cavite expansion also reinforces PLDT's ability to provide bundled
digital services, such as cloud computing, business solutions, and convergent voice-data
packages. With these activities, PLDT is building the foundations of a strong digital ecosystem,
enabling business customers and developers and also opening new revenue streams outside of
traditional telecommunication products.

Pursuing a solid financial position is another strategic foundation for PLDT. This is
aggressively pursued by bringing disciplined capital deployment, which seeks to decrease
capital spend from ₱78.2 billion in 2024 to the more manageable level of ₱68–₱73 billion in
2025. This saving would seek to decrease capital intensity while also releasing cash for high-
impact initiatives without undermining current network enhancements. With this in mind,
PLDT is seeking strategic alliances to unlock value. Most notably, the mooted sale of as much
as 49% of its data center operations to Japan's NTT for around US$750 million demonstrates a
twofold strategy: deleveraging the balance sheet of the company and financing further growth
in its digital infrastructure. These initiatives demonstrate PLDT's dedication to long-term
profitability and judicious financial stewardship.

The firm is also interested in sensing new drivers of growth from neighboring and new
industries, including artificial intelligence, cloud computing, and regional data capacity build-
out. Its effort to ramp international subsea cable capacity to one petabit per second over five
years, spearheaded by the Apricot Submarine Cable System, is a prime manifestation of
PLDT's vision of making the Philippines a regional digital hub. This investment not only puts
the company in an optimal position to take a larger slice of the increasing global data traffic,
but also enables its diversification and future-readiness strategy.

Finally, PLDT continues to be steadfast in integrating sustainability into its operations.

Its initiatives towards digital inclusion, including growing fiber coverage to more underserved
regions through socially motivated financing, complements its pursuit of driving inclusive
connectivity. Concurrently, the development of state-of-the-art, energy-efficient hyperscale
data centers supports reduced carbon footprints and is part of PLDT's overall ESG objectives,
including its aim to lower Scope 1 and 2 greenhouse gas emissions by 40% by 2030.

PLDT's future initiatives are not projects in isolation—those are the operational
implementation of its clearly articulated strategic pillars. From upgrading customer experience
and augmenting infrastructure to becoming financially resilient and championing
sustainability, each effort is anchored to a central strategic goal. Collectively, these initiatives
reinforce PLDT's unshakeable commitment to propelling the digital evolution of the
Philippines while being responsible and forward-looking in its business endeavor.
 COMPANY DESCRIPTION (2nd)

Converge ICT Solutions Inc. is the Philippines’ premier pure fiber-optic internet
service provider, delivering superior connectivity solutions to both residential and commercial
customers nationwide. The company’s cutting-edge fiber infrastructure provides consistently
high-speed internet with symmetrical upload and download capabilities, ensuring seamless
performance for modern digital needs. Businesses particularly benefit from enterprise-grade
reliability and dedicated bandwidth options that support cloud computing VoIP systems, and
other data-intensive operations. Home users enjoy buffer-free streaming, lag-free gaming, and
smooth video conferencing across multiple connected devices.

What sets Converge apart is its fully fiber-optic network architecture that eliminates the
limitations of traditional copper-based systems. This future-proof technology delivers faster
speeds, lower latency, and more stable connections compared to conventional broadband
services. The company maintains strict quality standards to guarantee uninterrupted service,
with 24/7 network monitoring and rapid response technical support. All plans feature truly
unlimited data without throttling, allowing customers to maximize their internet usage without
restrictions or surprise slowdowns.

Through continuous infrastructure expansion, Converge is bridging the digital divide

by bringing world-class connectivity to underserved regions across the archipelago. The
company’s growing nationwide footprint supports the country’s digital transformation,
enabling e-learning opportunities, e-commerce growth, and smart city development. With
innovative offerings like Wi-Fi mesh systems and bundled digital services, Converge enhances
the value proposition for subscribers. Its commitment to network excellence and customer
satisfaction positions Converge as a driving force in the Philippines’ evolving digital landscape.
 MISSION

Delighting customers by taking care of their own.

VISION

World Class ICT Organization that empowers people, business and the nation to be their best.

CORE VALUES

• Integrity
• Customer
• Focus
• Teamwork
• Empowerment
• Excellence
• Velocity

HISTORICAL BACKGROUND

1996 Founded as ComClark Network & Technology Corp. by Dennis Anthony Uy and
Grace Uy, initially focusing on telecom and networking services.

2007 Started offering fiber-optic internet services under the Converge ICT brand.

2012 Launched Bayanihan WiFi, providing free internet in public places.

2015 Expanded fiber-to-the-home (FTTH) services, targeting residential customers.

2019 Became the first pure fiber internet provider in the Philippines, offering speeds up
to 1 Gbps.

2020 Listed on the Philippine Stock Exchange (PSE) under the ticker CNVRG, raising
₱25.3 billion in IPO.
2021 Reached 1 million fiber ports, expanding converge nationwide.

2022 Surpassed 1.8 million subscribers, becoming a major competitor to PLDT and
Globe.

2023 Continued aggressive expansion, targeting 100% nationwide coverage by 2025.

Table 3.

CORPORATE STRUCTURE

Board of Directors

Chairman, Independent Non-executive Jose Pamintuan de Jesus

Director

CEO, Founder and Executive Director Dennis Anthony H. Uy

President, Chief Resources Officer, Chief Maria Grace Y. Uy

Risk Officer, Founder & Executive Director

Independent Non-executive Director Amando M. Tetangco, Jr.

Independent Non-executive Director Roman Felipe S. Reyes

Non-executive Director Francisco Ed Lim

Independent Non-executive Director Estela M. Perlas Bernabe

Senior Management and Adviser

CEO, Founder and Executive Director Dennis Anthony H. Uy

President, Chief Resources Officer, Chief Maria Grace Y. Uy

Risk Officer, Founder & Executive Director

Chief Operations Officer Jesus Romero

 Chief Commercial Officer and Chief Benjamin Rex Emilio Azada
Sustainability Officer

Chief Network Transformation Officer Paulo Martin Santos

Chief Finance Officer Robert Leo A. Yu

Major Subsidiary

President and Chief Operating Officer, Miles Tonn C. Chua

Metroworks
Table 4.

FUTURE PLANS

Converge ICT Solutions said it has completed its network modernization initiative to
boost its enterprise-level Internet offerings and be able to cover more markets still hungry for
faster, more efficient Internet connectivity.

The network modernization covers the core transmission using DWDM, IP Core and
Metro-Ethernet access as part of a five-year upgrading program.

The new equipment also allows Converge to grow further and reach more areas,
including the hard-to-reach ones, and to better serve its clients, particularly in the business
sector.

The company is anticipating a heavy volume of Internet traffic among users so it

decided to implement the network upgrade last year. Converge promises that from now on,
more customers can experience faster and better Internet and with absolutely no data cap.

“The upgrade of our facilities is part of the company’s five-year roadmap to provide
more bandwidth in anticipation of the heavy traffic of Internet users, and we will still keep our
promise that there will be no data cap in all Converge Internet plans,” explained Jesus Romero,
COO of Converge ICT.

The network modernization delivers multiple redundant 100G links to Converge’s core
network with no network element having less than a 10G uplink. This is in line with the
objective of having a non-blocking, low-touch core.
 With the upgrade, both home and business subscribers will have access to and connect
directly to the Converge network itself, thus making connectivity fast, seamless, uninterrupted
and with no data cap.

“We chose Huawei primarily because of their solutions flexibility and scalability and
we believe that Huawei will be able to deliver Converge’s low latency, high capacity and high
resiliency requirements of its network, now and in the future” said Dennis Uy, president and
CEO of Converge ICT.

“Aside from that, Converge will be able to provide bandwidth-hungry customers for all
vertical markets and more importantly, deliver the Internet speed they want at an ultra-
competitive price scheme,” added Uy.

Converge ICT currently has the third largest Internet backbone in the country and has
already laid more than 6,000 kilometers of fiber-optic Internet connectivity and still growing,
reaching customers in Baguio and down south to Batangas. Soon, it will reach customers as far
as La Union and further south in Nasugbu, Batangas.

Converge currently offers FiberX plan for consumers and is offered in three different
plan types for a variety of users depending on their Internet usage.

FiberX 1500 comes with a burstable speed of up to 25Mbps, FiberX2500 at up to

50Mbps while FiberX 3500 offers connectivity of up to 100Mbps.

For SMEs, Converge ICT offers its iBIZ pure Fiber plan so businesses can operate faster
and more efficient. Each iBIZ plan comes with free Webmail, free Web hosting and free Public
IP.

For larger enterprises, Converge offers Enterprise Data and Solutions that come with
scalable Internet connection up to 1Gbps, an IP MPLS (Multiprotocol Label Switching),
Disaster Recovery, Managed Data Center Services, and other benefits for more efficient
business operations.
II. Financial Statements and Financial Ratios Analysis
HORIZONTAL ANALYSIS (BALANCE SHEET)

Figure 1.

From 2020 to 2024, PLDT’s balance sheet reflects an aggressive expansion,

restructuring, and strategic recovery. In 2020, the company closed with ₱575.85 billion in total
assets. By 2021, total assets increased by ₱50,482 billion or 8.77%, rising from ₱575,846
billion to ₱626,328 billion, fueled by a record ₱89 billion in capital expenditures directed
toward fiber rollout, 5G deployment, and VITRO data centers. This was financed by a 9.4%
increase in liabilities, reaching ₱498.86 billion, mostly from new long-term borrowings. Equity
also rose by 6.52% from ₱119,665 billion in 2020 to ₱127,465 billion in 2021, supported by
strong Telco Core Income of ₱30.2 billion and growing retained earnings despite active
dividend payments.

However, in 2022, the momentum shifted. Total assets slightly declined to ₱624.16
billion or by 0.35% as PLDT pursued an “asset-light” strategy, selling over 7,500 telecom
towers and recognizing the proceeds of ₱98 billion. While this event helped reduce long-term
debt and brought down non-current liabilities by 4.15%, the current liabilities still increased
because of the recognition of new lease obligations from the tower sale-and-leaseback
arrangements. This also resulted in a 3.30% drop in property and equipment, the company’s
highest non-current asset reduction in five years. Upscaling the situation was a budget overrun
of ₱48 billion, part of the ₱96.8 billion in capex for the year, which triggered accelerated
depreciation and cut net income by 60%. Consequently, retained earnings fell 45.10% and total
equity plummeted by ₱12,504 billion or 10.59%, from ₱127,465 billion to ₱113,961 billion.
The equity decline was further aggravated by losses in investments and foreign currency
fluctuations.

In 2023, PLDT focused on financial recovery and stabilization. Total assets declined
further by 2.35%, primarily due to a 13.78% drop in current assets, including a 36% reduction
in cash and cash equivalents (from ₱25.21 billion to ₱16.18 billion). On the other hand,
liabilities fell by ₱11,068 billion or 2.17%, with a notable 20.38% reduction in current
liabilities, signaling improved short-term liquidity and maturing debt settlements. Although
retained earnings rise by 17.13%, equity still dipped slightly by 3.14% because of the 18.97%
increase in other comprehensive losses.

By 2024, PLDT shifted back to expansion while maintaining financial control. Total
assets grew again by 2.26%, due to capital expenditures of ₱78.2 billion (focused on expanding
fiber networks, upgrading mobile services, and completing its new data center), this amount
was slightly lower than the ₱85.1 billion spent in 2023, as they geared toward an efficient
strategic rollout and strategic use of those capex. These capital investments likely increased the
value of long-term assets such as property and equipment, as the total non-current asset
increased by 3.72% from 2023. The most notable change was in total liabilities, particularly in
the long-term liabilities which increased by 5.16% mainly due to a rise in borrowings. PLDT’s
net debt rose to ₱273.0 billion in 2024 from ₱239.8 billion in 2023 as shown in their recent
report, indicating that the company relied more on debt to finance its strategic projects. This
increase in debt contributed significantly to the growth in total liabilities of 1.48%. Despite
this, PLDT’s profitability strengthened significantly: net income grew 21% to ₱32.3 billion,
boosting retained earnings by 53.96% from ₱22,020 to ₱33,091. Consequently, total equity
increase by 5.75% from 110,386 to ₱116.74 billion, reaffirming financial stability.

HORIZONTAL ANALYSIS (INCOME STATEMENT)

Figure 2.

Over the past five years, PLDT has shown a steady and resilient financial performance,
especially in terms of revenue growth. From 2020 to 2024, total revenues increased from
₱181.0 billion to ₱216.8 billion, representing an overall growth of around 20%. This growth
was mainly driven by consistent increases in service revenues, which climbed from ₱173.6
billion in 2020 to ₱208.4 billion in 2024. Each year posted moderate but stable growth, with
2022 having the highest increase at 5.77%, while 2024 and 2023 saw growth rates of 3.25%
and 3.32% respectively. Non-service revenues, on the other hand, were more inconsistent.
These peaked in 2022 at ₱9.0 billion but declined by 7.35% to ₱8.5 billion in 2024, showing
some instability in revenue streams outside of core services.

Expenses over the five years reflected some volatility, largely due to fluctuations in
some cost categories. Selling, general, and administrative expenses remained relatively flat,
though they declined gradually from ₱84.5 billion in 2022 to ₱78.3 billion in 2024. A
significant change was the spike in depreciation and amortization in 2022, which increase
sharply to ₱98.6 billion, an 89% increase compared to the previous year. This was likely tied
to major infrastructure or asset investments. Fortunately, this figure dropped steadily in the
following years, with ₱58.4 billion in 2023 and ₱56.0 billion in 2024, suggesting that the
sudden high was a one-time event. Interconnecti

on costs also saw a continued rise over the five-year period, growing from only ₱2.1
billion in 2020 to ₱13.7 billion in 2024. This surge may point to increased traffic or broader
network collaborations. Meanwhile, cost of sales and services remained stable, around the ₱12
to ₱14 billion range, which helped keep total expenses under control.

These changes in revenue and expenses directly impacted PLDT's profitability. The
company experienced a drop in net income in 2022, recording only ₱10.7 billion, mainly due
to high depreciation and other cost pressures. However, this was followed by a net income
surged of ₱26.8 billion in 2023 and ₱32.6 billion in 2024, indicating an overall upward trend
in profitability. Earnings per share also reflected this recovery, increasing from ₱48 in 2022 to
₱149 in 2024.
 HORIZONTAL ANALYSIS (BALANCE SHEET)

Figure 3.

The balance sheet reveals significant fluctuations in the company’s financial position
over the five-year period. Current assets showed volatility, particularly in cash reserves which
dropped 37.61% in 2021 before rebounding 34.07% in 2023, only to decline again by 38.27%
in 2024, indicating persistent liquidity challenges. Trade and other receivables grew steadily
(19.56% in 2024), suggesting either expanded credit sales or slower collections. Inventory
levels saw dramatic swings, surging 25.83% in 2022 before plummeting 53.84% in 2023 and
22.92% in 2024, reflecting aggressive inventory management. Fixed asset growth was
strongest in 2022 (29.36% for property, plant and equipment) but slowed to just 3.74% in 2024,
signaling reduced capital expenditures. The liability structure showed concerning trends, with
short-term borrowings spiking 310.17% in 2021 and long-term debt peaking at 107.75%
growth in 2022, though both showed improvement by 2024 with declines of 20.15% in long-
term debt. Equity demonstrated resilience, with particularly strong growth in 2021 (100.27 %)
supported by retained earnings, helping to offset the company’s debt burden.

HORIZONTAL ANALYSIS (INCOME STATEMENT)

Figure 4.

Revenue growth exhibited an uneven pattern, with the strongest expansion in 2021
(69.17%) during the post-pandemic recovery, moderating to 14.85% in 2024. While gross profit
margins improved (15.79% growth in 2024), this was undermined by rapidly rising operating
expenses, with general and administrative expenses growing 32.68% in 2024 after a 72.09%
surge in 2021. Finance costs followed a concerning trajectory peaking at 256.71% growth in
2022 before moderating to 7.54% in 2024. Profitability metrics reflected these pressures after
an exceptional 111.29% net profit growth in 2021, the pace slowed considerably to just 18.84%
in 2024. The income statement reveals persistent challenges in converting revenue growth to
bottom-line results, as operating expenses consistently grew faster than revenues. Converge’s
2024 performance suggests it has stabilized from earlier volatility but continues to face margin
pressures from both operational costs and financing expenses.
VERTICAL ANALYSIS (BALANCE SHEET)

Figure 5.
 In vertical analysis of the two recent fiscal period, it greatly shows how PLDT is
focused on capital expenditure and financial control. With non-current assets continuously
account for the majority of the total assets from 88.50% of ₱609,519 in 2023 and 89.76% of
₱623,275 to the following year. This shift was driven by increases in property and equipment,
which rose from 47.1% to 51.03%, and right-of-use assets and investment properties. These
changes suggest that PLDT has made significant long-term investments, likely related to
infrastructure upgrades or expansion efforts.

On the other hand, the proportion of current assets decreased from 11.5% to 10.24% of
total assets in 2024, primarily due to a significant drop in cash and cash equivalents, which fell
from 2.65% to 1.61%. This indicates reduced liquidity, possibly resulting from the company
using cash for investments or debt repayments. Prepayments and other non-financial assets also
declined, alongside a drop in assets held-for-sale. However, trade and other receivables
increased from 4.28% to 5.07%, which could point to higher sales on credit or delays in
collections.

On the liabilities side, current liabilities as a percentage of total liabilities decreased

from 32.27% to 30.24%. This was mainly due to a reduction in accounts payable and income
tax payable, implying that the company may have paid off more of its short-term obligations
or had lower immediate tax liabilities. However, the current portion of interest-bearing
financial liabilities increased from 1.91% to 3.74%, indicating a rise in short-term borrowings.
At the same time, noncurrent liabilities increased slightly from 49.62% to 51.03%, largely due
to higher long-term borrowings and lease liabilities. This aligns with the rise in non-current
assets and indicates that PLDT is financing its capital investments through both short- and long-
term debt.

Equity improved slightly, growing from 18.11% to 18.73% of total liabilities and equity.
A significant contributor to this growth was the increase in retained earnings, which rose from
3.61% to 5.44%. This suggests that PLDT has better control of their finances and the large
investment in capital for the expansion and improvement of operation is paying off as more
customer avail their products. These developments, when viewed alongside the horizontal
analysis, indicate that the shifts in the vertical structure of PLDT’s balance sheet were likely
the result of strategic focus on long term growth and sustainability caused by the company’s
strategic focus on long-term growth and infrastructure expansion.
 VERTICAL ANALYSIS (INCOME STATEMENT)

Figure 6.

In 2024, PLDT’s income statement, as shown in the vertical analysis, there was an
improved profitability compared to 2023. Total revenues slightly increased, with service
revenues accounting for a larger share—rising from 95.68% in 2023 to 96.10% in 2024, while
non-service revenues slightly declined from 4.32% to 3.90%. This shift suggests that PLDT
strengthened its core business offerings, likely due to higher demand for data and digital
services, as the company continued to expand its fiber and 5G infrastructure.

A key factor behind the stronger net income performance was the reduction in total
expenses as a percentage of revenue. In 2023, total expenses represented 80.71% of revenues,
but this dropped to 76.72% in 2024. One factor is the significant change in selling, general, and
administrative expenses, which declined from 38.81% to 36.11%. This indicates improved cost
management and operational efficiency, possibly because of the implementation of AI, cloud
computing and other digital tools to streamline processes. Moreover, the decreases in the
component of expense signify that PLDT do not only focused on expanding their business, but
also sustaining it by also investing in internal operations.

PLDT’s operating improvements led to a rise in income before income tax from 17.29%
of revenue in 2023 to 19.69% in 2024. Even after accounting for a slightly higher income tax
provision (4.68% versus 4.56%), the net income margin improved from 12.72% to 15.01%.
This stronger bottom-line performance reflects not just revenue growth, but more importantly,
better control over operational and capital costs.

These positive results are consistent with PLDT’s objective in 2024 on maximizing core
services, improving customer experience, and managing expenses, all while navigating a
competitive telecom environment and pursuing infrastructure modernization. The company’s
performance, as reflected in the vertical analysis, shows that these efforts translated into a
stronger and more efficient operation.
VERTICAL ANALYSIS (BALANCE SHEET)

Figure 7
 The vertical analysis reveals significant structural changes in Converge’s financial
position. In 2023, non-current assets dominated at 78.10% of total assets, primarily driven by
property, plant and equipment (66.77%), reflecting capital-intensive operations. By 2024, this
concentration ceased slightly to 75.86%, though fixed assets remained the largest component
(65.44%). Current assets increased marginally from 21.90% to 24.14%, but cash and cash
equivalents halved from 13.54% to 7.90% of total assets, which is a concerning liquidity
development. On the liabilities side, Converge improved its structure by reducing total
liabilities from 55.27% to 48.91% of total liabilities and equity, mainly through cutting long-
term borrowings from 29.65% to 22.36%. This deleveraging strengthened equity from 44.73%
to 51.09%, indicating better financial stability despite the shrinking cash position.

VERTICAL ANALYSIS (INCOME STATEMENT)

Figure 8.

The analysis reveals the relative weight of each income statement item as a percentage
of total revenues for 2023 and 2024. In 2023, cost of services consumed -35.95% of revenues,
leaving a gross profit margin of 64.05%. Operating expenses (general/admin and impairments)
totaled -23.52%, significantly reducing profitability. Finance costs further eroded profits at -
5.88%, resulting in a pre-tax margin of 34.28%. After -8.55% in taxes, the net profit margin
settled at 25.73%. In 2024, cost of services improved slightly to -35.42%, boosting gross
margin to 64.58%. However, operating expenses worsened to -26.74%, indicating rising
overhead costs. Finance costs decreased to -4.73%, helping the pre-tax margin reach 35.19%.
Despite higher taxes (-8.56%), the net margin improved to 26.63%, suggesting slightly better
bottom-line efficiency. While revenues grew, cost pressures intensified, particularly in
administration and impairments. The marginal net profit increase, from 25.73% to 26.63%, was
supported by reduced finance costs, but operating expense control remains a critical challenge.
The analysis highlights that while revenue growth and lower financing costs helped margins,
rising operational costs are eroding potential profitability gains.

A. FINANCIAL RATIO ANALYSIS

Figure 10.

Figure 9.
Figure 10.
 1. Analysis of Liquidity or Short-term Solvency

Stakeholders pay close attention to a company’s ability to pay its short-term and long-term
debts as they become due. Liquidity ratios help measure this ability. In simple terms, these
ratios show whether a company can meet its short-term financial obligations. They also give a
good idea of how stable and prepared the company is in case of financial challenges.

Current Ratio

1.1
0.93

0.36 0.34

12/31 2023 12/31 2024

PLDT Converge

Graph 1.

One of the most commonly used liquidity indicators is the current ratio, which
assesses the extent to which current liabilities are covered by current assets. A higher ratio
suggests better short-term financial health, as it means the company can more easily pay off its
obligations as they come due.

PLDT’s current ratios for 2023 and 2024 are 0.36 and 0.34, respectively. This means
that the current liabilities for 2023 and 2024 exceed the current assets for those specific years.
Its current ratio implies that the current assets are insufficient to satisfy its obligations, which
indicates that the payment of such liabilities would not be possible if they were due at the point
in time, signaling a weak liquidity position. In addition, the current ratio decreased by 5.56%
in 2024, reflecting a continued liquidity challenge.
 While both current assets and current liabilities declined in 2024, the sharper drop in
current assets is the main reason for the ratio’s deterioration. Specifically, current assets fell by
8.98%, more than double the 4.18% decrease in current liabilities. This imbalance further
weakened PLDT’s ability to meet its short-term financial commitments.

In contrast, Converge demonstrated an improving liquidity position. Its current ratio

rose from 0.93 in 2023 to 1.10 in 2024. Although the 2023 ratio fell below the ideal benchmark
of 1.0, the 18.28% increase over the year reflects significant progress in its short-term financial
health.

This improvement was mainly driven by an increase in current assets, accompanied by

a modest 1.56% reduction in current liabilities. While the company experienced a 38.27% drop
in cash and cash equivalents, this was offset by gains in other current asset components, most
notably the introduction of short-term investments, which grew from zero to ₱8,526 million.

Quick Ratio
0.99
0.78

0.34 0.32

12/31 2023 12/31 2024

PLDT Converge

Graph 2

A company's quick ratio serves as a critical indicator of its ability to meet short-term
obligations using only its most liquid assets, excluding inventory. A ratio of 1.0 or higher is
generally preferred, as it suggests the company can cover its current liabilities without relying
on inventory or external financing.

In 2023, PLDT posted a quick ratio of 0.34, which slightly decreased to 0.32 by the end
of 2024. While the decline is minimal, it reinforces the company’s ongoing liquidity concerns.
The figures suggest that PLDT’s most liquid assets remain insufficient to meet its current
liabilities, leaving it reliant on internal cash flows or external financing to bridge the gap.
 In contrast, Converge displayed a notable improvement in its quick ratio, rising from
0.78 in 2023 to 0.99 by 2024, just below the ideal threshold. Although still under 1.0, this shift
indicates enhanced short-term financial health. The improvement is supported by a 16.66%
increase in current assets and an 8% reduction in inventory, strengthening Converge’s capacity
to manage obligations without heavy dependence on less liquid assets.

When comparing the two companies, Converge stands in a more favorable liquidity
position than PLDT. Despite operating within the same industry, Converge’s upward trend
reflects growing financial flexibility and better short-term stability. Meanwhile, PLDT’s slight
deterioration in its quick ratio signals potential vulnerability and highlights the need for
strategic action to address its liquidity challenges.

2. Analysis of the Liquidity and Asset Management Efficiency

Inventory Turnover Ratio

4.84
4.37 4.22

2.88

12/31 2023 12/31 2024

PLDT Converge

Graph 3.
Computations:

Average Inventory (AI) = {(Beginning, Inventory + Ending, Inventory) / 2}

Inventory Turnover Ratio (ITR) = Cost of Sales / Average Inventory

PLDT:

AI2023 = (3,568 + 3,340) / 2 AI2024 = (3,340 + 3,306) / 2

AI2023 = 3,454 AI2024 = 3,323

ITR2023 = 15,092 / 3,454 ITR2024 = 14,011 / 3,323

ITR2023 = 4.37 ITR2024 = 4.22

CONVERGE:

AI2023 = (5,644 + 3,460) / 2 AI2024 = (3,340 + 2626) / 2

AI2023 = 4,552 AI2024 = 3,043

ITR2023 = 13,110 / 4,552 ITR2024 = 14,743 / 3,043

ITR2023 = 2.88 ITR2024 = 4.84

As a rough estimation, PLDT’s inventory turnover ratios for 2023 and 2024 were sold
out and had been restocked 4.37 and 4.22 times, respectively. That said, Converge’s inventory
turnover was 2.88 for 2023 and 4.84 for 2024, which shows that Converge did better at
managing its inventories.

The thing that affected the reduction in the inventory turnover of the company PLDT
is the decrease in the cost of goods sold. Meanwhile, Converge’s cost of sales increased, leading
to an increase in the inventory turnover.

Days Sales in Inventory

125

82 85
74

12/31 2023 12/31 2024

PLDT Converge

Graph 4.
Computations:

Days Sales in Inventory (DSI) = 360 / ITR

PLDT:

DSI2023 = 360 / 4.37 DSI2024 = 360 / 4.22

DSI2023 = 82.37 DSI2024 = 85.31

CONVERGE:

DSI2023 = 360 / 2.88 DSI2024 = 360 / 4.84

DSI2023 = 125 DSI2024 = 74.38

Roughly speaking, the average period to work off the inventory of PLDT in 2023 is
82.37 or 83 days, while for 2024, it takes 85.31 or 86 days, which aligns with the decrease in
inventory turnover from 4.37 to 4.22, suggesting that inventory is staying longer before being
sold.

For Converge, it takes approximately 125 days exactly and 74.38 or 75 days for 2023
and 2024, respectively. The decrease in the days sales in inventory is caused by the increase in
the inventory turnover, which was the effect of the decrease in the cost of goods sold. It can be
shown that Converge has better days sales in inventory than PLDT.

Fixed Asset Turnover Ratio

0.73 0.72

0.57
0.52

12/31 2023 12/31 2024

PLDT Converge
Graph 5.
 The Fixed Asset Turnover Ratio (FATR) measures how efficiently a company uses
its fixed assets to generate sales revenue. It indicates how well the company is leveraging
investments in infrastructure, such as fiber-optic networks, towers, and data centers, to produce
income. A higher ratio suggests effective use of fixed assets, while a lower ratio may imply
underutilization or potential liquidity issues, especially if the company struggles to cover short-
term obligations. However, since both companies operate in the telecommunications industry,
fixed assets are expected to make up a significant portion of total assets, as substantial
investment in physical infrastructure is essential for delivering reliable services.

Computations:

Average Fixed Asset (AFA) = (Beginning, Fixed Asset + Ending, Fixed Asset) / 2

Fixed Asset Turnover Ratio (FATR) = Sales / Average Fixed Asset

PLDT:

AFA2023 = (292,745 + 287,103) / 2 AFA2024 = (287,103 + 318,069) / 2

AFA2023 = 289,924 AFA2024 = 302,586

FATR2023 = 210,953 / 289,924 FATR2024 = 216,833 / 302,586

FATR2023 = 0.73 FATR2024 = 0.72

CONVERGE:

AFA2023 = (65,827 + 70,383) / 2 AFA2024 = (70,383 + 72,289) / 2

AFA2023 = 68,105 AFA2024 = 71,336

FATR2023 = 35,359 / 68,105 FATR2024 = 40,610 / 71,336

FATR2023 = 0.52 FATR2024 = 0.57

*NOTE: Amount used in the computation is in ₱ millions.

In 2023, PLDT reported a Fixed Asset Turnover Ratio (FATR) of 0.73, which slightly
declined to 0.72 in 2024. Despite the minor decrease, PLDT maintained relatively consistent
efficiency in utilizing its infrastructure investments to drive sales. On the other hand, Converge
posted a lower FATR of 0.52 in 2023, which improved to 0.57 in 2024. This upward trend
reflects a more effective use of its fixed assets over time. Overall, PLDT outperformed
Converge in both years in terms of fixed asset efficiency. However, both companies exhibit
FATR values below 1.0, which is typical for telecommunications firms due to their capital-
intensive nature.

Total Asset Turnover Ratio

0.39

0.35 0.35
0.34

12/31 2023 12/31 2024

PLDT Converge

Graph 6.

Total Asset Turnover (ATR) measures how efficiently a company uses all of its assets
to generate sales revenue. It indicates how well the business is leveraging its total resources to
support its operations and drive income.

For the year 2023, PLDT and Converge recorded Total Asset Turnover Ratios (ATR)
of 0.34 times and 0.35 times, respectively. While PLDT's sales and average total assets were
significantly higher than those of Converge, the proportion between revenue and total assets
was nearly identical for both companies. This indicates that, despite their differences in scale,
they exhibited a similar level of efficiency in utilizing their total assets to generate revenue
during the period.

For the subsequent year, the ATR of Converge (0.39 times) is greater than the ATR of
PLDT (0.35 times). Both the sales of the two companies increased, but the change in sales for
Converge was 14.851% more than that of PLDT, which is only 2.787%.
 Although both total assets of the companies also increased, the proportion of the
increase in their sales and the increase in their total assets is higher on the Converge, thus the
higher ATR.

Computations:

Average Total Assets (ATA) = (Beginning, Total Assets + Ending Total Assets) / 2

Total Assets Turnover Ratio (ATR) = Sales / Average Total Assets

PLDT:

ATA2023 = (624,162 + 609,519) / 2 ATA2024 = (609,519 + 623,275) / 2

ATA2023 = 616,840.5 ATA2024 = 616,397

ATR2023 = 210,953 / 616,840.5 ATR2024 = 216,833 / 616,397

ATR2023 = 0.34 ATR2024 = 0.35

CONVERGE:

ATA2023 = (98,098 + 101,145) / 2 ATA2024 = (101,145 + 107,054) / 2

ATA2023 = 99,621.5 ATA2024 = 104,099.5

ATR2023 = 35,359 / 99,621.5 ATR2024 = 40,610 / 104,099.5

ATR2023 = 0.35 ATR2024 = 0.39

*NOTE: Amount used in the computation is in ₱ millions.

 3. Analysis of Leverage: Debt Financing Coverage

Debt Ratio

0.81 0.82

0.24 0.22

12/31 2023 12/31 2024

PLDT Converge

Graph 7.

The debt ratio is the proportion of a company’s assets that are financed by its liabilities.
It also measures the extent of a company’s leverage and its financial risk.

Based on the data, PLDT’s debt ratio increased slightly from 0.8127 in 2023 to 0.8189
in 2024, indicating that more than 80% of its assets are financed through debt. This suggests a
high level of financial risk, as the company relies heavily on debt financing. In contrast,
Converge’s debt ratio decreased from 0.2365 to 0.2199, showing a more conservative use of
debt and lower financial risk. The increase in PLDT’s debt ratio may indicate higher liabilities
relative to its assets, suggesting growing financial obligations. This could pose challenges in
times of economic downturns, as the company may face difficulty covering its debts.
Converge’s decreasing ratio reflects a more stable financial position and lower dependence on
debt.
 Debt to Equity Ratio

4.34 4.52

0.53 0.43

12/31 2023 12/31 2024

PLDT Converge

Graph 8.

The debt-to-equity ratio compares a company's total liabilities to its shareholder equity.
It indicates the relative proportion of debt and equity used to finance a company’s assets.

PLDT’s debt-to-equity ratio increased from 4.3392 in 2023 to 4.5217 in 2024, implying
that for every peso of equity, the company has over four pesos of debt. This increase signals a
higher financial risk, as PLDT becomes more leveraged over time. A higher ratio suggests
greater vulnerability to interest rate fluctuations and economic instability.

On the other hand, Converge’s debt-to-equity ratio decreased from 0.5286 to 0.4304,
indicating a more balanced capital structure with lower reliance on debt. This suggests stronger
financial stability and lower exposure to credit risk.

PLDT has a significantly higher financial risk than Converge, as seen in its rising debt ratios.
Its heavy dependence on debt financing makes it more susceptible to financial pressures, while
Converge demonstrates a more conservative approach, reflected in its declining debt ratios.
 4. Operating Efficiency and Profitability

Gross Profit Margin

0.93 0.94

0.64 0.65

12/31 2023 12/31 2024

PLDT Converge

Graph 9.

Gross Profit Margin (GPM) is a profitability ratio that measures how efficiently a
company produces and sells its products or services by showing the percentage of revenue that
exceeds the cost of goods sold (COGS). It reflects a company’s efficiency in using its resources
to deliver its products or services profitably. In simpler terms, it shows how much gross profit
a company retains from each peso of sales, which is then used to cover operating expenses,
taxes, and profit. A higher GPM means greater efficiency in controlling production or service
delivery costs, and it reflects strong operating performance.

In 2023, Converge recorded a Gross Profit Margin of 0.641, which slightly increased
to 0.646 in 2024. This rise in GPM suggests a marginal improvement in the company’s cost
efficiency either through better cost management or slightly higher pricing power. The upward
trend indicates that Converge was able to retain more of its revenue as gross profit, which is a
positive sign of operational improvement. This could be the result of technological upgrades,
improved service delivery, or better supplier terms. However, it is worth noting that Converge
operates in a highly competitive fiber internet market, which limits how much it can increase
its prices without losing customers. Overall, the figures reflect that Converge is maintaining a
stable and efficient approach to its core operations.

PLDT reported a significantly higher Gross Profit Margin of 0.9285 in 2023, which
further increased to 0.9354 in 2024. The increase, though small, suggests continued strength in
controlling direct costs and possibly greater revenue from higher-value services or efficient
service management. PLDT’s long standing infrastructure, wider customer base, and
diversified service lines may have helped it absorb cost pressures more effectively. Despite
rising operational costs and a competitive telecommunications environment, PLDT maintained
a highly satisfactory gross profit margin, suggesting that it has ample capacity to cover its
operating expenses and still remain profitable. PLDT’s high and consistent GPM underscores
its strong operating efficiency and cost leadership in the telecommunications industry.

When comparing the two companies, both Converge and PLDT show improvement in
their Gross Profit Margins from 2023 to 2024, indicating enhanced cost efficiency and
operational performance. However, PLDT significantly outperforms Converge in terms of
gross profitability, maintaining a GPM above 0.93, while Converge’s remains around 0.64. This
wide margin suggests that PLDT is more effective in managing its core costs and converting
revenues into gross profits, while Converge's margin is lower, it is still considered healthy given
the company’s position as a relatively newer and fast-expanding player in the market.
Nevertheless, both firms are operating efficiently within their respective capacities, and their
year-over-year improvements reflect stable and growing operational control in a competitive
industry. PLDT clearly has the upper hand in terms of profitability and resource utilization,
with a very low probability of operational losses in the near term.
 Operating Profit Margin

0.402 0.399

0.233
0.193

12/31 2023 12/31 2024

PLDT Converge

Graph 10.

Operating Profit Margin (OPM) is a financial ratio that measures how much profit a
company makes from its core operations before interest and taxes, expressed as a percentage
of its revenue. This ratio reflects the efficiency of a company in managing its operating costs
and indicates its ability to generate earnings from regular business activities. A higher operating
margin means the company retains more profit per peso of revenue, signaling stronger control
over operating expenses.

In 2023, Converge recorded an Operating Profit Margin of 0.4016, which slightly

decreased to 0.3992 in 2024. This minimal drop, suggests that while Converge is maintaining
strong operational profitability, there may have been a slight increase in operating expenses.
The nearly stable margin reflects that Converge still generates a healthy operating profit from
its core internet services, demonstrating consistent cost management and strong demand.
Despite facing competition and the need for network expansion, Converge continues to
efficiently turn its revenues into operating income.

PLDT, on the other hand, showed a improvement in its Operating Profit Margin,
increasing from 0.1929 in 2023 to 0.2328 in 2024. This substantial growth reflects better
operating efficiency, possibly driven by increased revenues from higher-margin business
segments, improved cost controls, or reduced non-core operating expenses. PLDT’s expansion
in digital services and strategic cost-cutting initiatives may have contributed to this margin
recovery. Although its OPM remains lower than Converge’s, the upward trend signals a positive
shift in profitability from operations and better financial discipline.

Both PLDT and Converge maintained positive Operating Profit Margins in 2023 and
2024, indicating profitable operations. Converge outperformed PLDT in terms of margin size,
with nearly 40% of its revenue turning into operating profit, compared to PLDT’s 23% in 2024.
However, PLDT showed a stronger year-over-year improvement, increasing its margin by
nearly 4 percentage points, while Converge’s margin remained relatively flat. This implies that
although Converge is currently more efficient in terms of operational profitability, PLDT is
catching up, possibly due to better cost strategies and growth in more profitable segments. Both
companies demonstrate solid operating performance, but Converge holds a slight lead in terms
of operational margin strength, while PLDT shows encouraging progress in improving its
operational earnings.

Net Profit Margin

0.26 0.27

0.15
0.13

12/31 2023 12/31 2024

PLDT Converge

Graph 11.

Net Profit Margin (NPM) is a profitability ratio that indicates how much of each peso
in revenue is translated into actual profit after all expenses including operating costs, interest,
taxes, and depreciation are deducted. It is calculated by dividing Net Income by Revenue. A
higher net profit margin signifies better control over overall expenses and efficient financial
management, while a lower margin may suggest high operational costs or other financial
burdens. In simple terms, this ratio tells us how much profit a company retains for every peso
of sales it earns.

Converge posted a Net Profit Margin of 0.2573 in 2023, which slightly improved to
0.2663 in 2024. This upward trend suggests that Converge was able to increase its profitability,
likely through efficient cost management or increased subscriber base translating to higher net
income. Despite growing competition in the broadband sector, the improvement shows
Converge’s ability to control expenses and manage operations effectively, resulting in a higher
percentage of profit retained from its total revenues. The rise in its NPM, though moderate,
points to stable and growing net earningssupported by scalable operations and potential
enhancements in service packages or pricing strategies.

PLDT showed a Net Profit Margin of 0.1272 in 2023, which grew to 0.1501 in 2024.
This positive increase implies an improvement in the company’s bottom line, possibly driven
by strategic cost reductions, streamlining of operations, or enhanced revenue sources such as
digital services and enterprise solutions. Though still lower than Converge’s NPM, the
consistent upward trajectory is favorable. It suggests that for every peso PLDT earns, it now
retains about 15 centavos as net profit—up from 12 centavos the year prior. This reflects
PLDT’s effort to improve its profitability despite the burden of legacy systems, larger
workforce, and broader infrastructure footprint compared to its competitor.

In conclusion, both Converge and PLDT displayed positive Net Profit Margins in 2023
and 2024, indicating that they both remain profitable after all expenses. Converge
outperformed PLDT in both years, showing that it retained a higher portion of profit from its
sales—26.63% in 2024 compared to PLDT’s 15.01%. However, PLDT showed a greater year-
on-year improvement in percentage terms, reflecting effective cost control and growing
efficiency. The difference in their net profit margins can be attributed to their business models
and scale: Converge, being leaner and more focused on broadband, may benefit from lower
overhead costs, while PLDT bears broader legacy expenses. Still, the upward trend in both
margins shows strong financial performance and healthy profitability, with Converge holding
the advantage in terms of efficiency, and PLDT showing promising financial recovery and
momentum.
 Return on Asset
0.1
0.09

0.05
0.04

12/31 2023 12/31 2024

PLDT Converge

Graph 12.

Return on Asset (ROA) is a profitability ratio that measures how efficiently a company
uses its assets to generate net income. It is computed by dividing Net Income by Total Assets.
This metric tells us how many pesos of profit a company earns for every peso it has invested
in assets. A higher ROA indicates more efficient use of assets, while a lower ROA may suggest
operational inefficiencies or underutilization of resources.

Converge reported an ROA of 0.08996 in 2023, which improved to 0.1010 in 2024.

This steady increase suggests that Converge is becoming more efficient in using its assets to
generate income. Despite being a relatively newer player in the telecommunications industry,
the company shows strong asset management—likely the result of scalable fiber infrastructure
investments, increased subscription revenue, and cost-efficient operations. The upward trend
means that for every peso Converge invested in its assets, it earned about 10 centavos in 2024,
compared to nearly 9 centavos in 2023. This reflects a healthy return relative to its asset base,
and signals strong operational performance supported by rising demand for broadband services
and strategic deployment of resources.

PLDT posted an ROA of 0.0440 in 2023, which improved to 0.0522 in 2024. Although
the numbers are lower compared to Converge, the upward trend is favorable. The improvement
could be attributed to better cost control, digital transformation initiatives, and streamlining of
legacy operations. However, PLDT’s large asset base, which includes a wide range of
infrastructure and legacy systems, may be dragging down its ROA. For every peso of assets
held, PLDT generated around 5 centavos of profit in 2024—up from 4 centavos the previous
year. This shows that PLDT is making progress in improving its operational efficiency but still
lags behind Converge in terms of asset utilization.

In conclusion, both Converge and PLDT showed year-on-year improvements in their

Return on Asset ratios, signaling better profitability and operational efficiency. However,
Converge remains significantly more efficient in converting its assets into profit. In 2024,
Converge generated 10.10% ROA compared to PLDT’s 5.22%, which means Converge was
almost twice as efficient in using its asset base. The difference may stem from the nature of
their operations—Converge operates with a newer, more targeted infrastructure focused on
broadband services, while PLDT maintains a broader and older network of services and
physical assets. This larger asset base of PLDT, although substantial, may be underutilized or
weighed down by legacy costs, reducing the returns relative to the investment. Overall, these
figures demonstrate that Converge is more agile and effective in managing its resources, while
PLDT, though improving, is still catching up in terms of asset efficiency. Both, however, show
promising signs of profitability growth.

Return on Equity

0.279
0.243
0.201 0.192

12/31 2023 12/31 2024

PLDT Converge

Graph 13.
 Return on Equity (ROE) is a profitability ratio that indicates how effectively a company
is using the shareholders’ equity to generate net income. It shows how much profit is generated
for every peso invested by stockholders. Investors use this metric to evaluate how well a
company is rewarding its owners for their investment. A higher ROE suggests stronger
financial performance and efficient capital management.

Converge posted a Return on Equity of 0.2011 in 2023, which slightly decreased to

0.1977 in 2024. This marginal drop in ROE suggests that although the company continues to
be profitable, its ability to generate returns on shareholders' equity has slightly weakened. This
could be due to a number of factors, such as higher retained earnings that increase equity,
reinvestments in infrastructure, or rising costs in operations and network expansion. Despite
the decrease, Converge remains highly profitable from a shareholder perspective—producing
nearly 20 centavos of profit for every peso invested by stockholders. This is still a strong return,
especially considering the capital-intensive nature of the telecom industry and the company's
aggressive expansion in fiber infrastructure.

PLDT reported an ROE of 0.2430 in 2023, which significantly improved to 0.2789 in

2024. This increase indicates enhanced profitability and more effective use of shareholders’
equity. The boost in ROE may be attributed to higher net income, improved operational
efficiency, and a more focused strategy in digital transformation and core revenue-generating
services. The increase also signals investor confidence, as PLDT is able to deliver nearly 28
centavos of profit for every peso of equity in 2024, up from 24 centavos in the previous year.
This strong upward trend in ROE highlights PLDT’s efforts to improve capital efficiency and
maximize shareholder value amid competition and industry transformation.

In conclusion, both Converge and PLDT show strong Return on Equity ratios, but
PLDT clearly outperformed Converge in 2024. While Converge’s ROE slightly declined,
PLDT’s ROE increased significantly, suggesting better utilization of stockholders’ equity and
stronger financial performance. PLDT’s rising profitability and growing returns for
shareholders indicate that the company has become more efficient in translating equity into
income. On the other hand, although Converge's ROE remains solid, the slight decline hints at
either increasing equity levels or higher operating costs related to expansion. Overall, PLDT
has not only achieved a higher ROE, but also demonstrated positive growth over the period—
making it more favorable in terms of delivering returns to its investors. This reflects a more
effective financial strategy, and possibly better capital and resource management than
Converge in the most recent year.

5. Financial Leverage Index

Solvency Ratio

5.52 5.34

2.24 1.96

12/31 2023 12/31 2024

PLDT Converge

Graph 14.

The Financial Leverage Index (FLI) is a solvency ratio that measures the impact of
financial leverage on a company’s return on equity in relation to its return on assets. In simpler
terms, it shows how much a company is using debt to increase its profitability for shareholders.
A higher FLI means that the firm is relying more on debt financing, which can result in higher
returns but also implies greater financial risk, especially if earnings decline or debt servicing
costs rise.

In 2023, Converge‘s Financial Leverage Index was 2.235, which slightly declined to
1.957 in 2024. This decline suggests that Converge experienced either a faster growth in total
assets compared to equity returns, or a reduction in its reliance on liabilities to generate returns
for its shareholders. The drop in FLI implies that Converge may be shifting toward a more
conservative capital structure, with reduced exposure to debt-related risks. Despite this change,
Converge still maintains a healthy level of solvency, with sufficient assets to cover its liabilities,
and a low probability of defaulting in the short term.
 PLDT, on the other hand, had a significantly higher Financial Leverage Index of 5.522
in 2023, which slightly decreased to 5.339 in 2024. This marginal drop may be attributed to a
slower growth in liabilities or a slight improvement in equity returns. Despite the decrease,
PLDT's FLI remains considerably higher than Converge's, signaling a greater dependency on
debt to fund its operations and maximize shareholder returns. While this aggressive leverage
strategy may boost profitability in favorable market conditions or during periods of stable
income, it also implies greater exposure to financial risks, especially in times of economic
uncertainty or rising interest rates. Nonetheless, PLDT continues to hold a strong asset base
that can meet its debt obligations, suggesting a very low likelihood of default in the coming
fiscal year.

Comparing both companies, it is evident that PLDT maintains a significantly higher

Financial Leverage Index than Converge, reflecting a more aggressive use of debt financing.
In contrast, Converge is moving toward a more balanced and risk-conscious capital structure,
which enhances its solvency position. Despite their differing financial strategies, both
companies remain solvent, with considerable asset levels capable of covering their liabilities.
This means that neither PLDT nor Converge is at immediate risk of defaulting, although
PLDT’s high leverage calls for careful monitoring of its financial obligations. Ultimately,
investors may view Converge as the more financially stable company in terms of long-term
solvency, while PLDT presents higher returns at the cost of elevated financial risk.
III. Overall Comparative Financial Statements

In the financial statement analysis of Converge ICT Solutions Inc. and PLDT Inc. for
fiscal years 2023 and 2024, a thorough comparison reveals how each company performed in
terms of profitability, liquidity, leverage, and asset management. Both companies operate in
the telecommunications industry, yet they differ significantly in their financial strategies and
outcomes. While both companies showed growth in profitability and improvements in key
financial metrics, Converge and PLDT have varying degrees of financial health and operational
efficiency, which may influence potential investor decisions.

Starting with profitability, PLDT recorded higher gross profit margins for both years
(93.54% in 2024 and 92.85% in 2023), much higher than Converge gross margins (64.58% in
2024 and 64.05% in 2023). This indicates that PLDT retains more income after covering the
cost of goods sold. However, Converge outperformed in operating profit margin with 39.92%
in 2024 and 40.16% in 2023, compared to PLDT’s 23.28% and 19.29%, respectively. This
implies that Converge is more efficient in controlling its operating expenses relative to its
revenue. In terms of net profit margin, which reflects the company’s overall profitability after
all expenses, Converge again leads with 26.63% in 2024 and 25.73% in 2023, while PLDT
trails with 15.01% and 12.72%. These results show that while PLDT may earn more at the
gross level, Converge manages its costs more effectively throughout the business process,
resulting in better overall profit margins.

When it comes to returns, Converge generated a Return on Assets (ROA) of 10.10% in

2024, improving from 8.99% in 2023, signifying efficient use of assets to generate income.
PLDT, on the other hand, had lower ROA values (5.22% in 2024 and 4.40% in 2023),
indicating that its vast asset base is not being utilized as effectively. However, Return on Equity
(ROE) tells a different story: PLDT has higher ROEs (27.89% in 2024 and 24.30% in 2023)
compared to Converge (19.77% in 2024 and 20.11% in 2023). This suggests that although
Converge is more efficient in asset utilization, PLDT creates more profit per peso of
shareholder investment primarily due to its higher financial leverage or higher use of debt.

Financial Leverage Index (FLI) provides insight into how leverage affects returns.
PLDT’s FLI remained significantly high (5.34 in 2024 and 5.52 in 2023), while Converge had
more conservative leverage (1.96 in 2024 and 2.24 in 2023). A higher FLI means PLDT is
relying more on debt to amplify shareholder returns, but it also indicates higher financial risk.
 This leads us to the solvency and liquidity position of each company. PLDT is heavily
financed by debt, as seen in its debt ratio of 81.89% in 2024 and 81.27% in 2023 and debt-to-
equity ratio of 4.52 in 2024 and 4.34 in 2023. This suggests that a large portion of PLDT’s
assets is financed through borrowing. In contrast, Converge has a much lower debt ratio of
21.99% and a debt-to-equity ratio of only 0.43 in 2024. This confirms that PLDT is highly
leveraged and dependent on external financing, while Converge remains in a more stable and
low-risk position in terms of debt management.

Liquidity is another crucial area. Converge has stronger short-term solvency, with a
current ratio of 1.1 in 2024 and 0.93 in 2023, alongside a quick ratio of 0.99 and 0.78. These
values indicate that Converge has sufficient liquid assets to cover its short-term liabilities. On
the contrary, PLDT’s current and quick ratios are both critically low (0.34 and 0.32 in 2024),
suggesting potential liquidity issues and an overreliance on non-current assets or short-term
debt to fund operations.

In terms of asset management efficiency, both companies showed improvements.

Converge improved its inventory turnover from 2.88 in 2023 to 4.84 in 2024, surpassing
PLDT’s figures (4.37 to 4.22), indicating more efficient inventory handling. Likewise,
Converge reduced its Days Sales in Inventory (DSI) significantly from 125 days in 2023 to just
75 days in 2024, reflecting quicker conversion of inventory into sales. PLDT’s DSI slightly
worsened (83 to 86 days), showing slower inventory turnover. However, in fixed asset
turnover, PLDT slightly edged out with 0.72 in 2024, although it declined from 0.73 in 2023,
while Converge improved from 0.52 to 0.57. Lastly, total asset turnover shows Converge (0.39
in 2024, 0.35 in 2023) used its assets more efficiently to generate sales compared to PLDT
(0.35 and 0.34).

In summary, while PLDT dominates in terms of higher gross profit and return on equity
due to high financial leverage, Converge shows better overall performance in operational
efficiency, higher net profitability, stronger liquidity, and asset management. While both
companies have their strengths, Converge's lower financial risk and better cost management
position it as a more stable investment, especially for risk-averse investors. PLDT, despite its
size and returns to equity holders, may be seen as riskier due to its high leverage and weak
liquidity. Financial statement and ratio analysis-wise, Converge shows stronger financial health
and operational control, making it the more secure and efficient option for investors looking
for solid long-term growth with lower risk exposure between the two in the current period.
However, potential investors should also consider external factors, industry trends, and long-
term strategic direction before making final investment decisions.
 IV. References

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Converge ICT (2021) Audited Financial Statements FY 2020 [Link]
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Converge ICT (2024) Audited Financial Statements FY 2023 [Link]
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