Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2023

Intangible assets and goodwill [abstract]

14.

Goodwill and Intangible Assets

Changes in goodwill and intangible assets account for the years ended December 31, 2023 and 2022 are as follows:


	Intangible Assets with		Intangible Assets with Finite Life													Total Intangible Assets with			Total						Total Goodwill and
	Indefinite Life		Trademark		Franchise		Licenses		Customer List		Spectrum		Others			Finite Life			Intangible Assets			Goodwill			Intangible Assets
			(in million pesos)
December 31, 2023
Costs:
Balances at beginning of the year		220		4,505		3,016		135		4,703		1,205		1,320			14,884			15,104			63,595			78,699
Translation and other adjustments		—		56		1		—		—		—		1			58			58			—			58
Balances at end of the year		220		4,561		3,017		135		4,703		1,205		1,321			14,942			15,162			63,595			78,757
Accumulated amortization and impairment:
Balances at beginning of the year		—		4,505		2,078		135		4,703		1,205		870			13,496			13,496			654			14,150
Amortization during the year (Notes 4 and 5)		—		—		186		—		—		—		35			221			221			—			221
Translation and other adjustments		—		56		1		—		—		—		(6	)		51			51			—			51
Balances at end of the year		—		4,561		2,265		135		4,703		1,205		899			13,768			13,768			654			14,422
Net balances at end of the year		220		—		752		—		—		—		422			1,174			1,394			62,941			64,335
Estimated useful lives (in years)		—		—		16		—		—		—	5-10				—			—			—			—
Remaining useful lives (in years)		—		—		4		—		—		—	3-8				—			—			—			—
December 31, 2022
Costs:
Balances at beginning of the year		—		4,505		3,016		135		4,703		1,205		799			14,363			14,363			62,033			76,396
Additions during the year		220		—		—		—		—		—		521			521			741			1,565			2,306
Disposals		—		—		—		—		—		—		—									(3	)		(3	)
Balances at end of the year		220		4,505		3,016		135		4,703		1,205		1,320			14,884			15,104			63,595			78,699
Accumulated amortization and impairment:
Balances at beginning of the year		—		4,505		1,892		131		4,703		1,205		771			13,207			13,207			654			13,861
Amortization during the year (Notes 4 and 5)		—		—		186		4		—		—		38			228			228			—			228
Business combinations		—		—		—		—		—		—		71			71			71			—			71
Translation and other adjustments		—		—		—		—		—		—		(10	)		(10	)		(10	)		—			(10	)
Balances at end of the year		—		4,505		2,078		135		4,703		1,205		870			13,496			13,496			654			14,150
Net balances at end of the year		220		—		938		—		—		—		450			1,388			1,608			62,941			64,549
Estimated useful lives (in years)		—		—		16		—		—		—	5-10				—			—			—			—
Remaining useful lives (in years)		—		—		5		—		—		—	4-9				—			—			—			—

The consolidated goodwill and intangible assets of our reportable segments as at December 31, 2023 and 2022 are as follows:


	2023						2022
	Wireless		Fixed Line		Total		Wireless		Fixed Line		Total
	(in million pesos)
Franchise		752		—		752		938		—		938
Customer list		—		220		220		—		220		220
Others		—		422		422		—		450		450
Total intangible assets		752		642		1,394		938		670		1,608
Goodwill		56,571		6,370		62,941		56,571		6,370		62,941
Total goodwill and intangible assets		57,323		7,012		64,335		57,509		7,040		64,549

The consolidated future amortization of intangible assets as at December 31, 2022 are as follows:


Year	(in million pesos)
2024		220
2025		220
2026		221
2027		214
2028 and onwards		299
		1,174

Impairment Testing of Goodwill

The organizational structure of PLDT and its subsidiaries is designed to monitor financial operations based on fixed line and wireless segmentation. Management provides guidelines and decisions on resource allocation, such as continuing or disposing of asset and operations by evaluating the performance of each segment through review and analysis of available financial information on the fixed line and wireless segments. As at December 31, 2023, the PLDT Group’s goodwill comprised of goodwill resulting from PGIH’s acquisition of Multisys in 2022, ePLDT’s acquisition of IPCDSI in 2012, PLDT’s acquisition of Digitel in 2011, ePLDT’s acquisition of ePDS in 2011, Smart’s acquisition of PDSI and Chikka in 2009, SBI’s acquisition of Airborne Access Corporation in 2008, and Smart’s acquisition of SBI in 2004.

Although revenue streams may be segregated among the companies within the PLDT Group, cash inflows are not considered coming from independent group of assets on a per Company basis due largely to the significant portion of shared and commonly used network/platform that generates related revenue. On the other hand, PLDT has the largest fixed line network in the Philippines. PLDT’s transport facilities are installed nationwide to cover both domestic and international IP backbone to route and transmit IP traffic generated by the customers. In the same manner, PLDT has the most Internet Gateway facilities which are composed of high-capacity IP routers and switches that serve as the main gateway of the Philippines to the Internet connecting to the World Wide Web. With PLDT’s network coverage, other fixed line subsidiaries share the same facilities to leverage on a Group perspective.

Because of the significant common use of network facilities among fixed line and wireless companies within the Group, management deems that the Wireless and Fixed Line units are the lowest CGUs to which goodwill is to be allocated and tested for impairment given that the Fixed Line and Wireless operations generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

The recoverable amount of the Wireless and Fixed Line CGUs have been determined using the value- in-use approach calculated using cash flow projections based on the financial budgets approved by the Board of Directors. The post-tax discount rates applied to cash flow projections are 9.29% for the Wireless and Fixed Line CGUs. Cash flows beyond the projection period of three years are determined using a 2.4% growth rate for the Wireless and Fixed Line CGUs, which is the same as the long-term average growth rate for the telecommunications industry. Other key assumptions used in the cash flow projections include revenue growth rate and capital expenditures.

Based on the assessment of the VIU of the Wireless and Fixed Line CGUs, the recoverable amount of the Wireless and Fixed Line CGUs exceeded their carrying amounts, hence, no impairment was recognized in relation to goodwill as at
December 31, 2023 and 2022.