| Property and Equipment |
Changes in property and equipment account for the years ended December 31, 2025 and 2024 are as follows:
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Cable
and
wire
facilities |
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Central
equipment |
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Network
facilities |
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Building and lease improvement |
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Vehicles,
furniture
and other
network
equipment |
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Land and land
improvements |
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IT
systems
and
platforms |
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Security
platforms |
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Property
under
construction |
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Total |
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(in million pesos) |
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December 31, 2025 |
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Net book value at beginning of the year |
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101,265 |
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257 |
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116,506 |
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7,304 |
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1,971 |
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4,474 |
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17,210 |
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864 |
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68,218 |
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318,069 |
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Additions (Note 4) |
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882 |
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— |
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723 |
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97 |
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367 |
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— |
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273 |
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— |
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51,935 |
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54,277 |
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Disposals/retirements |
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(6 |
) |
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— |
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(4 |
) |
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(3 |
) |
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(68 |
) |
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(1 |
) |
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— |
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— |
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— |
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(82 |
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Reclassification |
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11,158 |
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— |
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23,581 |
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7,141 |
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448 |
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(614 |
) |
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6,977 |
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258 |
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(51,345 |
) |
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(2,396 |
) |
Translation differences charged directly to cumulative translation
adjustments |
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1 |
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— |
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1 |
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— |
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— |
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— |
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— |
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— |
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— |
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2 |
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Depreciation and amortization (Note 3) |
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(10,483 |
) |
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(103 |
) |
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(24,626 |
) |
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(759 |
) |
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(725 |
) |
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(53 |
) |
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(4,850 |
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(282 |
) |
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— |
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(41,881 |
) |
Net book value at end of the year |
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102,817 |
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154 |
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116,181 |
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13,780 |
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1,993 |
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3,806 |
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19,610 |
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840 |
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68,808 |
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327,989 |
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As at December 31, 2025 |
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Cost |
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327,658 |
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513 |
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384,033 |
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35,183 |
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35,463 |
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4,301 |
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66,115 |
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2,189 |
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68,808 |
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924,263 |
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Accumulated depreciation, impairment and amortization |
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(224,841 |
) |
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(359 |
) |
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(267,852 |
) |
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(21,403 |
) |
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(33,470 |
) |
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(495 |
) |
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(46,505 |
) |
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(1,349 |
) |
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— |
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(596,274 |
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Net book value |
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102,817 |
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154 |
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116,181 |
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13,780 |
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1,993 |
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3,806 |
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19,610 |
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840 |
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68,808 |
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327,989 |
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December 31, 2024 |
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Net book value at beginning of the year |
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81,227 |
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384 |
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101,941 |
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7,979 |
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3,654 |
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4,122 |
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18,794 |
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1,162 |
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67,840 |
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287,103 |
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Additions (Note 4) |
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86 |
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— |
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70 |
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31 |
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397 |
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— |
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598 |
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— |
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69,730 |
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70,912 |
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Disposals/retirements |
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— |
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— |
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(19 |
) |
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(1 |
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(234 |
) |
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— |
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(1 |
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(129 |
) |
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— |
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(384 |
) |
Reclassification |
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31,435 |
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— |
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33,692 |
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542 |
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(809 |
) |
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456 |
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5,561 |
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202 |
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(69,167 |
) |
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1,912 |
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Translation differences charged directly to cumulative translation
adjustments |
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1 |
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— |
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— |
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— |
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1 |
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— |
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— |
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— |
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— |
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2 |
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Adjustments |
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— |
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(25 |
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— |
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— |
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25 |
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— |
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— |
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— |
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(185 |
) |
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(185 |
) |
Impairment losses recognized during the year |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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(67 |
) |
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— |
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(67 |
) |
Depreciation and amortization (Note 3) |
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(11,484 |
) |
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(102 |
) |
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(19,178 |
) |
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(1,247 |
) |
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(1,063 |
) |
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(104 |
) |
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(7,742 |
) |
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(304 |
) |
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— |
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(41,224 |
) |
Net book value at end of the year |
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101,265 |
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257 |
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116,506 |
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7,304 |
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1,971 |
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4,474 |
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17,210 |
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864 |
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68,218 |
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318,069 |
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As at December 31, 2024 |
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Cost |
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316,803 |
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532 |
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362,387 |
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27,884 |
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36,467 |
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4,960 |
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56,418 |
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1,930 |
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68,218 |
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875,599 |
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Accumulated depreciation, impairment and amortization |
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(215,538 |
) |
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(275 |
) |
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(245,881 |
) |
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(20,580 |
) |
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(34,496 |
) |
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(486 |
) |
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(39,208 |
) |
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(1,066 |
) |
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— |
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(557,530 |
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Net book value |
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101,265 |
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257 |
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116,506 |
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7,304 |
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1,971 |
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4,474 |
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17,210 |
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864 |
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68,218 |
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318,069 |
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Interest capitalized to property and equipment that qualified as borrowing costs amounted to Php2,724 million,
Php2,589 million and Php2,169 million for the years ended December 31, 2025, 2024 and 2023, respectively. See
Note 5 – Income and Expenses – Financing Costs – Net. The average interest capitalization rate used was approximately
5% each for the years ended December 31, 2025 and 2024 and 4% for the year ended December 31, 2023. Our net foreign exchange differences, which qualified as borrowing costs, amounted to Php308 million, Php686 million and Php195 million for the years ended December 31, 2025, 2024 and 2023, respectively. As at December 31, 2025, the estimated useful lives of our property and equipment are as follows:
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Cable and wire facilities(1) |
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5 – 25 years |
Central equipment(2) |
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10 years |
Network facilities |
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3 – 20 years |
Buildings |
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25 – 50 years |
Vehicles, furniture and other network equipment |
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3 – 15 years |
Land improvements |
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10 years |
IT systems and platforms(3) |
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3 – 20 years |
Security platforms |
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3 – 5 years |
Leasehold improvements |
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3 – 10 years or the term of the lease, whichever is shorter |
(1) As at December 31, 2024, the estimated useful life ranged from 5-15 years. (2) As at December 31, 2024, the estimated useful life ranged from 3-15 years. (3) As at December 31, 2024, the estimated useful life ranged from 3-5 years. See Note 3 – Management’s Use of Accounting Judgments, Estimates and Assumptions – Estimating useful lives of property and equipment. Sale and Leaseback of Telecom Towers On various dates in 2022 and 2023, Smart and DMPI signed Sale and Purchase Agreements with Edotco Towers, Inc., Edgepoint Towers, Inc., Unity Digital Infrastructure and Frontier Tower Associates Philippines, Inc., or collectively the TowerCos, in connection with the sale of 7,569 telecom towers and related passive telecommunication infrastructure for Php98,309 million. Concurrent with the execution of the Sale and Purchase Agreements, Smart also entered into Master Service Agreements, or MSAs, with the TowerCos wherein Smart agreed to lease back the towers sold in the transaction for a period of 10 years. In addition to space, the TowerCos are responsible for providing operations and maintenance services, as well as power to the sites. The sale and leaseback with the TowerCos is complemented by a commitment to place service orders for a total of 1,220 Build-To-Suit, or BTS, sites within the next two to four years. Thus, total committed BTS sites with the TowerCos is 2,270 sites. The closing of the agreements is on a staggered basis depending on the satisfaction of closing conditions based on the number of towers transferred. The following summarizes the completed sale of Smart and DMPI telecom towers as at December 31, 2025:
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Closing Date |
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Number of Tower Assets Sold |
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Cash Consideration |
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Gain on Sale and Leaseback |
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(in million pesos) |
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(in million pesos) |
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2022 |
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4,665 |
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60,492 |
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25,234 |
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2023 |
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1,705 |
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22,465 |
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7,467 |
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2024 |
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356 |
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4,362 |
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1,471 |
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2025 |
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89 |
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1,068 |
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|
859 |
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6,815 |
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88,387 |
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35,031 |
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(1) |
(1) Gross of related transaction costs. The remaining telecom towers with net book value of Php4,162 million and Php4,547 million as at December 31, 2025 and 2024, respectively, subject to sale and purchase agreement within one year, were reclassified from “Property and equipment” to “Assets classified as held-for-sale” under current assets in our consolidated statement of financial position.
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