Non-serviceRevenuesNon-service revenues increased by Php332 million, or 10%, to Php3,722 million in 2016 from Php3,390 million in 2015, primarily due to higher sale of FabTAB for myDSLretention and PLPunits, computer-bundled, and TVolution units, partially offset by lower sale of UNOequipment, Telpadunits, managed IT equipment, set top boxes and managed PABX solutions. Expenses Expenses related to our fixed line business totaled Php61,285 million in 2016, an increase of Php2,868 million, or 5%, as compared with Php58,417 million in 2015. The increase was primarily due to higher expenses related to professional and other contracted services, depreciation and amortization, rent, asset impairment, repairs and maintenance, cost of content, selling and promotions, communication, training and travel, and other operating expenses, partly offset by lower expenses related to interconnection costs, compensation and employee benefits, taxes and licenses, and insurance and security services. As a percentage of our total fixed line revenues, expenses associated with our fixed line business accounted for 84% and 85% in 2016 and 2015, respectively. The following table shows the breakdown of our total fixed line-related expenses for the years ended December 31, 2016 and 2015 and the percentage of each expense item to the total: Increase (Decrease)2016 % 2015 % Amount %(in millions) Depreciation and amortization Php15,471 25Php14,301 25Php1,170 8 Compensation and employee benefits 13,238 22 13,899 24 (661) (5) Repairs and maintenance 7,480127,02812452 6 Interconnection costs 5,940 10 6,666 11 (726) (11) Professional and other contracted services 5,64194,38281,259 29 Rent 3,373 6 2,7685 605 22 Cost of sales 2,61742,596421 1 Selling and promotions 2,133 3 2,036497 5 Asset impairment 1,75831,2442514 41 Taxes and licenses 1,13121,4252(294) (21)Insurance and security services 69717151 (18) (3) Communication, training and travel 6121549163 11 Cost of content 287 – 163 – 124 76 Other expenses 90726451 262 41 Total Php61,285100Php58,417100Php2,868 5Depreciation and amortization charges increased by Php1,170 million, or 8% to Php15,471 million due to a higher depreciable asset base. Compensation and employee benefits expenses decreased by Php661 million, or 5%, to Php13,238 million, primarily due to lower MRP costs by Php1,344 million, or 92%, to Php110 million in 2016, and lower provision for pension benefits, partially offset by higher salaries and employee benefits. Employee headcount increased to 10,695 as at December 31, 2016 as compared with 9,671 as at December 31, 2015. Repairs and maintenance expenses increased by Php452 million, or 6%, to Php7,480 million, primarily due to higher repairs and maintenance costs on cable and wire facilities, and higher maintenance costs on IT hardware and software, and buildings, partially offset by lower office and site electricity charges.
PLDT 2016 ANNUAL REPORT61DIGITAL LIKE NEVER BEFOREFINANCIAL REVIEW Interconnection costs decreased by Php726 million, or 11%, to Php5,940 million, primarily due to lower international interconnection/settlement costs as a result of a decrease in international inbound calls that terminated to other