Coronavirus prompts telcos to put capex plans under review

Ian Nicolas Cigaral - Philstar.com
Coronavirus prompts telcos to put capex plans under review
This file photo shows a cell tower.

MANILA, Philippines — The country’s telecom duopoly will revisit their budgets for expansion this year as restrictive quarantine measures meant to arrest the spread of the new coronavirus mess up with their plans.

After saying that its capital expenditures for the second quarter would be lower by P2 billion from previous three months, Ayala-led Globe Telecom Inc. said it would “re-evaluate” the rest of its spending plans for the year after the Luzon lockdown is lifted by May 16.

This includes the P63-billion capex plans of the telco network.

“Although plans to ramp up spending once operations normalize are in place, the full impact on the planned 2020 capex will be re-evaluated once ECQ is lifted on May 15, 2020,” Globe said in a disclosure at the stock exchange.

Rival PLDT Inc. also said it would “make the necessary adjustments” to its spending programs this year, including its planned P83-billion capex. 

“It really depends on what we see are the requirements and opportunities,” Ramon Isberto, public affairs head, told Philstar.com in a phone interview.

Telecom firms are heavily capex-driven with projects such as building telco towers needed to be undertaken to improve services. This has been postponed under an enhanced community quarantine in Luzon, which enforced movement restrictions in the island and halted businesses.

“As we move forward, there are some areas for expansion, but it’s difficult for you to work, to move around. It’s really a question of how we make sure that we deliver the services. How do we address that, immediate imperative,” Isberto said.

Earlier, Globe’s mother company, Ayala Corp., already said it is trimming capital investments this year due to enhanced community quarantine, a move followed by other conglomerates like Aboitiz Equity Ventures. 

The slashing of private company investments came as companies started to feel the bite of the coronavirus pandemic on their balance sheets. On Tuesday, Globe also disclosed that net income fell 2% year-on-year to P6.6 billion in the first quarter.

The decline in profits could linger in the second quarter with revenues seen “to decline by double-digits,” Globe President and Chief Executive Ernest Cu said in a statement.

In the same regulatory filing, Globe said it reduced its cash dividend payout for stockholders in the second quarter to “conserve” cash. 

“The decision to change the dividend payout for the quarter was an effort to conserve cash as a healthy balance sheet and strong cash flows are key to managing the challenges brought about by this extended quarantine period,” the company explained.

Meanwhile, PLDT told the local bourse last month that the distribution of cash dividend payable on April 3 would be delayed for some of its shareholders after the outbreak and ECQ “resulted in restricted movement and temporary business and work suspension, which has affected various services, including delivery services of the company.”




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