PLDT to cut spending in 2022 to boost financial strength

MANILA, Philippines — Telco giant PLDT Inc. is trimming its capital expenditures in 2022 to improve its financial health after years of “massive spending on infrastructure.”

In a disclosure to the Philippine Stock Exchange on Thursday, PLDT said it earmarked between P76-80 billion for capex this year, much lower than P89 billion it actually spent in 2021. Majority of last year’s spending went to the rollout of PLDT’s 5G and LTE network, as well as migration of customers from copper to fiber.

Explaining the decision, Manuel V. Pangilinan, company chairman, said PLDT is “determined to strengthen our financial standing as we focus on generating positive free cash flow.”

Latest financial results showed PLDT’s investments in the last 10 years amounted to P518.5 billion. That said, Pangilinan believes it is time to “(renew) efforts to throttle down on operating expenses” to enhance the company’s financial strength.

“After years of massive spending on infrastructure, we are transitioning to a more deliberate approach to our capital expenditures, having built the country’s most extensive networks,” he said.

To note, PLDT’s main rival Globe Telecom Inc. also lowered its capex for 2022 to P89 billion from an all-time high spending of P92.8 billion last year. Globe said this year’s spending plan would bankroll the construction of new cell sites and upgrade of existing towers to 4G/LTE, among others.

Meanwhile, DITO Telecommunity Inc, the nascent third telco player, said it set a "committed capex" of P27 billion this year.

PLDT’s decision to trim its capex came after posting better-than-expected profits last year, as telco companies continue to benefit from a pandemic-led surge in demand for internet connectivity. Figures showed PLDT’s telco core income, which excludes the impact of asset sales and the company's tech unit Voyager Innovations, climbed 8% annually to P30.2 billion last year, beating its forecast of P30 billion.

Including exceptional costs, net income jumped 9% year-on-year to P26.4 billion in 2021.

By reducing its investments, PLDT expects consolidated service revenues to grow by “mid-single digit” and telco core Income to be “between P32-33 billion”.

“To this end, we are channeling our efforts to improve our free cash flow. The formula is simple enough – increase revenues, rationalize capex, reduce costs and manage our cash position,” Pangilinan said.

On Thursday, shares in PLDT rallied 4.57% to close at P1,830 each.