PLDT to reduce capex in 2023 as it tackles overspending
MANILA, Philippines — PLDT Inc. said Thursday it would start winding down on spending next year as the telco giant tackles massive capital expenditure overruns it endured in the past four years.
In a disclosure to the stock exchange, Alfredo Panlilio, company president and chief executive, said 2023 will be “a year of consolidation” for PLDT. He made the remarks during a special briefing with investors and analysts last Wednesday following the discovery of the company’s P48-billion capex overspending.
“We plan to reduce fresh capex starting in 2023. Thereafter, we expect capex to reduce steadily,” Panlilio said.
This means PLDT would adopt a much earlier timeline for its capex reduction after years of heavy spending on its network expansion program. In a previous statement following the discovery of budget overruns, PLDT had said its capex would stay elevated next year, adding it would only trim spending from 2024 onward.
The Securities and Exchange Commission, the Philippine Stock Exchange and the Capital Markets Integrity Corp. (CMIC) — the independent audit, surveillance, compliance and enforcement unit of the PSE — have launched separate probes into PLDT’s reported overspending, which rocked the listed telco giant’s share price.
PSE president Ramon Monzon had said the stock exchange did not find any indications of insider trading of PLDT shares, which suffered from a brutal sell-off last Friday even before the company could make a formal disclosure of the budget overruns.
PLDT said an internal investigation did not find any fraudulent transactions, procurement anomalies, or loss of assets arising from the excessive budget spending, the amount of which represents about 12.7% of the firm’s total capex in the past four years.
Since 2019, the telco giant has embarked on a capital-extensive network expansion program to improve its services amid the pandemic, including LTE and 5G rollout.
Panlilio said there were other factors that likely pushed PLDT to overspend, including former President Rodrigo Duterte’s threat to telco firms to shape up, entry of new service provider Dito Telecommunity, and intense competition in the fiber space brought by Converge ICT Solutions Inc.
READ: Duterte threatens telcos: Improve services by December or face expropriation
Marilyn Victorio-Aquino, company chief legal counsel, said negotiations with vendors are ongoing. “Rest assured that we will provide additional disclosures in due course. What we want to avoid is premature disclosure that could harm the public shareholders,” she said.
Despite the capex overruns, PLDT officials said core income this year is still projected to hit between P32.6 and P33 billion, as targeted.
They added that the company could still settle the balance of dividends that must be paid to investors. The total dividends for 2022 are pegged at P134 per share, or 88% of PLDT’s expected earnings this year.
“The bulk of the P48-billion capex overspend involves the procurement of network equipment necessary to provide stronger connectivity to subscribers, specifically 5G cell sites for our mobile network and fiber rollout,” PLDT Chairman Manuel V. Pangilinan said. “There will be no write-off of these assets."
As of market recess, shares in PLDT were flat at P1,250 each.
Editor's Note: A unit under PLDT's media conglomerate has a majority stake in Philstar Global Corp., which runs Philstar.com. This article was independently produced following editorial guidelines.
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