Moody’s keeps PLDT credit rating; outlook stable

MANILA, Philippines — Debt watcher Moody’s Investors Service has maintained its Baa2 rating with a stable outlook for telco giant PLDT Inc. on the strength of its finances even after incurring a budget overrun.

In a report, Moody’s vice president and senior analyst Nidhi Dhruv said PLDT kept its credit rating after staying ahead of the pack in the broadband and mobile markets.

However, Dhruv warned that PLDT has to manage its finances well until 2025 to minimize the impact of its capital overspend on future operations.

“The affirmation of PLDT’s Baa2 rating reflects its leading market position, healthy margins and leverage below three times. However, high capital spending levels and shareholder returns will continue to strain the company’s free cash flow over the next one to two years,” Dhruv said.

For 2023 and 2024, Moody’s expects PLDT to grow its revenue by six percent, as subscribers start to recover their spending power with inflation trending downward. Moody’s also anticipates PLDT’s broadband income to go up with the acquisition of Sky Cable Corp.

In March, the Pangilinan-led telco bought out Sky Cable’s internet business for P7 billion and is just waiting for antitrust clearance to complete the takeover.

On the other hand, Moody’s sees PLDT’s free cash flow to stay in the red from 2023 to 2024 and that it will use debt to finance both capital expenditures and dividend payments.