PLDT Inc. is expected to begin reducing new capital expenditures (capex) over the next year to clean its books from the impact of the recently disclosed P48 billion budget overrun.
In a statement accompanying a disclosure Thursday, PLDT President Alfredo S. Panlilio said the company will use 2023 as a “year of consolidation.”
“[T]In view of the volume of fixed investments ordered, we plan to reduce new investments from 2023 onwards. After that, we expect a continuous reduction in investments in property, plant and equipment. 2023 will be a year of consolidation as we continue to strengthen and grow the business. We strive to be better,” said Panlilio.
The telecom titan, whose shares have slumped significantly since the so-called budget overrun was announced, also expects its earnings before interest, taxes, depreciation and amortization (Ebitda) to be “on track to reach 100 billion pesetas” and “stay off the investment overrun.” unaffected.”
The telecom industry’s core net income is also expected to be between 32.6 billion and 33 billion pesos as forecast.
Company officials have been contacted for more information on the impact of the budget overrun on the Company’s income statement, reported earnings and their plans for the unrecognized assets. BusinessMirror contacted PLDT, but they declined to respond to BusinessMirror’s inquiries.
Manuel V. Pangilinan, chairman of the telecom company, said the capital spending overrun was due to several factors, including pressure from former President Duterte, the pandemic and intense competition in mobile and broadband.
“Most of the P48 billion overspending relates to the procurement of network equipment needed to offer subscribers greater connectivity, specifically 5G cellular sites for our cellular network and fiber rollout. There will be no write-down of these assets,” he said.
PLDT first announced on Friday last week that it had uncovered a budget overrun of Pta 48 billion, an amount accounting for 12.7 percent of its total capital spending of Pta 379 billion over the past four years.
Ongoing internal forensics have so far uncovered “no fraud, no anomalies, no evidence of inflated prices and no unrecorded transactions related to the overage.”
The Securities and Exchange Commission (SEC), the Philippine Stock Exchange (PSE) and Capital Markets Integrity Corp. (CMIC) are separately conducting investigations into increased capital spending and trading activity in PLDT stocks ahead of the release on Friday last week.
On Wednesday, after initial investigations, the PSE determined that there was no evidence of insider trading in PLDT shares.
Pangilinan said he “welcomes this good news from the PSE,” adding that “this confirms that no insider trading has taken place in relation to last Friday’s disclosure.”
Negotiations with vendors
According to PLDT Chief Legal Counsel Marilyn A. Victorio-Aquino, negotiations are ongoing with vendors while reviews are being conducted to monitor network projects and process flows for improvement.
“Rest assured that we will provide further details in due course. What we want to avoid is early disclosure, which could harm public shareholders,” she said.
PLDT shares ended Thursday trading at 1,249 pesos a share, down 1 peso from the previous close of 1,250 pesos a share on Wednesday.