Capital expenditure (capex) of PLDT Inc. will remain elevated in 2023 on the heels of the investigation on its P48-billion capex overrun incurred from 2019 to 2022.
Over the past four years, PLDT and its subsidiary Smart Communications Inc. embarked on a massive network transformation program with an aggregated P397-billion capex, including an estimated budget overrun of no more than P48 billion which represents about 12.7 percent of total capex spent over the period.
“This best estimate is subject to ongoing internal forensics mandated by the board and its audit committee; discussion with principal vendors with a view to reconciliation of accounts and reduction of such budget overruns,” PLDT said in a disclosure at the stock exchange last Friday.
The estimated overrun capex will likely increase, PLDT said.
“The investigation has, so far, not covered any fraudulent transactions, procurement anomalies or loss of assets arising from the capex spend,” it added.
PLDT said its vendors continue to be committed to their partnership and have expressed flexibility to work with its commercial requests involving reduction of outstanding works.
Despite the investigation, PLDT said its capex for 2023 will continue to be elevated as the capex overruns enter the financial statements this year and next cushioned, however, by significant gains on its tower sales.
But capex levels are expected to be lower in 2024 onwards, it added.
PLDT also said it is undertaking a management reorganization process and has initiated improvements on its processes and systems to address weaknesses that allowed such budget overruns to occur.
A separate announcement will be made once the reorganization is implemented, the telco said.
For this year, PLDT is still on track to meet its full-year core net income guidance of P32 billion to P33 billion and earnings before interest, taxes, depreciation and amortization level of P100 billion.
In a related development, PLDT said its subsidiaries Smart and Digitel Mobile Philippines Inc. signed a deal with Unity Digital Infrastructure Inc. for the sale of 650 towers for P9.2 billion.
Backed by Aboitiz InfraCapital and the Partners Group, a leading global private markets investment firm, Unity is an established independent tower company in the Philippines and an existing partner of the PLDT Group.
The 650 towers being monetized are primarily located in Visayas and Mindanao. Concurrent with the execution of the sale and purchase agreement for the sale of 650 towers, Smart also entered into a master services agreement with Unity on similar terms as those previously entered into by Smart in relation to the sale and leaseback transactions announced in April 2022.
Upon completion of the transaction, Smart will lease back the towers for a period of 10 years at competitive terms as the anchor tenant.
The sale and leaseback will be complemented by a new tower build commitment of 220 towers over the next few years, enabling Smart to further expand its network and enhance customer experience.
PLDT said the closing of the transaction will be staggered based on the number of towers being transferred and subject to customary closing conditions.
All closings are expected to be completed in 2023, the telco added. UBS AG acted as exclusive financial adviser to PLDT and Smart on this transaction.
