PLDT Inc. has admitted it had lapses in its capital expenditure disbursement in the past four years – marked by aggressive rollout due to surge in demand and stiff competition – that resulted in an estimated P48-billion capex overrun.
PLDT yesterday held a special stockholders’ briefing to discuss matters pertaining to its capex overrun from 2019 to 2022.
Manual Pangilinan, PLDT chairman, and Alfredo Panlilio, PLDT and Smart Communications Inc. president and chief executive officer, were present at the briefing but refused to be interviewed by media.
According to an analyst, who was among the 50 stockholders who attended the special briefing, PLDT gave an explanation on the P48-billion capex overrun and that it happened during the pandemic when the company had to fast-track the installation of broadband to houses. Over the past four years, PLDT and its wireless subsidiary Smart had 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.
The estimated capex overrun will likely increase, PLDT said, but added the investigation has so far not covered any fraudulent transactions, procurement anomalies or loss of assets arising from the capex spend.
PLDT said its vendors remain committed to their partnership and have expressed flexibility to work with its commercial requests involving reduction of outstanding works.
PLDT added it will continue to cooperate fully with the Securities and Exchange Commission (SEC), Philippine Stock Exchange (PSE) and the Capital Markets Integrity Corp. (CMIC) as well as their investigation into the trading activities on PLDT shares just before the disclosure was filed with the PSE.
PLDT said it has responded to separate requests for clarifications and answers from the SEC and PSE, and it will continue to respond promptly to any further requests. The company is also gathering all the information requested by CMIC.
As a listed company, PLDT has an obligation to make timely disclosures.
PLDT explained that even as there were rumors circulating about the company in the public domain, it needed to understand the range of issues involved and the extent of the matter.
Until the information is complete, any announcement would have been premature to the detriment of the public shareholders, PLDT said.
PLDT added last Friday’s disclosure was done not one day sooner because it needed time to conduct its investigation of the contracts and expenditures involved as well as to meet its major vendors for reconciliation of outstanding amounts and project status. It also needed to identify and indicate in the disclosure its action plan moving forward.
As stated in its disclosure, PLDT said, it has not unearthed fraudulent activities in relation to the capex overrun and it will make the necessary disclosures if this changes in the future.
It stressed the business and outlook for the business continue to remain healthy.
For this year, PLDT said, it 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.
Despite the investigation, PLDT said its capex for 2023 will 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.
