It may take a while for investors to again trust the people running the country’s largest and oldest telecommunication company in view of its disclosure early December about some P48 billion budget overruns for the past four years. Investigators here and abroad are looking deeply into PLDT.
Even as the country’s oldest and largest telecommunication company is answering queries from local regulators like the Securities and Exchange Commission and Philippine Stock Exchange, among many others, several US law firms have been conducting their own probes.
Amid all these investigations, PLDT is forging ahead and announced plans to reduce its capital expenditure (CAPEX) budget this 2023 and has been talking with suppliers and vendors about possible reduction in orders. PLDT Inc. is in discussion with suppliers and vendors to cancel some projects to try to reduce budget “overruns” that raised concerns of management shortcomings
PLDT also said the discussion also includes replacing certain cancelled projects with new ones "that will improve revenue growth and customer experience."
The fiasco began when PLDT announced on December 17 its 4-year budget overruns amounting to P48 billion or about 12.7 percent of its total CAPEX in the past four years.
PLDT president/CEO Alfredo Panlilio traced the budget overruns to a “confluence of factors” such as its goal to regain network leadership following years of underinvestment, the threat from former President Duterte for telcos to shape up, intense competition in the telco sector with the entry of DITO and the mergence of a new rival in fiber space, Converge.
PLDT also cited the COVID-19 pandemic and the resultant lockdowns and quarantines, prompted it to fastback fiber rollouts to cater to the needs of households for work and school.
But for 2023 it would reduce capex steadily describing it as a year of consolidation “as we continue to strengthen and grow the business. We strive to be better,” he stressed and amortization
Despite its P48 billion overspend, PLDT said its EBITDA (or Earnings before interest, taxes, depreciation, and amortization for 2022 would remain unaffected and is on track to hit P100 billion with core net earnings expected to reach between P32.6 billion and P33 billion.
PLDT also expects to be able to pay the balance of the regular dividend for the full year 2022 estimated at P45 per share, and the remaining special dividend of P42 per share. This will bring total dividends for 2022 to P134 per share or 88 percent of this year’s earnings.
Meantime, PLDT chairman Manny V. Pangilinan insists that the ongoing review has not uncovered any fraud, anomalies and evidence of overpricing.
US law firms probe
New York-based Kirby McInerney LLP said on Dec. 23 that it was “investigating potential claims against PLDT.”
PLDT, a Philippine telecommunications company, has shares of common stock listed on the Philippine Stock Exchange and American Depositary Shares listed on the New York Stock Exchange.
“The investigation concerns whether PLDT and/or certain of its officers have violated the federal securities laws and/or engaged in other unlawful business practices,” Kirby McInerney LLP (a company focused on cases involving securities, antitrust, whistleblower and consumer litigation) said in a statement.
On Dec. 20, Robbins Geller Rudman & Dowd LLP also announced an investigation into “potential violations” of federal securities laws by the Pangilinan-led company. The probe would focus on “whether PLDT and certain of its top executive officers made false and misleading statements and/or failed to disclose material information to investors.”
Robbins Geller Rudman & Dowd LLP describes itself as “one of the world’s leading complex class action firms representing plaintiffs in securities fraud cases.”
“The price of PLDT shares declined by $6.35, or approximately 23.69%, from $26.81 per share to close at $20.46 on Dec. 19,” the law firm of Kirby McInerney LLP said.
In the Philippines, PLDT shares closed 19.35% lower at P1,192 apiece on Dec. 19.
The law offices of Glancy Prongay & Murray LLP, Howard G. Smith, Frank R. Cruz, Johnson Fistel LLP, and The Schall Law Firm have all announced that they would investigate PLDT, said Business World (which is part of the MVP Group of Companies).
“There were already negative speculations running around the market after the stock closed at P1,541 on Dec 15, 11 percent lower than Friday’s close of the previous week,” AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said.
“Looking at the charts, PLDT was already in its fourth day of consecutive declines prior to Dec. 16 and this may have prompted traders to trim their exposure while they search for clues that may explain the fuss about the company,” Temporal added.
Shares in PLDT managed to regain their footing on Dec. 20 after gaining 5.04% to P1,250 each.
“It may take a while for confidence in its local shares to return, as evidenced by continuous net foreign selling. But, yes, it has recovered a bit of its market price and PLDT remains to be a reputable company. Its stock price is just finding new footing,” said another analyst.