US class action suits vs. PLDT, MVP
Telecoms

US class action suits vs. PLDT, MVP

Feb 10, 2023, 7:08 AM
Rose De La Cruz

Rose De La Cruz

Writer/Columnist

Just when controversy have quieted down in the Philippines, the country’s largest telco company, Philippine Long Distance Telephone Inc., was jolted by class action suits against it by investors who felt gypped about the budget overrun of P48-billion between January 1, 2019 and December 19, 2022—when it was divulged to the public.

PLDT Inc. and its top executives, including Manuel V. Pangilinan, are facing class action lawsuits in the United States arising from the P48-billion budget mess, which disgruntled investors blame for the drop in the telco giant’s share prices that in turn caused trading losses, said a report of Inquirerdotnet.

In a document obtained by the Inquirer, investor Sophia Olsson filed on behalf of other plaintiffs—which can be “hundreds, if not thousands”—the case in the US District Court, Central District of California this week, the report said.

Olsson and the other investors—who purchased PLDT securities between Jan. 1, 2019 and Dec. 19, 2022, referred to as the class period or time when the alleged crime transpired—are represented by The Rosen Law Firm, P.A.

Law firms Bernsteid Liebhard LLP and Robbins LLP likewise filed class action suits, according to their separate notices.

The plaintiffs, led by Olsson, are demanding compensation for damages the defendants allegedly caused upon them due to violations of federal securities laws, which have yet to be proven.

PLDT and its officials allegedly “misrepresented and failed to disclose the following adverse facts pertaining to the company’s business, operations and prospects, which were known to defendants or recklessly disregarded by them,” the plaintiffs said.

The plaintiffs noted that press releases related to capital expenditure and other spending during the four-year class period did not include the budget snafu until December last year.

The court filing cited numerous reports from 2019 to 2022 to back the claim.

On Dec. 16, 2022, PLDT disclosed that it had incurred billions-worth of budget overrun from 2019 up to last year due to “over orders” related to rollout of 5G and wireless services, among others. The adoption of the fast-speed technology did not take off as expected as shown by the low 5G penetration in the market, the Pangilinan-led telco explained earlier.

“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s common shares, plaintiff and other class members have suffered significant losses and damages,” according to the court filing.

It was previously reported that PLDT American Depository Receipts dropped by more than 23 percent on Dec. 19 following the budget overrun disclosure. On the same day, PLDT shares traded via the local bourse plummeted by nearly 20 percent to P1,192 each, wiping out around P62 billion in shareholders’ value.

PLDT has not responded to requests for comment.

Since the budget debacle has emerged, PLDT said it has been investigating to get to the bottom of the issue. But it had stressed that no fraudulent activities were uncovered so far.

The telco player is negotiating with vendors to slash their obligations, in addition to seeking for payment deferral, to mitigate the impact of the overspending on their bottom-line.

PLDT is also set to scale down its capital outlays this year. In 2022, it earmarked P85 billion in capital expenditure.

The Pangilinan-led company previously announced plans to borrow about P35 billion to P45 billion in the next two years to fund its capex, dividends and general corporate matters.

On December 28, PLDT Inc. said it is in talks with suppliers for discounts and the cancellation of certain components of delayed projects to reduce its P48-billion budget overrun, reported Business World, a subsidiary of PLDT.

“The ongoing discussion with the principal vendors includes negotiation on discounts and cancellation of certain portions of delayed projects that have not been started or completed, which would reduce the capex (capital expenditure) overrun,” the company said in a disclosure to the stock exchange.

The Pangilinan-led company added that its discussion with suppliers also includes the possible replacement of certain projects that will be canceled.

On the alleged unrecorded transactions, the company said that its recent disclosure on capex spending “did not mention any unrecorded transactions.”

It clarified that the ongoing discussion with the vendors referred to in its disclosure will provide the company with “more information and basis to determine the appropriate treatment of the P48 billion on our books.”

“The P48-billion expenditures are expected to be completed in 2022 to 2023 barring any delays,” it said. These will then enter its financial statements as they are completed, it added.

PLDT chair Manuel V. Pangilinan, received information in October 2022 on the accumulated capex spend “reflecting a total amount which is higher than the projected capex spend.”

The company estimates a budget overrun of about P48 billion, which represents about 12.7% of its P379-billion capex over the past four years. It attributed the budget overspending to site rollout, transport projects, and ports rollout.

The company also denied reports of employee suspension in connection with the budget overrun. “The concerned officers are on leave with pay to allow the conduct of an independent investigation on the elevated capex spend, although they have made themselves available to the company to answer questions or provide clarifications as needed,” PLDT said.

The company stressed that its “forensic investigation is still ongoing,” adding that thus far, “no fraudulent transaction, procurement anomaly, or loss has been identified or uncovered.”

It plans to borrow P35-45 billion in the next two years for “general corporate purposes including, but not limited to, payment of capex and dividends.”

Tags: #PLDT, #classuitsinUS, #budgetoverrruns, #P48B


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