PLDT cuts capex to P80-85B for 2023

FOR 2023, listed firm PLDT is eyeing to spend P80 to 85 billion in capital expenditures (capex) this year down from P96.8 billion it used in 2022.

“For this year’s capex, we expect it to be between P80 billion to P85 billion, down compared to around P96 billion last year. We expect revenue growth to be in the mid-single-digit range, earnings before interest, taxes, depreciation and amortization (Ebitda)(growth will be the) same —mid-single-digit range,” said PLDT chairman Manny Pangilinan, during the company’s 2022 Financial and Operating Results media briefing, Thursday, March 23, 2023.

Last year’s spending was used on investment in capacity to support home broadband business, the construction of the 11th data center, investment in international cabling systems, the impact of the sale and leaseback of telco towers and continuous investment in cybersecurity infrastructure.

“We anticipate providing core income guidance for 2023 in May when we release our first quarter 2023 results,” added Alfredo Panlilio, PLDT and Smart president and chief executive officer.

Budget overrun

Meanwhile, PLDT announced it has completed the forensic review of its elevated capex commitments disclosed on Dec. 16, 2022 and “identified no evidence of fraud, intentional concealment, or bad faith conduct on the part of any employee of the company and no basis to restate the company’s historical financial statements.”

An expenditure or cost overrun occurs when the costs for a project go over the amount that was originally estimated to be needed.

On Dec. 16, PLDT issued a disclosure about its elevated capex spend which included an estimated capex budget overrun of approximately P48 billion, net of advances to vendors.

This amount, PLDT said, “represented management’s estimate of the outstanding commitments to its major vendors for the acquisition of property and equipment post-2022 after the anticipated cancellation or amendment of certain outstanding purchase orders.”

After negotiating with its major vendors, the company’s outstanding commitments were reduced to around P33 billion “net of advances paid to these vendors.”

“The company plans to engage in similar discussions with non-major vendors to achieve similar results,” it said.

PLDT said it has adopted and implemented or is in the process of implementing various operational enhancements to its policies, procedures and controls relating to capex management processes.

“We’re relieved that is the case and it’s now incumbent upon management and the board to get back on the saddle and move on, move forward, and demonstrate that despite this big hump on the road, the financial and operating conditions of the company remain strong and robust,” said Pangilinan.

2022 performance

PLDT closed 2022 with consolidated total revenues reaching P205.2 billion, up by six percent from the P193.3 billion it generated a year earlier.

Consolidated service revenues last year were six percent higher at P196.2 billion than 2021’s P185.8 billion.

Data and broadband, which grew by nine percent or P12.7 billion to P152.5 billion, contributed 80 percent of the consolidated service revenues.

“Our core business remains to be sound, and continues to show solid Ebitda numbers,” said Panlilio. “We have an excellent network, strong brands and attractive products. Wireless is simplifying its portfolio, Home continues to expand beyond connectivity and Enterprise is pursuing its digital transformation initiatives.

Consolidated Ebitda reached an all-time high, growing four percent year-on-year to P100.5 billion, marking the first time the company breached the P100-billion mark. Ebitda margin was at 51 percent in 2022.

Danny Yu, the PLDT group’s controller, said home business continues to lead the charge growing 20 percent to P57.4 billion in 2022.

Despite multiple challenges in 2022, PLDT Home installed a total of 1.1 million new fiber customers and migrated 0.1 million customers to fiber for the full year 2022. It had deployed 1.5 million fiber ports nationwide, bringing the total number of fiber ports to 6.08 million covering around 17,700 barangays. Port utilization for the year was at 60 percent.

Meanwhile, revenues from PLDT’s fiber-only business reached P48.5 billion, up by 45 percent, while revenues from the enterprise business were eight percent higher at P47.5 billion. Individual business revenues went down by five percent to P82 billion. (KOC)