PLDT to borrow up to P45 billion to pay dividends, trim debt

MANILA, Philippines — Pangilinan-led PLDT Inc. plans to borrow up to P45 billion in 2023 and 2024 to settle the dividends of its shareholders and pay off its outstanding debts with the goal of nursing its financials back to health by 2025.

Based on documents obtained by The STAR, PLDT plans to borrow P35 billion to P45 billion in the next two years to settle its debts arising from its budget overspend worth P48 billion from 2019 to 2022.

PLDT will also use the financing to fullfill its commitment to shareholders, as it tries to improve its balance sheet and be out of the woods by 2025 at the earliest.

In a special briefing for investors yesterday, PLDT president and CEO Alfredo Panlilio informed stakeholders that PLDT is working on consolidating its budget overruns.

However, Panlilio told stakeholders that the company may incur additional debt in the short term that could affect its reported income.

During the briefing, PLDT executives also said that the P48 billion overspend was made up of mostly 5G assets as part of the company’s move to enhance its network.

They also said that the telco giant underinvested from 2016 to 2018, compelling it to spend aggressively starting 2019.

After procuring 5G assets, PLDT found itself in a dilemma as to where to deploy them given that the products arrived at the height of the pandemic in 2020.

As such, PLDT told its shareholders that the initial rollout of 5G services failed to attract enough buyers, who also saw their pockets severely affected by the pandemic-induced recession.

In turn, PLDT had to cancel network buildup agreements with telco giants Ericsson and Huawei for the delivery of at least 61 towers and 54 towers, respectively.

With its 5G assets stuck in warehouses, the telco giant expects to write off between P15 billion and P55 billion in assets this year due to depreciation.

As such, PLDT anticipates its net income to drop in 2022 compared to the P26.37 billion recorded in 2021.

Panlilio also said that PLDT is requesting its vendors to provide relief for the payment of assets covered by the budget overspend. It hopes to secure agreements that would allow it to stagger the settlement of its debts.

Looking ahead, Panlilio said PLDT eyes to raise capital through the sale of passive assets as it sets out to sell of another 1,000 towers by the first quarter of next year.

“Moving forward, we believe we can sustain a 60 percent dividend payment and for our earnings before interest, taxes, depreciation and amortization to remain strong,” Panlilio said.

When sought by an investor whether the P48 billion could increase, PLDT chairman Manuel V. Pangilinan said there is little possibility that the amount would go up any further.

Pangilinan himself said PLDT has implemented measures to tighten its spending, vowing that it will be transparent with its next moves in resolving the matter.

He added that the goal right now is for the telco to return to its normal range of capex by 2024.

“I think it’s less likely that it would be a bigger number than P48 billion. We’re being cautious and we’re being transparent with you guys,” Pangilinan said during the briefing.

PLDT wants to reduce its capex to a band of P50 billion to P55 billion in 2024, a year behind the industry trend of winding down on spending from pandemic highs.

Last week PLDT announced that it would have to operate yet again on elevated capex in 2023, as it scrambles to resolve the capex overrun it recorded from 2019 to 2022.

The firm saw its capex hitting P379 billion in the past four years, including an estimated breach of P48 billion, although investigations so far have uncovered no fraudulent transactions.