PLDT profit cut by 60% as budget overrun bites

MANILA, Philippines — Telco giant PLDT Inc. suffered a 60 percent decline in its profit last year due to the depreciation of some of its legacy assets, as well as the impact of its capital expenditure overrun.

In a regulatory filing yesterday, PLDT reported that its net income dropped by 60 percent to P10.49 billion last year from P26.37 billion in 2021, as the firm had to write off P51.2 billion in assets to take in new forms of technology.

On the other hand, core income – computed as profit adjusted to the net effect of gains and losses from various factors – grew by 10 percent to P33.12 billion on an annual basis.

PLDT chairman Manuel V. Pangilinan said the telco giant had to write off legacy assets to make way for the entry of the latest technologies like 5G. In particular, PLDT cleared from its balance sheet P19.2 billion in transport assets; P9.7 billion in VDSL network; P9.4 billion in 3G services; P3.2 billion in fiber cables; P1.8 billion in legacy equipment, among others.

In spite of this, Pangilinan said he has no regrets that PLDT gave up the obsolete assets as the firm wants to improve its infrastructure network to keep up with the competition. The telco would still have had to write off the equipment and facilities to upgrade its systems.

PLDT reported that earnings increased by six percent to P205.25 billion last year from P193.26 billion in 2021, as services raked in an all-time high of P196.23 billion for the firm.

Moving forward, PLDT hopes to return to free cash flow by 2024 at the earliest, with Pangilinan expressing optimism that the telco provider would be   out of the woods by then.

For one, Pangilinan said PLDT managed to bring down outstanding commitments relating to its budget overrun to P33 billion from P48 billion as a result of negotiations with multiple vendors.

Also, PLDT cut its budget for capex to a range of P80 billion to P85 billion for this year from P96.8 billion in 2022. For 2023, Pangilinan expects PLDT to borrow P19 billion from domestic banks to support its spending and pay off debts.

In a separate disclosure, PLDT announced that an investigation conducted by an external council found no evidence of fraud in the capex overrun. Likewise, the Pangilinan-led telco has entered into settlement and mutual release agreements with vendors to slash PLDT’s payables.

Last year PLDT shook the capital market when it reported a capex spend of P379 billion between 2019 and 2022, including an estimated breach of P48 billion.

The telco traced the budget overspend to the procurement of several assets, particularly 5G sites, that it failed to maximize due to the slow adoption of new technology nationwide.