Moody’s retains PLDT rating at Baa2

MANILA, Philippines — Telco giant PLDT Inc. is expected to reduce its debts through the sale of data centers and mobile towers, allowing it to keep a stable outlook from New York-based Moody’s Ratings.

In a statement, Moody’s said it is retaining PLDT’s Baa2 rating and stable outlook, confident that the telco would be able to improve its financial standing through 2026.

Moody’s vice president and senior credit officer Nidhi Dhruv said PLDT is taking the right path in raising its creditworthiness by selling some of its high-value assets in exchange for cash.

Dhruv said PLDT is cutting its capital expenditures to achieve free cash flow next year.

The telco is also cashing in on the remaining proceeds of its tower sale and is looking to sign a minority partner for its data centers.

If there is one risk to PLDT’s future, Dhruv said it is the telco’s policy to give out high dividends to shareholders, flagging it as a strain to PLDT’s finances.

Other than that, Dhruv believes PLDT is in a position to extend its leadership in Philippine telco.

PLDT pushed up profit margins to 52.8 percent in 2024 from 47.8 percent in 2023, as the telco benefitted from cost-cutting measures and the decline in equity losses from Maya Group.

PLDT maintains healthy margins when compared to similarly rated global telcos, which register in the range of 35 percent to 40 percent.

However, Moody’s said PLDT’s liquidity is insufficient over the next 18 months, but it benefits from committed and uncommitted lines of credit that can cover expiring debts.

Moody’s trusts PLDT to sustain its dominance in the telco industry, and this is why the telco was given a stable outlook in spite of liquidity risks.

Moreover, the debt watcher expects PLDT to be prudent in spending proceeds from its asset sale.

PLDT is still the telco to beat in the Philippines, accounting for 44 percent of the subscribers in the mobile market. It maintains more than 50 percent of the revenue market, shrugging off the challenge from industry newcomers Dito Telecommunity Corp. and Converge ICT Solutions Inc.

PLDT grew its profit by 21 percent to P32.31 billion from P26.61 billion in 2023, as the telco increased revenue by three percent and slashed spending by two percent.

The leading Philippine telco also brought down its capex to a range of P68 billion to P73 billion this year from P78.2 billion in 2024.