PLDT reports 60% profit slide, sets P85-B capex

PLDT Inc. recorded a 60.2% decline in its attributable net income to P10.49 billion in 2022 largely as a result of accelerated network and technology upgrades.

Danny Y. Yu, the PLDT group’s controller, said in a briefing on Thursday that last year’s accelerated depreciation amounted to P51.2 billion, which was mainly a result of a P19.2-billion transport network modernization.

He also cited P9.7 billion for the migration of the network to fiber, P9.4 billion for sunset 3G technology initiatives, P3.2 billion for the replacement of fiber optic cables, and P1.8 billion for the write-down of legacy network equipment at the group’s offices.

Meanwhile, total depreciation and amortization expenses jumped 89.2% to P98.7 billion last year from P52.2 billion in the previous year.

Despite this, the company said it reached record-high earnings before interest, taxes, depreciation, and amortization (EBITDA).

“For the first time as a company we have reached P100 billion EBITDA level, we ended up with P100.5 billion, 4% higher than last year,” PLDT President and Chief Executive Officer Alfredo S. Panlilio said.

The company’s EBITDA margin was at 51% in 2022, slightly lower than 52% in 2021.

“This is a focused area for us as we strive to improve EBITDA margins moving forward and we will make sure that we even go beyond 51%,” Mr. Panlilio said.

In 2022, PLDT’s consolidated total revenues reached P205.2 billion, up by 6% from the P193.3 billion it generated a year earlier.

Consolidated service revenues last year were 6% higher at P196.2 billion than 2021’s P185.8 billion.

“Our home business continues to lead the charge growing 20% to P57.4 billion in 2022, a historic high,” Mr. Yu said.

Meanwhile, revenues from PLDT’s fiber-only business reached P48.5 billion, up by 45%, while revenues from the enterprise business were 8% higher at P47.5 billion. Individual business revenues went down by 5% to P82 billion.

2023 CAPITAL EXPENDITUREFor 2023, the company is earmarking P80 billion to P85 billion for capital expenditure (capex) projects, down from the P96.8 billion it used last year.

“[For this year’s] capex, we expect it to be between P80 billion to P85 billion, down compared to around P96 billion last year,” PLDT Chairman Manuel V. Pangilinan said.

In total, capital spending in 2022 reached P96.8 billion, Mr. Yu said, consisting of information technology and network capex of P76.9 billion and business capex of P12.2 billion.

Last year’s capex included 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.

Mr. Pangilinan said that the company is expecting a mid-single-digit growth in service revenues in 2023.

“We expect revenue growth to be in the mid-single-digit range, EBITDA [growth will be the] same — mid-single-digit range,” he said.

Meanwhile, Mr. Pangilinan said there is a need to review the forecast for telco core income in 2023.

“We anticipate that we will have better guidance numbers for the telco core and telco reported income by the time that we announce the first quarter results in May this year,” he said.

“It is likely to be better than the P33.1 billion we reported in 2022. How much higher? We cannot give you with some level of precision but we will provide guidance sometime in May,” he added.

Telco core income was higher by 9.6% from P30.2 billion in 2021.

BUDGET OVERRUNIn a disclosure to the Philippine Stock Exchange, PLDT said there was no evidence of fraud, intentional concealment, or bad faith conduct on the part of any employee in relation to the P48-billion capex overrun disclosed in December last year.

The overrun represented the PLDT management’s estimate of the outstanding commitments to its major vendors for the acquisition of property and equipment after 2022 due to the anticipated cancellation or amendment of certain outstanding purchase orders.

PLDT said discussions had been completed with its major vendors representing around 80% of its outstanding capex commitments as of Dec. 31, 2022.

It said agreements with vendors reduced PLDT’s outstanding commitments to them for the acquisition of property and equipment after 2022 to P33 billion.

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

According to PLDT Chief Legal Counsel Atty. Marilyn Victorio-Aquino, 80% of major vendors had signed up as of March 23.

“We have the entire 2023 to finish the discussions with the other major vendors because the outcome of the discussions or the settlements will be reflected in the financials of 2023,” she added.

On Thursday, shares in PLDT declined by P22 or 1.59% to close at P1,359 apiece.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Justine Irish D. Tabile

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