PLDT may raise capex for 2022

PLDT Inc. “might” increase its capital expenditures (capex) program by as much as P3 billion to P88 billion for 2022, no thanks to the prevailing “tough and challenging” economic conditions in the Philippines.

During the company’s press briefing for its first half financial results, PLDT Chairman Manuel V. Pangilinan said there is a “risk that we might exceed the P85-billion” capex program for the year due to the impact of foreign exchange.

Almost half or 45 percent of the telco titan’s capex is foreign spend. The Philippine peso closed at P55.67 against the greenback on Thursday, 11 percent higher than the close the year prior.

When asked how much the additional capex spend will be, Pangilinan replied: “Probably, P2 billion to P3 billion.”

“Remember we’ve already committed to spend about half of our capex for the first half. So about half of the P85 billion or so are at risk.”

He noted, however, that the foreign exchange risk also has a benefit for the company’s foreign operations, which generates about $600 million in international revenues.

Its impact on the profit and loss charts, then, is “more beneficial to PLDT,” Pangilinan said.

“Taken in the round, it’s probably more beneficial. We do have enough cash from operations to be able to fund the entire capex.”

Stronger headwinds

PLDT President Alfredo S. Panlilio also characterized the year 2022, both for the first half and forecasting for the second half, as “challenging.”

Aside from the lingering effects of the pandemic, the industry, he said, is battling it out for a share in the customers’ wallets.

“Economic situations are tough; we are seeing the effect on the wallets,” Panlilio said.

In fact, PLDT SVP Francis Flores said, the rising inflation numbers have caused Filipinos to “economize” with consumers “stretching their load, trying to cut down on non-essential telco use.”

Nevertheless, PLDT is confident that it will meet its income guidance of P33 billion by the end of the year.

PLDT recorded P16.7 billion in net profits in the first half, a 30-percent surge from P12.9 billion the year prior, padded by the sale of its tower assets during the said period.

Its telco core income, which also excludes the impact of innovations arm Voyager, also rose by 12 percent to P17 billion from P15.2 billion last year.

Consolidated service revenues reached an all-time high of P94.3 billion, a 5-percent growth from P89.9 billion the previous year, driven largely by its data and broadband businesses.

Data and broadband, which now account for 79 percent of the consolidated service revenues, grew by 10 percent to P74.9 billion. The wireless business contributed P35.7 billion in revenues, while home, P24.6 billion, corporate, P11.9 billion, and ICT, P2.6 billion.

Expenses were flattish at P43.8 billion.

“We expect stronger headwinds in the second half, with higher inflation impacting our customers’ pockets as well as our own operating costs. With so much pressure on growth, it is imperative that we stay focused on our strategic initiatives and managing costs,” Pangilinan said.

“As to full year profit guidance, we maintain telco core income at P33 billion, albeit some upside may be possible as portions of proceeds from the towers sale are used to pay down debts in the second half.”