Industry giant PLDT Inc. is flexing its massive financial muscle, revealing for the first time a multi-year capital spending plan as the Duterte administration hopes to select a new telco challenger in the next few months.
PLDT, in a statement over the weekend, announced an unprecedented three-year spending budget of P180 billion from 2018 to 2020—or P60 billion per year—to help double fixed-line and mobile internet capacity in the next year and a half.
The figure is roughly the same amount that the Department of Information and Communications Technology (DICT) hopes a prospective third telco player would spend every year for five years to effectively compete with PLDT and its main rival, Globe Telecom.
“This massive effort by PLDT in improving and expanding its networks—translated into historically high capex levels —expresses our firm commitment to deliver better coverage and quality products and services to our customers. This is a conviction program, backed up by statement capex,” PLDT chair and CEO Manuel V. Pangilinan said in the statement.
The amount largely depends on Mr. Duterte taking concrete steps to ease a multitude of regulatory bottlenecks. Even then, it signals PLDT’s commitment to spend more, potentially at the expense of high profits.
A PLDT spokesperson said the company was targeting to reinvest 30 percent to 35 percent of service revenues from 2018 to 2020, similar to the ratio used by Globe. This suggested annual service revenues of at least P600 billion for the period, or P200 billion per year.
The spending commitment is larger than the roughly 22 percent of service revenues that PLDT allotted from 2011 to 2016, data complied by the Inquirer showed. PLDT has yet to disclose full-year 2017 earnings.
“The net result is that within the next 12 to 18 months world-class internet services on PLDT’s super-charged fixed and mobile networks will be available to many more Filipinos in many more parts of the country,” Pangilinan said in the statement.