Telecommunications giant PLDT Inc. will implement a management shakeup after an internal investigation revealed a budget overrun of P48 billion over several years, which includes the network spending surge during the pandemic.
“PLDT is undertaking a management reorganization process and has initiated improvements on its processes and systems to address weaknesses that allowed such budget overruns to occur,” PLDT said in a regulatory filing that was released after trading hours.
“A separate announcement will be made once the reorganization is implemented,” it added.
The previous day, PLDT appointed Emmanuel C. Lorenzana, the former head of flagship wireless unit Smart Communications, as chief transformation and customer officer. Lorenza had served as an advisor since 2019.
PLDT also appointed Danny Yu as group controller and Joseph Gendrano as chief technology officer.
The announcement follows weeks of rumors of an internal probe at the country’s biggest integrated telecommunications provider over supposed financial anomalies. Complaints were also raised by some of the company’s suppliers during the probe, sources told the Inquirer.
PLDT stressed in the disclosure that it had so far found no fraudulent transactions, procurement anomalies, or loss of assets arising from the capital spending overruns.
It was also in negotiations with suppliers and vendors to cut the unexpected spending increase.
“Our vendors continue to be committed to their partnership with PLDT and have expressed flexibility with our commercial requests involving reduction of outstanding work,” PLDT said.
The overruns covered capital spending (capex) over four years from 2019 through 2022, the telco giant said.
“In the face of the pandemic, and especially at its height, PLDT and Smart continued its capex spend, resulting in enhanced connectivity for our people, and better customer experience,” it said.
“While these substantial capex investments were key to meeting PLDT’s goals, they came at a price—capex investments for these four years aggregated to P379 billion, including an estimated budget overrun of no more than P48 billion,” PLDT said.
PLDT said the estimate was based on an ongoing internal forensics mandated by the board and its audit committee and discussions with principal vendors.
Eagle Equities Inc. president Joseph Roxas said budget mistakes might have been caused by aggressive spending in response to the entry of DITO Telecommunity and the expansion of fiber internet provider Converge ICT Solutions during the COVID-19 pandemic.
“Spending overruns are not unusual. What was unusual was the audit. What prompted the investigation?,” he told the Inquirer.