US law firms probe PLDT budget overrun mess

Several US law firms said they would probe PLDT Inc. for possible federal securities laws violations on behalf of investors, after the telco giant’s recent revelations of P48 billion in capital spending “budget overruns” over the past four years.

Glancy Prongay & Murray LLP, The Schall Law Firm, Johnson Fistel LLP and Law Offices of Howard G. Smith are seeking out affected investors to prepare for the potential filing of class action suits, separate announcements on Tuesday showed.

PLDT shares are traded on the New York Stock Exchang via PLDT American Depositary Receipts (ADR).

The PLDT ADRs fell by more than 23 percent on Monday “thereby injuring investors”, said Law Offices of Howard G. Smith, which is based in Pennsylvania.

“The investigation focuses on whether the company issued false and/or misleading statements and/or failed to disclose information pertinent to investors,” the Los Angeles-based The Schall Law Firm said.

PLDT has yet to reply to a request for comment.

The telco’s Philippine Stock Exchange (PSE)-listed shares plunged 19.5 percent on Monday—its biggest loss since 1998—in the wake of the discovery of budget overruns and plans for a management revamp.

Disclosure policies

The Philippine Securities and Exchange Commission said it was also looking into the matter, including the unusual sell-off of PLDT’s shares before the information was first disclosed to the public on Friday.

Adrian Yu, head of institutional sales at stockbrokerage house COL Financial Group, said they were waiting for further details on PLDT’s internal investigation that led to the discovery of billions of pesos in overspending over several years.

“[A]t this point I’m not ready to call it a corporate governance risk but I do think there are some disclosure policies that were not followed, which is why the P48 billion [overrun] is now being audited,” Yu told the Inquirer.

“From the looks of it, they are trying to get to the bottom of this and that is positive for the stock but there is still uncertainly,” he added.

Increased expenses

Selling pressure on PLDT’s PSE-listed shares eased on Tuesday as it declined 0.17 percent to P1,190 per share.

Last Friday, PLDT said capital spending in 2023 would remain elevated to account for the sudden capital spending budget increase but would slow down by 2024.

The telco giant’s expenses have ramped up in recent years as it responded to surging demand for broadband services during the harsh pandemic lockdowns in the Philippines.

The impact of spending will also be blunted by gains from its P77- billion tower sale to third-party operators. It has received P57.7 billion from the transaction thus far.

Last Thursday, PLDT appointed Emmanuel Lorenzana, the former head of flagship wireless unit Smart Communications, as chief transformation and customer officer.

The company also appointed Danny Yu as group controller and Joseph Gendrano as chief technology officer. INQ