PLDT to weather recent troubles, says credit watcher

MANILA, Philippines  – The PLDT Group, which recently faced another debacle, is expected to be shielded from serious financial impact in the long term given its stable credit fundamentals and additional buffer from the sale of its towers, according to CreditSights.

“While PLDT is exposed to recent negative headlines, we don’t anticipate any long-lasting material operational and financial impact,” the Fitch Group unit said in a report.

The office of Smart Communications Inc., the wireless unit of PLDT, was shut down for a few days by the Makati City government last week due to unpaid taxes amounting to P3.2 billion. It was resolved after the telco submitted the necessary documents required by the local government unit. This issue came about two months after the parent company revealed it had incurred P48 billion in budget overruns because of 5G technology “over-orders.”

“This will likely cloud investor perceptions of the company, although we anticipate a limited impact on PLDTʼs actual operations and financials from the closure order,” CreditSights said, while acknowledging that PLDT’s reputation has suffered “some damage.” The credit watcher said it “[expects] all services to remain operational in spite of the physical padlocking of the headquarters.”

The unpaid taxes were “manageable considering PLDT’s stable credit fundamentals,” it added. The company has a net debt to equity ratio of 1.90:1 as of Sept. 30 2022.

The telco is expected to have some wiggle room with its tower sales proceeds. PLDT sold over 6,500 towers for P86 billion in three separate sale and leaseback deals last year.

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