Better PLDT debt position expected by year-end

MANILA  -CreditSights expects PLDT Inc. to improve its credit metrics for the rest of the year amid a revenue growth projection, slowdown in capital outlays and cash inflow from its sale of communications towers.

In its latest report, the Fitch Group unit noted the telco giant’s net leverage ratio was expected to decline to 2.5x to 2.6x in the next two quarters from the current 2.8x.

Net leverage—computed as net debts divided by earnings before interest, tax, depreciation and amortization (Ebitda)—measures the borrowing capacity of a company, and a lower figure is better because it represents more earnings than borrowings.

The outlook was supported by its expectation that PLDT’s Ebitda will register a low single-digit growth in 2023, which will be driven by “resilient (albeit slowing) broadband growth, robust enterprise data growth and cost efficiencies that offset a challenging mobile operating environment.”

In the first half, PLDT saw its Ebitda soar by 3 percent to P52.1 billion on the back of higher topline contributions and lower operational expenses.

The easing of capital expenditures—along with the collection of about P29 billion from tower sales—is also seen helping PLDT to deleverage, CreditSights noted.

This year, PLDT set capex guidance of P80 billion to P85 billion, lower than P96.8 billion in 2022.

In March, the telco giant sold 1,012 towers for P12.1 billion to Frontier Tower Associates Philippines. Following this agreement, PLDT has now monetized 7,500 towers for P98 billion.

“Mobile competition remains strong from both market leader Globe Telecom and new entrant DITO, though we believe mobile industry dynamics are set to improve mildly from easing domestic inflation and the normalization of the SIM (subscriber identity module) registration law,” the Fitch Group unit said.

Last week, PLDT wireless unit Smart Communications announced its plan of regaining mobile market leadership after the SIM card registration trimmed the market share gap with rival Globe Telecom Inc.

PLDT president and CEO Alfredo Panlilio said they were planning to do so by offering “better products” catering to the needs of the market.

After the July 25 deadline and five-day grace period for SIM listup, Smart saw nearly 80 percent of its users comply with 52.5 million, which is just 1.2 million fewer than Globe’s 53.7 million. Prior to this, Globe had 84.75 million SIM cards, significantly bigger than Smart’s 66.3 million. INQ