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Investors await PLDT move on budget overrun

BW FILE PHOTO

By Arjay L. Balinbin, Senior Reporter

INVESTORS and shareholders will be watching closely how the management team of PLDT, Inc. will respond to an estimated P48-billion budget overrun from 2019 to 2022, according to analysts.

Telecommunications provider PLDT led by Manuel V. Pangilinan is reorganizing its management after discovering the budget overrun, representing 12.7% of its P379-billion capital expenditure (capex) over the past four years, the company announced on Friday.

“Investors would like to see what will be PLDT’s response to these budget overruns — how to pay it off [and] how to curb while still being competitive in the market,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan told BusinessWorld in a phone message on Sunday.

According to PLDT, its ongoing internal investigation “has, so far, not uncovered any fraudulent transactions, procurement anomalies, or loss of assets arising from the capex spend.”

“The sooner the public knows, the better,” Mr. Limlingan said.

According to PLDT, a separate announcement will be made once the reorganization is implemented.

Anabelle L. Chua, PLDT’s chief financial officer, is in charge of overseeing the company’s financial activities. The company has so far announced three major appointments: Danny Y. Yu as group controller effective Nov. 17 and Emmanuel Ramon C. Lorenzana and Joseph Ian G. Gendrano as chief transformation and customer officer and chief technology officer, respectively, effective Jan. 1.

BusinessWorld is awaiting clarification from PLDT on a news report by the Philippine Daily Inquirer on Dec. 17, citing an interview with Mr. Pangilinan, that “anomalous supply deals” were initially estimated to be close to P130 billion before being reduced to P48 billion.

Antonio A. Ligon, a law and business professor at De La Salle University, said, “Whether it’s private or public funds, when resources are not utilized properly, the public must be concerned.”

He said that the PLDT management team may have to look into the company’s good corporate governance.

“When they investigate the matter, they should look into how it happened, where the money went, and if it can be recovered,” Mr. Ligon said in a phone interview on Sunday.

He said that when individuals invest, they are aware of the risks, “but if it’s lost because of an anomaly, it is something else, which will undermine their trust and confidence.”

When asked how the issue will affect the company’s financial performance, Mr. Ligon said, “I’m sure there is accounting for internal control, and now you will conduct an audit separate from that, so it doubles the work and thus doubles the costs.”

Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said that investors should “positively consider the immediate action taken by the PLDT management team to undertake measures to stop the cost overrun upon the discovery of anomalous deals.”

“This is proof of its commitment to good corporate governance,” he said in a phone message.

Mercantile Securities Corp. Analyst Jeff Radley C. See said that the issue will create a “negative sentiment” among investors.

“Investors will see stronger selling pressure in the coming weeks,” he noted.

“There will be knee-jerk reactions for sure since 12.7% is a huge budget overrun. It is uncommon since companies would [normally] have a single digit or less than 5% budget overrun,” Mr. See also said.

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