PLDT ends budget overrun saga
PLDT Inc. is finally closing the chapter on its P48-billion budget mess that brought about overseas class action suits after receiving from the US District Court for Central District of California the final approval of its $3-million settlement plea.
The telco giant, in a statement on Thursday, stressed that the “settlement contains no admission of liability, fault or wrongdoing by any defendant.”
To recall, the lawsuits were filed by disgruntled investors in the United States who claimed financial losses from their shareholdings as PLDT revealed it had incurred a P48-billion budget overrun in 2022.
The cases were filed against the company’s certain former and current officials and directors, including president Manuel Pangilinan.
The Pangilinan-led company said the approval was issued by the California court on Sept. 17. It had proposed a $3-million settlement in February.
Its legal counsel previously said the settlement payment would not have material impact on the company’s financial standing.
The accumulated overspending had started in 2019, covering four years in total, before it was just uncovered in December 2022, according to PLDT.
PLDT American depositary receipts fell by more than 23 percent on Dec. 19, 2022 following the disclosure on Dec. 16, 2023. On the same day, PLDT shares traded via the local bourse plunged by nearly 20 percent to P1,192 each, wiping out around P62 billion in shareholders’ value.
“The investors alleged that defendants made materially false and misleading statements regarding PLDT’s capital expenditures and internal controls (among other matters) at various times between 2019 and 2022,” PLDT noted.
The telco giant has since completed the probe into the budget mess back in March last year, stressing that no fraudulent activities ensued.
PLDT previously said the budget overrun was due to high capital expenditure (capex) level as it ramped up purchases of 5G equipment.
In resolving the matter, the company negotiated with its major vendors to trim their debts.
It also incurred P51.2-billion worth of depreciation related to the 5G assets, causing its net income to plunge by 60 percent to P10.49 billion in 2022.
As a safeguard, PLDT said it had installed measures to better monitor capex spending to avoid another budget overrun.
The telecom service provider also welcomed new chief financial officer, Danny Yu, last year after Anabelle Chua had taken an early retirement amid the controversy. Chua is now an independent director at consumer giant Monde Nissin Corp.
The blue chip company was able to financially recover from the overspending with its profits more than doubling to P26.61 billion last year—marking its return to 2021 income level or prior the budget mess.
