S&P GLOBAL RATINGS has affirmed PLDT Inc.’s “BBB” credit standing with a stable outlook, citing the corporate’s sustained and moderating capital intensity, which is anticipated to maintain its operating and financial performance aligned with investment-grade standards.
“We affirmed our long-term issuer credit standing on PLDT at ‘BBB’ and our issue rating on the corporate’s senior unsecured notes at ‘BBB,’” S&P Global said in a report dated Dec. 2. A “BBB” rating indicates that PLDT has adequate capability to fulfill its financial commitments but stays more subject to opposed economic conditions.
In accordance with S&P Global, improvements in PLDT’s internal controls, particularly over capital expenditure (capex), have allowed the corporate to take care of spending according to its budgets and under control. It added that the corporate’s capex is anticipated to proceed declining over the following 24 months.
“We imagine PLDT has adequately addressed material deficiencies in internal controls,” S&P Global said, noting that it’s revising its assessment of the corporate’s management and governance rating to neutral from moderately negative.
The previous assessment factored in cost-monitoring shortcomings, which led to a capex overrun in 2022 covering expenditures from 2019 to 2022. The overrun prompted PLDT to implement operational enhancements to its capex management policies, procedures, and controls.
“We imagine these remedial measures are effective, as indicated by PLDT’s actual capex aligning with its budget over the past three years. The corporate also successfully delivered on its planned capex reduction over the identical period,” S&P Global added. For 2025, PLDT reduced its capex to about P60 billion from the P70 billion goal range, and it plans to lower the capex budget further next 12 months.
For the third quarter, PLDT posted an attributable net income of P6.93 billion, down 28.26% from P9.66 billion in the identical period last 12 months, as higher expenses offset revenue growth. Revenues rose barely to P53.71 billion from P53.36 billion, while expenses increased to P42.36 billion from P39.62 billion.
“PLDT’s sustained earnings growth and reducing capital intensity will keep its operating and financial performance commensurate with the ‘BBB’ rating. Earnings will rise mainly resulting from the fixed-line segment, especially in fixed broadband and enterprise revenues,” S&P Global said.
The rankings agency expects PLDT’s annual earnings within the fixed-line segment to expand between 5% and seven% through 2027, citing the corporate’s position to profit from the country’s rapid fixed broadband adoption.
“While there could possibly be potential revenue streams from network wholesale and increased flexibility in network expansion, such revenues may not fully offset the effect of more intense competition,” S&P Global noted.
It also flagged uncertainties from the Konektadong Pinoy Act, which goals to advertise competition in data transmission and take away barriers to latest entrants.
“We may lower the rating if we imagine PLDT’s competitiveness has deteriorated, resulting in a decline in operating performance. We may lower the rating if we imagine the corporate will operate with a better leverage tolerance over a sustained period,” S&P Global said.
On the local bourse on Wednesday, PLDT shares closed at P1,277 apiece, up P3 or 0.23%.
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