Philippine bourse seeks clarity on PLDT’s claim it found no fraud

THE Philippine Stock Exchange (PSE) has asked PLDT to clarify its announcement that it did not uncover any fraud, anomalies, overpricing and unrecorded transactions in its 48 billion peso (S$1.2 billion) capital spending overrun, shortly after the Philippines’ biggest phone company by revenue had disclosed it.

PSE president Ramon Monzon also said that while the exchange’s market surveillance unit has initially found no evidence of insider trading on PLDT shares on Dec 16, the day it first disclosed the overspending, the investigation is continuing.

PLDT on Thursday (Dec 22) said an ongoing review of what happened showed there was “no fraud, no anomalies, no evidence of overpricing, and no unrecorded transactions in relation to the overrun”.

PLDT chairman Manuel Pangilinan said there will be no write-off of assets purchased with the bulk of the 48 billion peso overspend that included 5G cell sites for its mobile network.

“For you to make that statement, that means the investigation has been completed. If the investigation is over, that’s a material information that should have been disclosed,” Monzon said in an interview with Bloomberg News. “Why wasn’t it disclosed to us?”

The bourse has sent PLDT a letter asking for clarification on that matter and expects a response by Friday morning, he said.

PLDT is at the centre of investigations by the PSE’s Capital Markets Integrity Corporation (CMIC) and the Securities and Exchange Commission after its Dec 16 revelation raised concerns over corporate governance and fiscal controls at the nearly 100-year-old company that has one of the largest capitalisations among Philippine-listed firms.

The stock plunged by a record 19 per cent on Monday. That followed a late sell-off last Friday just before PLDT’s disclosure on what it has called capital spending budget overrun, elevated capital spending and overspending.

“Initially, we didn’t see any indication of insider trading,” Monzon said, referring to the Friday selling, pointing out that most of the sellers were foreign brokers whose clients are foreign institutional investors.

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“There’s a small level of comfort when you talk about foreign brokers,” he said. “These people are not going to allow their organisation to be used for any illegal things.”

But he said CMIC’s review is continuing and is focused on finding out who the ultimate sellers were and whether they had prior knowledge of what happened at PLDT. The CMIC is looking at trades in PLDT from November till Dec 16 after the Philippine Daily Inquirer reported that a senior executive had informed Pangilinan about the issue in early October.

“It might take PLDT a little longer to regain the full confidence of investors, but certainly this is still a very profitable company,” Monzon said.

PLDT expects its earnings before interest, taxes, depreciation this year to hit 100 billion pesos, remaining unaffected by the overspending. It also sees its telco core income at 32.6 billion to 33 billion pesos, in line with its guidance.

But S&P Global Ratings warned the budget overrun could stretch the firm’s balance sheet and weigh on its credit profile. S&P rates PLDT at “BBB+” with a “stable” outlook. 

PLDT shares fluctuated between gains and losses on Thursday before closing down less than 0.1 per cent, its eighth decline in nine sessions.

Despite the overhang from the recent sell-off in PLDT shares, the bourse’s president is optimistic about the outlook for the stock market in 2023, citing the improving economy. He expects 14 initial public offerings for next year. BLOOMBERG