More US law firms probing PLDT on budget overrun
Arjay L. Balinbin, Senior Reporter
MORE US law firms said that they would investigate, on behalf of investors, possible violations by PLDT Inc. of federal securities laws after it disclosed a P48-billion budget overrun.
New York-based Kirby McInerney LLP announced on Dec. 23 that it was “investigating potential claims against PLDT.”
PLDT, a Philippine telecommunications company, has shares of common stock listed on the Philippine Stock Exchange and American Depositary Shares listed on the New York Stock Exchange.
“The investigation concerns whether PLDT and/or certain of its officers have violated the federal securities laws and/or engaged in other unlawful business practices,” Kirby McInerney LLP said in a statement.
US law firm Kirby McInerney LLP focuses on cases involving securities, antitrust, whistleblower, and consumer litigation.
On Dec. 20, Robbins Geller Rudman & Dowd LLP also announced an investigation into “potential violations” of federal securities laws by the Pangilinan-led company.
The investigation would focus on “whether PLDT and certain of its top executive officers made false and misleading statements and/or failed to disclose material information to investors,” the law firm said in a statement.
Robbins Geller Rudman & Dowd LLP describes itself as “one of the world’s leading complex class action firms representing plaintiffs in securities fraud cases.”
PLDT disclosed on Dec. 16 a P48-billion budget overrun representing about 12.7% of its P379-billion capital expenditure (capex) over the past four years.
The company said that it was undertaking a management reorganization process and had initiated improvements in its processes and systems to address weaknesses.
“The price of PLDT shares declined by $6.35, or approximately 23.69%, from $26.81 per share to close at $20.46 on Dec. 19,” the law firm of Kirby McInerney LLP said.
In the Philippines, PLDT shares closed 19.35% lower at P1,192 apiece on Dec. 19.
The law offices of Glancy Prongay & Murray LLP, Howard G. Smith, Frank R. Cruz, Johnson Fistel LLP, and The Schall Law Firm have all announced that they would look into PLDT.
BusinessWorld is still awaiting comment from PLDT on this matter.
In a disclosure to the stock exchange on Dec. 22, PLDT said that it “may incur additional debt in the short term.”
“The plan to borrow P35-45 billion in the next two years is for general corporate purposes including, but not limited to, payment of capex and dividends,” the company noted.
The company attributed its budget overspending to “site rollout, transport projects, and ports rollout.”
“5G assets… were cited as an example [during a recent special briefing], but they do not comprise the bulk of the P48 billion capex overrun,” it added.
The company also said that the deferment of the 5G rollout was in relation to the tepid market adoption of 5G handsets given that these are “still not affordable for most of the Philippine prepaid market.”
PLDT Chief Executive Officer and President Alfredo S. Panlilio said in a separate disclosure that a confluence of factors, such as years of underinvestment, heightened competition, and the strong demand for fiber connections during the coronavirus pandemic, led to the overspending.
Other factors were “the threat from former President Rodrigo R. Duterte for telcos to shape up; intense competition in the telco sector with the then anticipated entry of DITO Telecommunity Corp. funded by China Telecom Corp., Ltd., as well as the emergence of a competitor in the fiber space, Converge ICT Solutions, Inc.,” he added.
The company plans to reduce fresh capex starting in 2023. “Thereafter, we expect capex to reduce steadily. 2023 will be a year of consolidation as we continue to strengthen and grow the business. We strive to be better,” Mr. Panlilio said.
PLDT shares closed 1.52% lower at P1,230 apiece on Dec. 23.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.