PLDT Inc. is expected to lower its average capital expenditures (capex) by more than 10% from 2023 to 2025, according to a report by Singapore’s S&P Global Ratings.
The report — S&P’s Asia-Pacific 5G: Telcos Face A Billion-Dollar Balancing Act — said telecommunication companies’ investments in 5G technology “remains more credit risk than reward.”
However, it said that average capex intensity, or capital spending as a proportion of revenue, among rated Asia-Pacific telcos will ease but will remain high from 2023 to 2025.
“We expect average capex intensity for the same population to be close to 19% in 2023 before easing slightly from 2024. This compares with the average of about 20% in 2019-2022, the period during which most telcos rolled out 5G,” S&P said.
“Some telcos will face less pressure than others. For rated telcos in Korea, Taiwan, and Philippines, we expect average capex to fall by more than 10% for 2023-2025,” it said.
According to the report, the Philippines has 60%-80% of 5G population coverage since the first rollout in 2020.
“In contrast, we anticipate average capex will rise more than 10% for rated telcos in Singapore, Japan, and India for the same comparative periods. Bharti Airtel only started rolling out 5G in late 2022,” it added.
The report has rated 14 telcos from different countries within the Asia-Pacific region, with PLDT rated for the Philippines.
S&P projects that telcos will continue to improve their 5G networks based on adoption rates and that tower building or leases will rise because 5G demands more towers and small cells.
Telcos are also seen to still benefit in its average revenue per user or unit and earnings from 5G services, said S&P.
“This is because data use typically rises with migration to 5G. For now, telcos use 5G to offer consumers faster mobile and fixed-wireless access. Not all telcos are charging a premium for 5G services,” it said.
MONETIZED CELL TOWERSIn a separate report, credit rater Moody’s Investor Services said PLDT would still have 4,430 towers or 37% of its tower portfolio to monetize.
“Based on average valuations for precedent transactions, PLDT’s towers could fetch about P58 billion, which is a substantial source of funding for the company. We do not rule out that PLDT may classify some of the remaining towers as strategic and not available for sale,” it said.
Since April 2022, PLDT has been monetizing its tower assets by entering sale-and-leaseback transactions for 7,569 towers valued at P98.3 billion.
“As of May 16, PLDT closed around 70% of its total announced tower sales and received P69.5 billion in cash consideration. We expect the remaining tower sales transactions to be completed in tranches by the end of 2023,” Moody’s said
PLDT shares rose 1.46% or P19 to close at P1,319 each on Tuesday.
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. — Justine Irish D. Tabile
