MVP: PLDT performance is a letdown; necessary measures will be done

Posted by DG, Date posted at December 27, 2022

PLDT Chairman Manuel V. Pangilinan did not mince words on how PLDT has fallen from expectations, “Certainly, we’ve taken a knock on our reputation. We pride ourselves on governance, on disclosures, and we’re gonna get a knock. We have a job in trying to recover our credibility.”

PLDT Chairman Manuel V. Pangilinan
Image source: Bilyonaryo Business News

Pangilinan detailed in an exclusive interview with the Inquirer how he learned that there were as much as PHP 130 billion in undocumented purchase orders for the last four years at the country’s premier and biggest telecommunications firm.  

As of the 16th of December, a Friday, PLDT said that the most current estimate of these unaccounted and questionable deals — tagged vaguely as “budget overruns” — has been patted down to a total of PHP 48 billion. This is still a considerable amount since this figure shows that 12% of PLDT’s PHP 379 billion capital spending program of the last four years.  

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Unrecorded transactions revealed by a senior company executive

A senior company executive stepped in and informed Pangilinan about the problem with unrecorded transactions in the early part of October 2022. The executive said that there have been purchases and orders for internet and phone network equipment that are without the proper documentation pegged at billions of pesos in total. This has been ongoing and there were no measures taken to stop the unrecorded transactions.

These now lay open that said transactions will be in question and stain the integrity of PLDT as a company. If controls to such purchases and transactions were unaddressed this can be interpreted as deals that are aboveboard or there are shameless corporate officials or vendors who are willingly and fearlessly committing fraud, most likely kickbacks from the multi-billion peso purchases.  

Pangilinan said, “At that early stage, the numbers were very different from what we disclosed [on Friday] — they were closer to the numbers being quoted in those rumours: 128, 130 [billion pesos].”

Tracking the internal trail

The 76-year-old Pangilinan oversaw PLDT’s metamorphosis from a largely analog telephone monopoly in the 1990s to the digital megacorporation it is today. His first order of the day after learning of the questionable transactions was to establish a worthy group to compose the internal forensics team to find out what happened and assess the situation in depth. Another step was to hire a third-party auditor that was not connected in any way with PLDT’s external auditor, SGV & Co., to go through PLDT’s books with a fine-toothed comb, hook line and sinker to search for possible cases of fraud.

Pangilinan also gave officials the go-ahead to renegotiate or altogether cancel the large supply deals with vendors that have ballooned beyond expectations — those that are below the radar of the company’s top leaders and board of directors. Doing so has trimmed down the potential irregularities from the earlier reported estimate of PHP130 billion to PHP48 billion in the coming weeks. 

Necessary actions will be taken to create a stronger PLDT

There will be harsh measures taken for officials who are proven to be involved or have had knowledge of these unrecorded transactions.  

Pangilinan stressed, “We have to set an example. We have to send a message. We have to be firm.”

So far, PLDT has suspended four key officials while further investigation is ongoing to dive deeper into what took place and further details that would prove how these schemes played out. Among the officials who will meet actions accordingly include heads of finance, procurement, and networks. 

There are stories that a fourth suspended official who recommended the equipment suppliers and vendors to PLDT who were involved in the questionable transactions. Pangilinan is also going to bolster the company’s books from the ambiguous transactions. 

He will focus on PLDT’s depreciation expenses, with P48 billion representing uncompleted capital expenditures carried over from 2020 and 2021, and fulfilled in 2022 and 2023. These will be depreciated over a period of eight to nine years getting PLDT’s depreciation level to about PHP 4.5 billion annually starting in 2023. Should this not be addressed, it will reduce the company’s core income by about PHP3.5 billion each year.

Pangilinan clarified, “The significant gain from the sale of [telecommunications] towers should give us the space to write off a significant amount of current assets to offset these unanticipated CAPEX overruns.”

The management team presented its latest findings last Friday to the board of directors. There was an assurance that the effects on the firm’s 2023 profits will be minimal. Definitely, 2024 will be better and show the results of action plans taken to address the issues that hounded the company for the past five years. 

Pangilinan digressed, “Give us a year to recover and 2024 should be good. It will be better than 2022. I’d like to assure everybody else that, when we heard about this problem, we addressed it right away. It’s most unfortunate. I’m very sad and disappointed that this happened. But it is what it is. We just have to deal with it and put in tighter controls and better processes.”

“We have much work ahead but we will get through this one,” Pangilinan added. “We shall overcome.”

Pangilinan is simply amazing. Without much hemming and hawing, he decisively implemented what was needed to get PLDT to a better place again. Any comments on this? Just type in your feedback, suggestions and reaction anytime. Hope to hear from you!

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