(Based on PLDT Inc.’s SEC Form 17‑Q for the nine months ended Sept. 30, 2025, filed Nov. 11, 2025; plus public disclosures on Kayana through Jan. 28, 2026. Not investment advice.)
Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.
PART 1 — “The Dividend Machine Still Runs… But It’s Feeling the Heat”
There’s a simple reason PLDT (TEL) continues to command attention among income investors: cash generation. In the first nine months of 2025, TEL produced ₱75.8 billion in operating cash flow—up 11% year‑on‑year—while cash dividends paid were about ₱20.6 billion, essentially steady versus the prior year. That is the kind of coverage that reassures dividend holders: the payout isn’t being “imagined” into existence; it’s being funded by operating cash.
But if you look only at cash flow, you miss the heat rising under the hood. Reported profitability softened: net income fell 11% to ₱25.1 billion for 9M25, even as EBITDA increased 3% to ₱82.8 billion and EBITDA margin held at about 52%. That divergence—strong operating earnings, weaker bottom line—tells you where the pressure is building: below the operating line, where financing costs, FX swings, and depreciation live.
The most dividend-relevant metric here is telco core income, which PLDT itself uses as a reference point for dividend decisions. On that basis, 9M25 was not a victory lap: telco core income declined 5% to ₱25.3 billion (from ₱26.6 billion). Core income overall was flat, but the telco core line—the one management explicitly ties to dividends—moved lower. For dividend investors, that’s a yellow light: not a cut signal, but a reminder that dividend growth needs earnings headroom.
Meanwhile, dividends were still declared at a high run rate: ₱47/share (approved Feb. 27, 2025) and ₱48/share (approved Aug. 12, 2025) for common stock in the first nine months. That suggests management is still defending the income proposition. But defending is different from expanding. The bigger question is whether TEL can grow distributions without leaning harder on debt.
And debt is where the market starts asking harder questions. Total interest‑bearing debt rose to ₱297.5 billion as of Sept. 30, 2025 (up from ₱281.6 billion at end‑2024). Net debt-to-equity inched up to 2.40x, and interest coverage fell to 3.37x (from 3.96x). PLDT says it remains compliant with covenants—but covenant compliance is the floor, not the ceiling. For dividend growth, investors want to see leverage at least stabilize, ideally improve.
So where does that leave the dividend thesis today?
Sustainability? The evidence still points to yes—because cash from operations is strong, EBITDA is stable-to-improving, and the company continues to pay out sizable dividends.
Growth? More conditional. Dividend growth becomes a tougher sell when telco core income is down, financing costs are rising, and leverage is edging higher. The market doesn’t need perfection—just an inflection: improving telco core, stable churn/ARPU, and a capex profile that stops competing so aggressively with dividends.
In other words: TEL’s dividend machine still runs—but it’s working against a stronger headwind than last year.
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