PSE Points to Ponder

Someone has said that in deal making, if you are a buyer pretend to be a seller and if you are a seller pretend to be a buyer. After Business World has reported that the Philippine Competition Commission (PCC) green-lit DMC Urban Property Developers, Inc.’s acquisition of Smart Towers, the Makati-based office building assets of PLDT Inc. ( TEL ), another news outfit the Philippine Star/PhilStar Global has r eported that MVP Group’s PLDT is vying for Lopez owned Sky Cable . Business World and the Philippine Star are units of Hastings Holdings, Inc. and according to the disclosure in the Business World report, Hastings Holdings, Inc. – a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls. Hastings is a wholly-owned subsidiary of MediaQuest and holds all the print-related investments of MediaQuest, including equity interests in the three leading newspapers: The Philippine S...

PLDT Inc. ( TEL ) is under heavy pressure to (1.) invest in fiber broadband and 5G wireless networks and (2.) still reduce leverage and (3.) distributes dividend to shareholders, the “ triple threat position. “ No less that the President of the Philippines on its State of the Nation Address had called on TEL and Globe Telecom, Inc. ( GLO ) to improve their services. The President was telling the telcos that it is just a matter of capital infusion and that the telcos have to look for it to fund service improvements. As of June 30, 2020 TEL’s debt had increased 22% to 235.3 Billion Pesos from the end of December 31, 2019 of 192.6 Billion Pesos. The already elevated debt level gives TEL less flexibility to raise capital through debts. Judging by the results of the 1H 2020, cash generations from operations will just be enough to fund capital expenditures of 70 Billion Pesos if TEL will stick to its plan of spending around 70 Billion Pesos for capital expenditures on n...

TEL has been gradually accumulating debt. As of June 30, 2020 (1H 2020) total long-term debt of TEL is at 199.7 Billion Pessos. That is a significant 28.2% increase from 155.8 Billion Pesos as of the end of December 31, 2018. It can be remembered that on October 2019 TEL initiated a consent solicitation from bondholders to amend certain provisions in the indentures to allow TEL to borrow more money without breaching any debt covenants. TEL has to borrow more in 2019 because it has to fund its massive capital expenditures. In 2019, TEL spent 88 Billion Pesos for network and infrastructure. TEL has to catch-up on network and infrastructure investments as the third telco rolls out its network and telecom infrastructure . Over the years while it grew debt, TEL did not invests aggressively on its infrastructure. Over a three period from 2016 to 2018, TEL’s investment on its infrastructure averages to only 42 Billion Pesos. TEL was among the early companies to dip into borrowings ...