telecommunications companies

PLDT says ‘tough year’ ahead amid high interest rates, inflation

Lance Spencer Yu

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PLDT says ‘tough year’ ahead amid high interest rates, inflation

Manny Pangilinan photo by Angie de Silva/Rappler

'We expect fuel prices, oil, gas, and the like to stay high,' PLDT chairman Manny Pangilinan says. 'It will continue to pinch wallets of Filipinos.'

MANILA, Philippines – PLDT chairman Manny Pangilinan anticipated bigger challenges in the coming year even as the company posted a record-high, P142-billion revenue.

In a press conference on Thursday, November 3, Pangilinan cited interest rate hikes, inflation, and geopolitical volatility as some of the pressures that the company must overcome in 2023.

“It will be a tougher year next year,” Pangilinan said. “Borrowing costs will go up, and when borrowing costs go up, that affects the equities market inversely.”

The Bangko Sentral ng Pilipinas has announced it will match the recent 75-basis points interest rate hike by the Federal Reserve. Such a move would likely make it more expensive for companies like PLDT to acquire fresh investments, and would add more pressure to post higher returns for those investments.

“When you raise the threshold on returns on investment, it tends to dampen investment interest,” Pangilinan expounded.

The somber outlook came as the company was also reviewing its consolidated capital expenditures (capex) of the year, which could exceed its initial guidance of P85 billion. Executives have said that 2023’s capex may continue being affected by foreign exchange volatility, a concern amid PLDT’s ambitious expansion plans.

“We are also watching our capex levels, especially the impact of the weakening peso on our dollar-denominated debts and imported capex, even capex committed in previous years and current ones,” PLDT president and CEO Alfred Panlilio said.

Inflation to ‘pinch wallets’ of Filipinos

But it wasn’t just interest and forex rates troubling the telecom giant. Pangilinan also pointed to the war in Ukraine and inflation as other sources of volatility, worsening fuel and food prices. For their customers, this may mean cutting back on discretionary spending, like telecommunications.  

“We expect fuel prices, oil, gas, and the like to stay high,” the chairman said. “It will continue to pinch wallets of Filipinos because in terms of priorities, it will be your food, your rental, your housing.”

Just as inflationary pressures dig into the income of everyday Filipinos, Pangilinan predicted that government spending for the next year may also be “challenged.” In spite of this, he was adamant that the government should encourage more investment in new private sector businesses.

“Your real weapon for economic recovery will be investments,” he said. “When you do that, you create new jobs, and when you create new jobs, there’s more income flowing to the income stream.”

PLDT to ‘rise to the challenge

Despite these hurdles, PLDT posted a record-high, P141.9-billion net service revenue. This represented a 4.5% increase from the previous year, which executives have attributed to consumers embracing a digital post-pandemic lifestyle. Telco core income in the first nine months also rose to P25.4 billion, up 10% from same period in 2021.

The company’s enterprise service segment remained a “bright spot,” growing 8% from 2021 as businesses reopen. PLDT Home also brought in 21% more revenue compared to the previous year, although the company tempered future growth expectations as the market matured. On the other hand, revenue from Smart and TNT continued its downward trend, shrinking by 5% from last year.

Looking toward the future, PLDT also announced plans to construct the Asia Direct Cable, which would link with seven East and Southeast Asia countries. Once completed, the project would expand PLDT’s network coverage from 60 Tbps to over 130 Tbps.

“We just have to rise to the challenge, realities. What we ought to do is to offer value for money to attract the pesos that you want them to spend on telecoms,” said Pangilinan. –

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Lance Spencer Yu

Lance Spencer Yu is a multimedia reporter who covers the transportation, tourism, infrastructure, finance, agriculture, and corporate sectors, as well as macroeconomic issues.