Philippine telecommunication companies are likely to increase their capital expenditures next year due to regulatory pressure and looming competition, according to Fitch Ratings.
The credit rating agency said PLDT Inc. and Globe Telecom Inc. both lowered their capex guidance for 2020 by 15 percent to 20 percent from their original targets in light of the pandemic-related supply disruption.
PLDT set a capex guidance of P70 billion from the original P83 billion, while Globe will be spending P50.3 billion from P63 billion.
“The government’s push for significant network improvements”•recently reiterated by President Duterte at the annual state of nation address”•is likely to accelerate network expansion over the next few quarters,” Fitch said.
“We believe a spill-over of deferred capex into 2021 will stretch domestic telcos’ leverage profiles, as operating cash flow continue to fall behind investments,” it added.