Troubled Philippine telecoms giant PLDT Inc. finally halted a days-long stock rout as it vowed to cooperate with an investigation into the more than $800 million of unaccounted spending that it disclosed last week.
(Bloomberg) — Troubled Philippine telecoms giant PLDT Inc. finally halted a days-long stock rout as it vowed to cooperate with an investigation into the more than $800 million of unaccounted spending that it disclosed last week.
Shares of the country’s largest phone company by revenue climbed as much as 7.1% on Wednesday in Manila, helped also by comments from the head of the stock exchange that there was no fraudulent trading in PLDT shares before it disclosed the unrecorded spending.
It’s a welcome reprieve for the almost a century-old firm after shares tumbled 20% on Monday alone, a record drop. But questions remain about why the spending was undocumented, with investors expecting answers at a briefing taking place this afternoon.
While the company denies that there were any fraudulent activities, the issue raises concerns about its corporate governance practices and may make investors wary about the broader $228 billion Philippine stock market.
PLDT flagged 48 billion pesos ($867 million) in undocumented spending over four years from 2019 on Friday, describing it as a “budget overrun” and “elevated capex spend.” The Securities and Exchange Commission, the Philippine regulator, quickly said that it was starting an inquiry into the disclosure and the sharp decline in the share price before it.
Philippine Stock Exchange President Ramon Monzon said earlier Wednesday that there were no fraudulent activities in the trading of PLDT shares, according to ABS-CBN News.
In its statement, PLDT also said that its disclosure last week wasn’t made sooner because it “needed time to conduct its investigation of the contracts and expenditures involved as well as to meet its major vendors for reconciliation of outstanding amounts and project status.”
It added that its business and outlook continue to remain healthy.
PLDT has a large base of foreign investors, but has the second-lowest percentage of independent directors among the 30 firms in the country’s benchmark index.
At least two brokers have already weighed in to support the company, with Morgan Stanley saying much of the undocumented spending has already been priced in. Local firm COL Financial Group Inc. upgraded PLDT to buy from hold, saying the selloff appears to be overdone.
(Updates throughout)
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