Fitch Ratings has downgraded the credit ratings of Philippine Long Distance Telephone Co. after the telecom firm allocated higher capital expenditures for 2015.
PLDT’s long-term local currency default rating was reduced to BBB+ from A-.
The credit rating agency simultaneously affirmed PLDT’s long-term foreign-currency IDR and its foreign-currency senior unsecured rating at ‘BBB’.
Fitch said the revision was due to the further deterioration in the company’s funds flow from operation due to signifiant capex expansion.
PLDT raised its capex to P43 billion this year from an earlier budget of P39 billion.
The company also earmarked $100 million for digital acquisitions in 2015, including $20 million in Internet TV service provider iflix and online payment solution company Paywhere.
Fitch Ratings projected losses in the digital business of PLDT over the next three years.
First said despite the downgrade, PLDT was expected to sustain its leading position in the telecommunications market, although Telstra Corp.’s impending entry with San Miguel Corp. will intensify competition over the longer term.