S&P Global Ratings has affirmed PLDT Inc’s ‘BBB’ credit rating, citing improved corporate governance and tighter controls over capital expenditure. The outlook is stable.
S&P said in a statement it revised its assessment of PLDT’s management and governance score to neutral, an upgrade from moderately negative.
This change reflects the effective operational enhancements PLDT implemented in its capital expenditure management policies and procedures following a budget overrun in December 2022. That overrun stemmed from spending during 2019 through 2022.
The company’s actual capital spending has aligned with its budget over the past three years. S&P projects PLDT’s cash capital expenditure will be P63 billion to P66 billion in 2025, a notable reduction from P94 billion in 2022. It said there have been no other material internal control deficiencies since the overrun.
The impact of the capex overrun is now largely mitigated. PLDT has reaccelerated its fiber rollout. Remaining commitments to major network vendors related to the overrun have reduced to about P3.4 billion as of Sept. 30, 2025 from P33 billion on March 31, 2023. PLDT also resolved a U.S. class action litigation related to the issue on Sept. 17, 2024 with a settlement of $3 million.
PLDT’s sustained earnings growth and reduced capital intensity are expected to keep its financial performance consistent with the ‘BBB’ rating.
Earnings are expected to rise primarily from the fixed-line segment, led by fixed broadband and enterprise revenues.
S&P forecasts annual earnings growth of 5 percent to 7 percent in the fixed-line segment through 2027. PLDT is well positioned to capitalize on the rapid adoption of fixed broadband in the Philippines due to its market-leading subscriber base and network investments since 2019, it said.
Increasing demand for cloud services cybersecurity data center solutions and AI-driven services will support the enterprise segment.
The ratings agency anticipates weaker earnings growth in PLDT’s wireless segment because of the already high mobile market penetration rate and strong competition from Globe Telecom and Dito Telecommunity Corp.
S&P projects an improvement in PLDT’s discretionary cash flow on account of overall earnings growth of 3 percent to 5 percent annually in 2026 and 2027, coupled with a decline in capital expenditure intensity. Discretionary cash flow should turn positive in 2027, the first such year since 2018.
PLDT’s leverage headroom will remain limited through 2027, partially due to higher lease liabilities from entering into more land and tower leases, it said.
S&P estimates the company’s ratio of debt to EBITDA will remain high at about 3.0x in 2025 and 2026 compared with 3.1x in 2024.
Plans by PLDT to sell partial stakes in its data centers and monetize its legacy copper assets could lead to faster deleveraging than S&P’s base-case expectations.
The company intends to execute the transactions and use the majority of the proceeds to pare down debt, in S&P’s view, although the base case does not include this due to uncertainties around transaction structures and timelines.
PLDT faces an overhang of uncertainty from new regulations, specifically the new Konektadong Pinoy Act (KPA), which aims to promote competition in the Philippine telco market and improve internet access. Its looser franchise requirements and increased infrastructure-sharing mandates are likely to lower barriers to entry.
Although there could be potential revenue streams from network wholesale and increased flexibility in network expansion, such revenues may not fully offset the effect of more intense competition. KPA became law in August 2025, but S&P awaits more clarity as the regulator implements the law and discloses more details such as the mandatory access list and network pricing structures.
The stable outlook reflects S&P’s view that rising earnings will provide some cushion against rising debt for PLDT, such that its debt-to-EBITDA ratio will improve below 3x.
