PLDT Proposes $3 Million Settlement for US Class Action Lawsuit Over Budget Overrun

PLDT Inc., a leading telecommunications company in the Philippines, has agreed to pay $3 million to settle a class action lawsuit in the United States. This lawsuit was initiated by investors who suffered losses following the company’s disclosure of a multibillion-peso budget overrun in 2022. The settlement, announced on February 16, is pending approval by the US District Court for the Central District of California.

The company has emphasized that the proposed settlement includes no admission of liability, fault, or wrongdoing. Approval of the settlement would completely resolve the US class action lawsuit against all defendants involved.

The class action suit stemmed from a significant drop in the value of PLDT securities after the company disclosed a P48-billion ($888 million approximately) budget overrun on December 16, 2022. This disclosure led to a more than 23% drop in the price of PLDT American Depositary Receipts and a nearly 20% fall in PLDT shares on the Philippine Stock Exchange, erasing about P62 billion ($1.15 billion approximately) in shareholder value.

Plaintiffs in the lawsuit alleged that PLDT and its officials had misrepresented and failed to disclose critical information affecting the company’s business, operations, and prospects, which they claim was a violation of federal securities law. The budget overrun, attributed to “over orders” in the rollout of 5G and wireless services, accumulated over four years from 2019 until its disclosure in 2022.

Following an investigation concluded in March last year, PLDT assured investors that no fraud was detected during the forensic review by an external counsel. The company has since implemented stricter measures to monitor capital expenditures to prevent future budget overruns. As part of its response to the investigation’s findings, PLDT appointed a new chief financial officer, and several key officials left the company through early retirement and voluntary resignation.