PLDT funding capex via possible Meralco divestment

MANILA, Philippines – Philippine Long Distance Telephone Co. (PLDT) is in talks with Metro Pacific Investments Corp. (MPIC) as it looks to unload its shares in power utility giant Manila Electric Co. (Meralco) to reduce debts and support capital expenditures.

Manuel V. Pangilinan, chairman of PLDT and MPIC told reporters on the sidelines of the annual shareholders’ meeting of the infrastructure conglomerate, the telco intends to let go of its shares in Meralco in the near term.

“From a PLDT perspective, my view is that the investment of PLDT in Meralco which we made way back in 2009 has already ripened to the point where it is time for PLDT to consider divesting part and eventually all of its stake in Meralco,” he said.

Meralco is owned directly by two major stockholder groups: Beacon Electric Asset Holdings Inc. and JG Summit Holdings Inc.

PLDT has investments in Meralco through Beacon which is a joint venture of the telco’s unit PLDT Communications and Energy Ventures Inc. and MPIC.

“There is nothing wrong with the investment in Meralco. I think it has been a great investment for PLDT,” Pangilinan said.

For MPIC to be able to maintain its control in Meralco, he said it would be best if part of the holdings of PLDT would be sold to the infrastructure giant.

MPIC chief financial officer David Nicol said discussions are ongoing with the board of PLDT.

After divesting its stake in Meralco, Pangilinan said PLDT intends to use the proceeds to reduce its debts and to fund its capital expenditures.

“What is the principal use of proceeds? I would like to think reduction of debt. And as you know the capex of PLDT will be elevated this year and I think for the next two or three years, it will be quite high,” he said.

PLDT has set its capital expenditures at a record P43 billion this year, similar to last year’s.

The bulk of this year’s capex will be invested on improving PLDT’s network capacity and Internet connectivity to meet rising demand in data usage.