PLDT to sell 17.48% stake in Meralco

Philippine Long Distance Telephone Co. (PLDT) is ready to sell its entire stake in Manila Electric Co. to cut debts and support massive capital spending after earlier tagging challenges in the telecommunications landscape, its chair and CEO Manuel V. Pangilinan said Friday.

PLDT initially entered the then Lopez family-led Meralco in 2009 and figured prominently in a dramatic race for control for the country’s biggest electricity distributor against rival San Miguel Corp.

Pangilinan’s group eventually gained effective control of Meralco that same year after affiliate Metro Pacific Investments Corp. won the backing of the Lopez family to acquire most of the clan’s remaining Meralco shares at a record price of P300 a share.

That was seven years ago and on Friday, Pangilinan said their investment has “ripened to the point that it is time for PLDT to consider divesting part, and eventually all of its stake in Meralco” in the near term.

PLDT, via Beacon Electric Asset Holdings Inc., owns 17.48 percent of Meralco while Metro Pacific owns another 32.48 percent. That means PLDT’s Meralco stake was worth about P60 billion based on the electricity retailer’s latest share price of P301.80 apiece. Meralco lost more than 4.5 percent Friday after Metro Pacific announced an alliance with the Ty family’s GT Capital Holdings and a deal to acquire 56 percent of the latter’s power business.

“It’s my sense that investment has ripened to the point that it’s useful for PLDT to divest its stake in Meralco,” Pangilinan said at the sidelines of Metro Pacific’s annual meeting. “I think any kind of fund raising or liquidity event on the side of PLDT will be helpful.”

PLDT has hinted at raising funds before, as it noted that capital spending would remain elevated in the next two to three years. It said competition in the telecommunications sector would stay      fierce with the potential entry of new players and as consumers demand better Internet services.

At the start of 2016, PLDT hit the “reset” button, both to realign its strategy in a digital era and to temper expectations. It is poised to post its third straight year of decline in profits, with core earnings for 2016 seen at P28 billion, below last year’s P35.2 billion.

Pangilinan said proceeds from the sale of its Meralco stake, likely to companies within the group to maintain their control, would be used to pare down PLDT’s debts and to partly pay for capital spending.

PLDT’s capital spending this year was projected at about P43 billion, mainly to improve data services. It spent P43.2 billion in 2015.