Meralco eyes loan for broadband project

MANILA, Philippines – Power utility giant Manila Electric Co. (Meralco) plans to borrow to finance a proposed broadband over power lines project.

Alan T. Ortiz, a member of Meralco’s board of directors, told reporters over the weekend that the borrowing plan has been discussed in the recent board meeting.

He said the company is set to pilot test the broadband over power lines project which is one of the synergies Meralco and its new shareholder, the Philippine Long Distance Telephone Co. (PLDT), will undertake.

“It will be used for broadband over power lines which PLDT is proposing. They want it to be tested already. In the last board meeting, they made a suggestion to test this broadband over power lines – which incidentally (Ramon) Ang (of San Miguel Corp.) talked about in the May board meeting – so this is a confluence of interest,” Ortiz said.

San Miguel is also a new minority shareholder in Meralco, alongside PLDT.

Ortiz said Meralco will borrow for this additional project.

“They will have to borrow for the broadband over power lines. It will be small   since it’s going to be done in a pilot test basis,” he said.

But Ortiz admitted Meralco may consider more borrowings for this project once it goes full blast.

“Once it kicks off in Metro Manila then it would require additional borrowings. No figure yet, as they are working on it,” he said.

He said there was a proposal for Meralco subsidiary, Meralco Energy Systems Inc. (Miescor), to undertake this project.

“There will be additional investments. But the infrastructure is mostly in place to the Meralco subsidiary – Meralco Energy Systems, Inc. – they have a subsidiary for the fiber optic line around Metro Manila. It’s already in place, but it’s just a matter of installing the software,” he said.

Ortiz said Miescor has been recognized for its outstanding performance in system technologies.

“Business opportunities (for Meralco) are metering – smart and prepaid meters, broadband. Miescor can do all of these projects for Meralco. Miescor is a triple A rated company,” he said.

According to Ortiz, they are optimistic the broadband project will further improve the revenues of the company.

“It’s going to be a new revenues stream. So everybody will benefit from it,” he said.

After securing a rate hike and applying a new performance-based rate mechanism, Meralco is projected to earn some P15 billion this year from P3.1 billion in 2008.