PLDT divesting entire Meralco stake

MANILA, Philippines – PLDT Inc. is in talks with foreign investors for the sale of its remaining 8.74-percent stake in Manila Electric Co. (Meralco).

“We are now in discussion with a number of interested buyers. The timetable for the disposal would not be this year… but would most likely be first half of 2017,” PLDT chairman and CEO Manuel V. Pangilinan said in a press briefing in Makati City yesterday.

PLDT owns a 25-percent stake in Beacon Electric Asset Holdings Inc. after selling 25 percent to Metro Pacific Investment Corp. Beacon, in turn, owns 35 percent of Meralco.

BEAHI is a joint venture company composed of PLDT Communications and Energy Ventures (PCEV) and Metro Pacific Investments Corp. (MPIC).

Meralco’s two major stockholder groups are BEAHI and JG Summit Holdings Inc.

The transaction would likely happen in the first half of 2017, Pangilinan said, adding that the purchase consideration is likely “in the north of P26 billion.”

“Buyer could form a consortium because it is a very big amount. Remember the sale now includes not only the attributable share of PLDT in Meralco shares which is about 8.74 percent but also the attributable share of PLDT in Beacon and Beacon now owns 56 percent of Global Business Power,” Pangilinan said.

The telco expects to realize a similar gain made from the sale of PCEV’s 50 percent equity interest in BEAHI to MPIC on May 30, when it sells the remaining interest in Meralco.

PCEV’s 50 percent equity interest was sold to MPIC for a total consideration of P26.2 billion and as a result, gave a net gain of P7.4 billion.

“If you use that as a guide, it is likely that first-half next year, we would realize similar gain,” Pangilinan said.

He said earlier, PLDT is divesting its stake in Meralco as the investment made way back in 2009 has ripened and the proceeds would be used to support the telco’s capital expenditures and reduce debts.

A portion of the first payment received by PCEV has been used to fund part of PLDT’s acquisition of 50 percent of the telco assets of San Miguel Corp. (SMC).

PLDT has a pending petition against the Philippine Competition Commission before the Court of Appeals to prevent a review of the transaction with SMC.

While the frequencies part of the transaction are necessary for telcos to provide improved services to consumers, Pangilinan said the telco would survive even if the transaction would not be allowed to proceed.

“I think the company will survive…Clearly, this new government wants to see telcos improve their services so it is essential that the frequencies which are the subject matter of transaction with SMC, be resolved in favor of two telcos. I think that is crucial element for two telcos to improve capacity and services on internet for Filipino consumers,” he said.

As of the first semester, PLDT’s consolidated core income reached P17.7 billion, down six percent from P18.9 billion last year.

The telco’s net income for the January to June period reached P12.5 billion, 33 percent lower than the P18.7 billion in the same period a year ago.

PLDT Group chief financial officer Anabelle Chua attributed the lower net earnings to the P5.4 billion impairment from its investments in German e-commerce investor Rocket Internet amid the dip in the latter’s share price.

While PLDT’s core earnings were down in the first half, it is sticking to its P30 billion core income guidance for the year.

PLDT ended 2015 with core net income of P35.2 billion, in line with its guidance for the year.