European fund manager eyes stake in PLDT data centers

MANILA, Philippines — Telco leader PLDT Inc. is negotiating with Europe’s CVC Capital Partners for the minority sale of its $1 billion portfolio of data centers, as talks with Japan’s Nippon Telegraph and Telephone Corp. (NTT) failed to progress on disputes in ownership terms.

The STAR learned from several sources that CVC is eyeing a partial stake in PLDT’s data center business, seeing potential in a network now made up of 11 facilities across Mega Manila.

CVC, based in Luxembourg, handles more than $210 billion in assets as a private equity manager through its global umbrella of 29 offices.

Prior to this, PLDT withdrew from negotiations with NTT, which was first to convey interest in the data centers built by the telco. Sources said NTT was asking for a majority share, but PLDT was unwilling to give up control, leading the two to call it quits.

CVC almost had PLDT walk out of the negotiating table, too, on disagreements in the valuation of data centers. Fortunately, CVC was able to convince the telco to stay on the line by putting up a better priced proposal, sources said.

The STAR also found out that another investor stands ready to engage with PLDT if it walks out in the potential deal with CVC for whatever reason.

For PLDT, the objective is to secure the best price from the partial sale of its data centers, and the telco is sure it can find one given the importance of such infrastructure in the digital age.

VITRO Inc. president and CEO Victor Genuino said the $1 billion valuation of the data centers is computed based on existing and future capacity and the demand from tech giants.

VITRO was created earlier this year to manage the data centers of PLDT. Currently, the company operates 10 facilities with a combined capacity of 50 megawatts, and this is expected to double to 100 MW once VITRO Sta. Rosa is activated.

VITRO Sta. Rosa is the 11th and biggest data center of PLDT, and the telco spent $350 million for its construction. Now that the project is completed, studies are underway for the development of a 12th, 13th and 14th data center.

In spite of the setback with NTT, Genuino is optimistic that VITRO will pick up a new investor,  dismissing the possibility it will go public just to raise fresh funds.

“We feel that a strategic investor is a more appropriate path forward,” Genuino told The STAR.

Based on financial reports, PLDT’s data centers are showing signs of business viability, growing revenues by 10 percent to P3.2 billion in 2023, from P2.9 billion in 2022.

China Bank Capital Corp. managing director Juan Paolo Colet said the data center industry in the Philippines is really bound for growth, especially with telcos like PLDT betting heavily on the sector. He noted that the market can expand by double digits over the next few years.