PLDT exec: Synergies with Meralco worth at least P8-B

ABS-CBN News

Posted at Mar 17 2009 08:27 PM | Updated as of Mar 18 2009 09:33 PM

Market players may not have appreciated the PLDT Group’s recent moves to acquire a major block in power giant Manila Electric Company (Meralco), but an executive of the company stressed Tuesday that the synergies between the existing infrastructure of Meralco and PLDT is worth at least P8 billion.

In a press conference, Ray C. Espinosa, PLDT director and executive in several PLDT subsidiaries, said the cost of replicating Meralco’s extensive pole network is “about P8 billion.”

PLDT, the country’s biggest telecommunications company, currently piggybacks its cables on Meralco’s pole network, which covers the telecommunication industry’s most lucrative market: Metro Manila and the outlying areas.

Meralco has over 500,000 poles in its franchise area. Each pole cost about P15,000 to construct.

Espinosa said these estimates do not include related expenses in obtaining right-of-way rights.

Meralco’s other major shareholder, San Miguel Corporation, has previously announced it is entering the telecommunications market through Q-tel, its venture with a Qatar-based company.

Ramon Ang, president of San Miguel, earlier said he has discussed in a Meralco board meeting the possibility of reducing electricity rates by utilizing the Meralco poles also for Q-tel’s purposes.

Market talk is rife that both PLDT and San Miguel groups are vying for control of Meralco’s board as the electricity company’s May 26 annual stockholders meeting nears.

On Monday, following PLDT’s announcement that it has increased its Meralco stake to 30 percent, its stock price dropped 11.7 percent to P1,895--its lowest since October 28--as investors digested the Meralco move.

Moody’s Ratings Service also announced it will review its rating of PLDT’s debt notes to reflect uncertainties in its recent purchases. -- with reports from Ricky Carandang, ABS-CBN News
 

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