Piltel changes name as business focus shifts

MANILA, Philippines - Philippine Long Distance Telephone Co. (PLDT) unit Pilipino Telephone Corp. (Piltel) is being renamed PLDT Communications and Energy Ventures (PCEV) to reflect the changes in the company’s business brought about by its investments in Manila Electric Co. (Meralco).

This developed as PLDT chairman Manuel Pangilinan confirmed that his group, through Beacon Electric Asset Holdings, is in talks to acquire additional shares in Meralco, particularly the four percent stake acquired by businessman Eusebio Tanco from the Government Service Insurance System (GSIS) earlier this year.

Beacon is the special purpose company jointly owned by Piltel and Metro Pacific Investments Corp. (MPIC) whose sole purpose is to hold their shares in Meralco, which amount to 392.5 million shares, or equivalent to 34.8 percent of Meralco’s outstanding common shares.

Asked whether it will be worth it to acquire Tanco’s stake given the high price at which it was acquired from GSIS, Pangilinan said that “anyway, it is deferred payment.”

Piltel’s stockholders have approved the amendment in the company’s article of incorporation, in particular the change in corporate name and in the primary purpose. “The amendment in the name and primary purpose is needed because the current ones are no longer reflective of Piltel’s new corporate purpose and the business in which it is engaged in,” the company said. The number of board directors was also reduced from 13 to 11.

“Piltel, which will be renamed PLDT Communications and Energy Ventures Inc., is now a significant player in the energy industry as a result of its holding in Meralco. Piltel’s investment should ensure that the PLDT Group will be in the best position to harness both operational and strategic synergies with Meralco,“ Piltel president and CEO Napoleon Nazareno said. Nazareno added he will remain president and CEO of the renamed company while Manuel Pangilinan will still be chairman.

Pangilinan, in an interview on the sidelines of the annual stockholders meeting, said that while at present Piltel is just a holding company for its direct and indirect stake in Meralco, they are currently reviewing what other assets will be placed under it or businesses it will be operating in the future.

However, Nazareno revealed that as a holding company for shares in Meralco, PCEV will likely be handling new synergy businesses being developed between PLDT and Meralco, such as broadband over power lines, prepaid electricity, among others.

Piltel is 99.5 percent owned by Smart Communications, which, in turn, is wholly owned by PLDT. Pangilinan said they are still trying to acquire the remaining 0.5 percent in the hands of small shareholders.

Asked about plans to delist Piltel from the local stock exchange, Pangilinan stressed that this matter is still being reviewed, although in the past, he has said that it may no longer make sense for it to be publicly listed, considering that 99.5 percent is already owned by Smart.

Meanwhile, Piltel announced that its net income for the first quarter of 2010 stood at P458 million, 86 percent lower than the P3.25 billion generated during the same quarter last year.

Core net income, before exceptionals and one-time items, declined to P470 million from P3.2 billion in the same period in 2009, mainly comprised of Piltel’s equity share in the net income of Meralco.

Piltel acquired its 20 percent investment in Meralco in July 2009. The P3.2 billion recorded in the first quarter of 2009 primarily represented Piltel’s net income relating to its cellular business which was sold and transferred to Smart in August 2009.

Starting the second quarter of 2010, Piltel’s financial results will reflect the equity accounting of  its 50 percent share in Beacon.

The results will also start including Piltel’s share of Meralco’s earnings arising from the 68.8 million Meralco common shares (6.1 percent interest) retained by Piltel after the transfer of its 154.2 million shares to Beacon. Piltel’s effective interest in Meralco, however, remains at 20 percent.

Piltel’s shareholders also approved the sale and transfer of Piltel’s 154.2 million shares in Meralco to Beacon as well as the P23.13 billion investment in Beacon shares.

They also gave their go-signal to the consolidation in Beacon of 154.2 million Meralco shares owned by Piltel and 163.6 million shares owned by MPIC, amounting to 28.2 percent of Meralco.

With the exercise by Beacon of the option to acquire the Lopez Group’s 6.6 percent stake (around 74.7 million common shares) in Meralco, the Pangilinan-led group now controls over 41 percent of the power utility.