PLDT Explores REIT Listing for Data Center Business, Considers Strategic Partnership with NTT

PLDT Inc., under the leadership of Chairman and CEO Manuel V. Pangilinan, is contemplating a significant move to list its data center business through a Real Estate Investment Trust (REIT) on the Philippine Stock Exchange (PSE). This strategic decision is coupled with ongoing discussions to sell a stake in the asset to Japan’s Nippon Telegraph and Telephone (NTT), potentially enhancing the business’s valuation and control.

Strategic Valuation and Partnership

As the data center business becomes increasingly vital to PLDT’s operations, Pangilinan highlighted that the company is aiming for a valuation “north of $1 billion.” This valuation underscores the critical role data centers play in PLDT’s broader strategy, particularly as part of ePLDT, the digital arm that focuses on providing comprehensive digital solutions. NTT, which already owns a 25% stake in PLDT, is a key player in these discussions, reflecting a long-standing partnership since 1995 that might deepen with this new agreement.

Control and Financial Strategy

Pangilinan stressed the importance of maintaining control over the data center business, indicating that PLDT aims to keep at least a 51% stake. This approach ensures that the company continues to leverage the data centers as a strategic asset while potentially benefiting from the liquidity that a REIT listing could offer. The CEO’s comments suggest a keen interest in maximizing financial returns without compromising operational control, which is crucial for maintaining the quality and reliability of their service offerings.

Alternative Plans and Market Flexibility

The talks with NTT are not exclusive, and PLDT is open to engaging with other potential investors to secure the best possible deal. This openness to negotiation underscores PLDT’s commitment to achieving a high valuation while maintaining strategic flexibility. If satisfactory terms with NTT or other parties are not reached, PLDT considers listing the data center business as a REIT on the local exchange, a move that would allow the company to retain full control and still attract significant investment.

Leadership and Future Directions

Amid these strategic discussions, Pangilinan also touched on leadership succession plans, noting ongoing meetings with potential candidates to eventually take over his role as President and CEO. This transition is part of a broader strategy to ensure continuity and stability in PLDT’s leadership, aligning with the company’s long-term vision and operational priorities.

Economic Impact and Industry Growth

The potential REIT listing and expansion through strategic partnerships are set to have a substantial impact on PLDT’s market position and financial health. By leveraging the growth in digital infrastructure demand, PLDT aims to secure a leading role in the region’s telecommunications and data services sectors. The move also reflects broader industry trends where telecommunications companies are increasingly turning to specialized investments like data centers to drive growth and diversification.

Conclusion

PLDT’s exploration of a REIT listing for its data center business, in conjunction with potential partnerships or stake sales, represents a strategic pivot towards optimizing its asset portfolio and enhancing shareholder value. This initiative not only reflects the evolving dynamics of the telecommunications industry but also positions PLDT at the forefront of digital transformation efforts in the region. As negotiations continue, the outcome will likely influence the company’s strategic direction and operational capabilities in the burgeoning digital economy.