PHNO-BE: PLDT'S MVP EXPANDS HIS EMPIRE

PLDT'S MVP EXPANDS HIS EMPIRE

MANILA, JULY 3, 2012 (STANDARD) By Lailany P.
Gomez - When Manuel V. Pangilinan (photo) walks into the ballroom of the
JW Marriott Hotel in Hong Kong to address a group of financial executives during
a recent regional conference, everyone turns attentive, anticipating with
excitement what the top Filipino executive of First Pacific's business empire
has to say.
Pangilinan, the managing director and chief executive of the Hong Kong-based
First Pacific, is straightforward in his speech, giving participants of the
Earth's Resources Conference insights on how he runs his businesses and his
vision for the future.
"Wherever we do invest, we insist on achieving control, or at the very least,
significant influence. Our job at First Pacific is to generate cash flow up to
head office," Pangilinan says, summing up his business philosophy that enabled
First Pacific to post a net profit of $600 million in 2011 and expand in new
areas in the Philippines.
First Pacific, although operating from its headquarters in Hong Kong,
exercises vast economic influence in the Philippines and Indonesia. It has
management control of Philippine Long Distance Telephone Co., which has ten
times more SIM cards on its network than there are people in Hong Kong, as well
as other major corporations in the Philippines.
Although Forbes magazine failed to include him in its list of 40 richest
Filipinos, Pangilinan, known in the business and media circles as MVP, is easily
the most influential Filipino businessman, who moves stock markets with a simple
quip, jolts political alliance with TV ad placements and is a force in the
sports and entertainment industries.
MVP Olympics
The 65-year-old Pampanga native, who engages Filipino-Chinese taipans and
Filipino-Spanish magnates either in joint ventures or competition, is a living
testament that Filipinos can run a business.
And what a business the MVP empire is. His First Pacific Group controls at
least 17 of the largest corporations in the Philippines, with total market
capitalization of over P1 trillion. These companies are so huge they hold their
own annual Olympics aptly called MVP Olympics.
The five largest corporations he manages as chairman have combined annual
sales equivalent to nearly 5 percent of the country's gross domestic product.

In the Philippines, the MVP empire owns stakes in the largest corporation by
market value (PLDT), controls power and water distribution, operates the largest
hospitals, runs the longest expressways, mines the largest gold deposits,
dominates mobile, broadcast and Internet services, secures the largest
outsourcing contracts, and explores what can be the largest natural gas field.
It also plans to venture to railways, port and airport operation soon.
Five of the largest companies he manages as chairman—PLDT, Manila Electric
Co., Maynilad Water Services Inc., Philex Mining Corp. and Metro Pacific
Investment Corp.—reported a combined profit of P61.8 billion in 2011 and total
revenues of P462 billion.
Those revenues represented 4.8 percent of the Philippine gross domestic
product estimated at P9.7 trillion in 2011.
Pangilinan says First Pacific is very keen on growing its business in the
Philippines, particularly the mining and agriculture sectors. "Of the four areas
of the economy where we feel we have some advantage of experience or strength,
we are very excited about the opportunities in natural resources, particularly
mining but also in plantations, whether they be oil palms or sugar or even
bananas," he says.
He is confident about mining, because of rising global demand for minerals.
First Pacific-controlled Philex Mining Corp., the Philippines' top producer of
gold and copper, in fact looks at three possible acquisitions in Southeast Asia
to sustain profitability.
Pangilinan sees Philex Mining posting a fourfold increase in ore production
over the medium term. Philex operates the Padcal mine in Benguet, producing
about 25,000 metric tons of ore a day. Its Silangan project in Mindanao targets
to produce about 35,000 tons a day.
Asian expansion
First Pacific's investments are presently concentrated in two countries, with
70 percent in the Philippines and the rest in Indonesia. Pangilinan says the
conglomerate is now looking at the potential of Myanmar, Vietnam, Malaysia and
other Southeast Asian countries.
Pangilinan says First Pacific will stick to emerging markets, where it has
thrived amid faster economic growth. "In a mature economy, you don't see the
kind of growth you get in less wealthy countries. China has been able to grow at
10 percent a year for the past several years precisely because it began from
such a low base. A big, wealthy economy is very unlikely to match that. For us,
it's simply that the opportunities in emerging markets are so much greater than
in mature markets. And we've been there for many years. Emerging markets are
familiar to us. They are home," says Pangilinan.
First Pacific group, through the publicly-listed Metro Pacific Investment
Corp., also considers investing in airports, light rail, electricity generation
and plantations.
Pangilinan says the conglomerate looks at developing the former Clark air
base into a secondary international hub because it has a longer runway which can
accommodate heavier and larger airlines that the Ninoy Aquino International
Airport cannot.
"We like the idea of investing in airports for the same reason that we like
emerging markets and we like infrastructure: for growth. Anyone who flies to
Manila is familiar with the delays, discomfort and inefficiencies of the main
airport," he says.
Light rail is another area of infrastructure in need of investment, he says.
Metro Pacific and the Ayala Group have recently formed a joint-venture firm that
would pursue the expansion of the country's light railway system.
In control
While exploring other opportunities, PLDT remains the crown jewel of the MVP
business empire and continues to deliver cash for the Salim family, the
Indonesian top shareholders of First Pacific.
"It's no secret that PLDT's dividend payout has been 100 percent of core
profit for the past five years running. I don't see that stopping soon. Why am I
so confident? Because of our insistence on significant influence or control,"
says Pangilinan.
Pangilinan says without control or influence, he cannot be confident about
the company's dividend flow. First Pacific's dividend income reached $322
million in 2011, the highest it has ever been.
"And when I look ahead over the next few years, I see continuing strong
growth. This is vital for returning value to our shareholders whether it be via
share price appreciation or dividend payouts of our own. I won't be confident in
our growing dividend income if we aren't in control of it," he says.


Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
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