PLDT Inc., a Philippine telecom giant, is considering two viable paths: a Real Estate Investment Trust (REIT) offering or selling a stake in its $1-billion data center arm.
The potential REIT offering, backed by PLDT’s data center portfolio encompassing 10 facilities, could provide the company with a significant financial boost. This route, according to Manuel Pangilinan, President and Chair of PLDT, offers the advantage of maintaining stronger control over operations while retaining a majority equity interest. REITs, known for generating regular dividend payouts, have become increasingly attractive to investors seeking stable income from real estate assets.
However, PLDT is also in discussions with Nippon Telegraph and Telephone Corp. (NTT), Japan’s telecommunications behemoth, regarding a potential 49-percent stake sale in its data center subsidiary, ePLDT. This move aligns with NTT’s strategic focus on expanding its presence in the lucrative data center market, buoyed by the proliferation of generative AI technologies.
The stakes are high for PLDT, as the company seeks to optimize its capital structure and reduce debt while tapping into the growing demand for data center services. The potential sale to NTT could see PLDT divesting up to $750 million worth of its data center assets, a move that could alleviate its financial burdens and pave the way for further investments in its core business areas.
As discussions unfold, PLDT remains open to both options, weighing the benefits of a REIT offering against the potential gains from selling a stake to NTT. With the final decision expected to be made next month, investors and industry observers are eagerly awaiting PLDT’s strategic move, which could reshape the landscape of the telecommunications and data center sectors in the Philippines and beyond.
