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Marcos open to buying Russian fuel, proposes new Myanmar approach

MANILA – Philippine President Ferdinand Marcos Jr on Wednesday said his nation may need to turn to Russia to fulfil its fuel needs amid rising global energy prices, bucking pressure from Western allies for countries to shun Moscow.

Speaking to the Manila Overseas Press Club, Marcos, who is also agriculture minister, said the Philippines may also deal with Russia for supply of fertiliser.

“We take we take a very balanced view because the truth of the matter is, we may have to deal with Russia for fuel, for fertilizer,” said Marcos.

The Philippines like many countries is grappling with soaring inflation, due to supply woes fanned by Russia’s invasion of Ukraine. The Philippines, a U.S. defence ally, has not imposed any sanctions on Russia.

Marcos, the son and namesake of the ousted late strongman who ruled the Philippines for two decades, also said he wanted his country to play a key role in promoting regional peace, amid challenges posed by North Korea and China-Taiwan tensions.

“We hope to be part of leading, the ones that are leading the effort for peace,” he said.

He said he would propose a new approach to the crisis in Myanmar at an upcoming meeting of the Association of Southeast Asian Nations (ASEAN) in November, which could involved engaging the military government directly.

Myanmar’s ruling junta has been barred from regional summits over its failure to implement a five-point peace plan it agreed with ASEAN in April last year, after violent turmoil erupted in the country following a military coup.

The generals have been outraged by ASEAN’s unusually tough stand and have said they intend to comply with its plan, but will not agree to its call to hold dialogue with a pro-democracy resistance movement they call “terrorists”.

“It’s time to put together, to put forward some concrete proposals on what we can do to at the very least to bring at least representatives of the military government to the table so we can begin to talk about these things,” Marcos said.

On Wednesday, Cambodia, the current ASEAN chair, confirmed to Reuters that a request had been sent to the State Administrative Council, as the junta is known, that it nominate a non-political figure to represent Myanmar at the upcoming leaders’ summits.

“Again, the SAC has refused to send anyone to the summits,” Cambodia Foreign spokesperson Chum Sounry said. — Reuters

WTO warns ‘darkened’ trade outlook could deteriorate further

REUTERS

GENEVA — The World Trade Organization (WTO) forecast a slowdown of global trade growth next year as sharply higher energy and food prices and rising interest rates curb import demand, and warned of a possible contraction if the war in Ukraine worsens.

The Geneva-based trade body said on Wednesday that merchandise trade would increase by 3.5% this year, up from its April estimate of 3.0%. However, for 2023, it sees trade growth of just 1.0%, compared with a previous forecast of 3.4%.

The WTO said there was high uncertainty over its forecasts. It provided a band of trade growth expansion of 2.0% to 4.9% for this year and of -2.8% to 4.6% for 2023.

“The picture for 2023 has darkened considerably,” WTO director-general Ngozi Okonjo-Iweala told a news conference, adding that risks for next year’s forecast were more on the downside.

“If the war in Ukraine worsens, rather than gets better, that’s going to have a huge impact,” she said.

Weather events hitting food-producing regions or damaging energy export infrastructure could further hit trade growth, along with weakness in China, where coronavirus disease 2019 (COVID-19) outbreaks have disrupted production.

She said the world needed a more diversified and less concentrated base for production of goods and services, which should boost growth, increase resilience and promote long-term price stability by mitigating exposure to extreme weather events and local disruptions.

She also warned against the “tempting response” to resort to trade restrictions, saying curbs imposed by various countries on food and fertilizer exports had dropped from 57 to 42 in the past month, but then rose back to 53 due to new measures.

“These would only deepen inflationary pressures and reduce living standards and would likely make us more rather than less vulnerable to the crisis we are grappling with,” she told a news conference.

The WTO’s forecast does not cover services, but the WTO said tourist arrivals were likely to fall after tripling in the first seven months of 2022. Lower shipping rates, it said, might have been greeted before as a sign of supply chains improvements, but was probably more the result of cooling demand. — Reuters

Unemployment rate inches up to 5.3% in Aug.

The ranks of jobless Filipinos went up 79,000 month on month in August, bringing the total unemployed that month to 2.681 million, preliminary data from the Philippine Statistics Authority showed.

This translated to an unemployment rate of 5.3%, rising from 5.2% in July but lower than 8.1% in August last year.

Meanwhile, the size of the Filipino workforce expanded by 557,000 to 50.551 million in August.

New entrants decreased by 271,000 on a monthly basis to 1.018 million.

Employed Filipinos in August picked up by 478,000 to 47.870 million from 47.391 million in July.

This was equivalent to an employment rate of 94.7%, slightly lower than 94.8% in July.

However, underemployed Filipinos rose by 488,000 to 7.031 million in August.

This put the share of the underemployed Filipinos to the total employed population that month at 14.7%, the highest in five months or since 15.8% in March.

Services remained the leading employer in August after cornering 59.9% share. Agriculture and industry logged employment shares of 22.6% and 17.5%, respectively.

An average Filipino worker worked for 40.5 hours a week in August, unchanged from July. — MIUC

Inflation zooms to 6.9% in Sept.

A jeepney driver shows peso bills in this file photo. Commuters began paying higher public transport fares on Monday. — PHILIPPINE STAR/ WALTER BOLLOZOS

INFLATION zoomed to its fastest pace in over 13 years in September, as food, utilities and transport costs spiked.

Preliminary data from the Philippine Statistics Authority (PSA) showed headline inflation accelerated to 6.9% in September, from 6.3% in August and 4.2% in September 2021.

The latest inflation print matched the 6.9% logged in September and October 2018. It was also the fastest in more than 13 years or since the 7.2% in February 2009 at the height of the global financial crisis.

Headline inflation rates in the Philippines

“If you recall in 2008 global financial crisis there were a lot of high inflation rates,” National Statistician Claire Dennis S. Mapa said during the briefing on Wednesday.

September also marked the sixth straight month that inflation breached the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target this year.

The latest headline figure was higher than the 6.7% median in a BusinessWorld poll conducted last week.

“The September 2022 inflation outturn of 6.9% is within the BSP’s forecast range of 6.6 to 7.4%, consistent with the BSP’s assessment of inflation remaining above target over the near term as price pressures broaden and signs of further adverse second-round effects emerge,” the central bank said in a statement.

On a monthly basis, headline inflation inched up 0.4% in September. Stripping out seasonal factors, inflation rose by 0.6% month on month.

This brought average inflation in the nine months to September to 5.1%, higher than 4% a year ago. However, it was still below the BSP’s 5.6% forecast for 2022.

Core inflation, which discounts volatile prices of food and fuel, eased to 4.5% year on year in September but still elevated from 2.6% a year earlier.

Core inflation rates in the Philippines

Out of 13 commodities, nine reported faster inflation in September.

Commodities that contributed to the faster headline inflation in September were the heavily weighted food and non-alcoholic beverages (7.4% annually from 6.3% in August); housing, water, electricity, gas and other fuels (7.3% from 6.8%); and transport (14.5% from 14.6%).

Inflation in the National Capital Region (NCR) jumped to 6.5% in September, from 5.7% in August, while inflation in the areas outside Metro Manila surged to 7% from 6.5% in the prior month.

Of the 17 regions in the country, nine posted inflation faster than the national average of 6.9%. It was led by Zamboanga Peninsula (9.6% in September from 9.1% in August), Davao Region (9.6% from 8.9%), and Caraga (8.2% from 7.5%).

Similarly, inflation as experienced by the bottom 30% income households climbed to 6.7% in September from 5.9% in August. It averaged 4.6% in the nine months to September, lower than 4.9% average last year. However, this segment still uses the consumer price index under 2012 prices compared with the rebased 2018 prices for the national inflation rate.

The National Economic and Development Authority (NEDA) said inflation has been accelerating not just in the Philippines but in other countries as well due to robust domestic demand, high commodity prices, supply chain disruptions, weather disturbances and the strong US dollar.

“The government’s priority is to make sure that there is sufficient and affordable food supply for every Filipino family,” NEDA Director-General and Socioeconomic Planning Secretary Arsenio M. Balisacan was quoted in the statement as saying.

Security Bank Corp. Chief Economist Robert Dan J. Roces attributed the higher inflation to the faster rise in prices of food and beverages, as well as housing, electricity and gas.

“The September print is the first full month where the impact of the [peso’s] depreciation to current levels were felt, along with initial price effects of the recent typhoons. As such, the country remains vulnerable to inflation shocks caused by exchange rate swings,” Mr. Roces said via e-mail.

The Philippine peso breached multi-year record lows in September. It traded to P57 levels against the US dollar for the first time on Sept. 6, and crossed the P58-to-a-dollar territory on Sept. 20. The local unit finished the month at P58.625 against the greenback.

Philippine National Bank (PNB) economist Alvin Joseph A. Arogo said in a separate e-mail the September inflation reflected the impact of the supply shortages “caused by the combination of the delayed effect of higher fertilizer prices and immediate disruption from Typhoon Karding,” as well as rising fuel and transport costs.

Latest government data showed Super Typhoon Karding caused over P3 billion in agricultural damage. Affected regions include Ilocos, Cagayan Valley, Central Luzon, Calabarzon, Bicol, Cordillera Administrative Region, and Western Visayas.

‘REMAIN ELEVATED’
“Inflation is expected to remain elevated for the last quarter of 2022 with the recent fare hike and the impact of Typhoon Karding on food supply,” the Department of Finance (DoF) said in a statement.

The DoF said full-year inflation is still expected to fall within the 4.5-5.5% target by the interagency Development Budget Coordination Committee.

For its part, the BSP cited several upside risks that cloud the near-term inflation outlook, such as “potential impact of higher global non-oil prices, pending petitions for further transport fare hikes, the impact of weather disturbances on prices of food items, as well as the sharp increase in the price of sugar.”

PSA’s Mr. Mapa said October inflation may further rise due to the higher public transport fares that took effect this month.

“The transport commodity group, which carries 9% weight in inflation, we are seeing spillover effects on other subgroups, such as food. The PSA is monitoring this in our data collection, the fare hike in October and the rise in food prices,” Mr. Mapa said.

On Monday, the Land Transportation Franchising and Regulatory Board implemented fare hikes for public utility jeepneys and public utility vehicles, taxis, and Transport Network Vehicle Service.

“For inflation, we continue to expect a possible peak in the headline print this October before slowing in the final two months mostly on base effects,” Security Bank’s Mr. Roces said.

PNB’s Mr. Arogo said his average inflation forecast for the fourth quarter is 7.3%.

“The second-round effects of the global commodities spike earlier in the year and impact of the depreciation of the peso against the US greenback on imported products will likely still be felt in the coming three months. This is evidenced by the upward trend in the price growth in housing & utilities and restaurants & accommodation,” he said.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco raised his average inflation forecast for 2022 to 5.4% from 5%, after the release of the September inflation data.

“The BSP won’t be sitting again until November and, if we’re right about September being the peak in inflation and the underlying sluggishness in the economy — the [third-quarter] GDP report is due before the next Board meeting — then an imminent pause in the tightening cycle will be play,” Mr. Chanco said.

The central bank said it is “prepared to take further policy actions to bring inflation toward a target-consistent path over the medium term.”

The Monetary Board has raised rates by 225 bps so far since May. It will have its next policy-setting meeting on Nov. 17. — Bernadette Therese M. Gadon

PHL launches dollar bond offering

REUTERS

THE PHILIPPINES returned to the global bond market again this year via a three-tranche, US dollar-denominated bond offering.

This is the first global bond offering under the Marcos administration, which took office on June 30.

Documents from the Bureau of the Treasury (BTr) showed the offering consists of dollar bonds with tenors of five years and 10.5 years, as well as 25-year green or sustainability bond, at benchmark size or at least $500 million.

The initial price guidance for the five-year and 10.5-year tenors are set around the level of Treasuries plus 155 basis points (bps) and 220 bps, respectively, the document showed.

The 25-year sustainability bonds are set around 6.550%.

Proceeds of the bonds would be used for general budget financing, as well as the financing or refinancing of assets in line with the Philippines’ sustainable finance framework.

BofA Securities, Goldman Sachs, HSBC (B&D), JPMorgan, Morgan Stanley, SMBC Nikko, Standard Chartered Bank, and UBS have been tapped as joint bookrunners. The latter two are designated as sustainability structuring banks.

S&P Global Ratings assigned a “BBB+” long-term foreign currency rating to the US dollar senior unsecured notes to be issued by the Philippines, while Fitch Ratings gave it a “BBB” rating.

Moody’s Investors Service also assigned the notes a senior unsecured rating of “Baa2” which mirrors the Philippine government’s issuer rating.

The five-year notes will mature in October 2027, the 10.5-year bonds in April 2033, and the 25-year sustainability bonds in October 2047.

Finance Secretary Benjamin E. Diokno previously said that 69% of the current debt stock was sourced domestically. The government targets to increase that to 75% this year, and to 80% in the longer term, to minimize foreign exchange risks.

In a Viber message to reporters, Mr. Diokno said that while 75-25 is the preferred mix, “sometimes one has to be opportunistic.”

The government raised $559 million from a yen-denominated Samurai bond issue in April, and sold $2.25 billion worth of dollar-denominated notes in March.

Last year’s offshore debt issues by the Philippines included $3-billion dual-tranche global bonds, the 2.1-billion-euro triple-tranche global bonds, and the 55-billion-yen Samurai bonds.

The government will borrow from local and external sources to help fund a budget deficit capped at P1.65 trillion this year, equivalent to 7.6% of GDP.

The National Government’s outstanding debt rose to a record-high P13.02 trillion at the end of August due to additional domestic borrowings and a weak peso.

As of the second quarter, the Philippines’ debt-to-gross domestic product (GDP) ratio was at 62.1%, above the 60% threshold deemed sustainable for developing countries. The government intends to bring it down to 52.5% by 2028. — Diego Gabriel C. Robles

PHL banks’ NPL ratio falls to 23-month low

PHILIPPINE STAR/MICHAEL VARCAS

By Keisha B. Ta-asan

SOURED LOANS held by banks fell for a sixth straight month in August, bringing the nonperforming loan (NPL) ratio to a 23-month low amid the economy’s continued reopening.

However, the decline in NPLs may slow in the coming months due to the recent rate hikes by the Bangko Sentral ng Pilipinas (BSP), economists said.

Latest data from the BSP showed the Philippine banking sector’s gross NPL ratio inched down to 3.53% as of end-August from 3.57% as of end-July and 4.51% in the same month last year. 

The NPL ratio in August was the lowest in 23 months or since 3.51% in September 2020.    

Bad loans declined by 15% year on year to P418 billion as of end-August. It was also 0.5% lower than the P420.254 billion seen at end-July.

Loans are considered nonperforming once they remain unpaid for at least 90 days after the due date. They are deemed as risk assets given borrowers are unlikely to settle such loans.

“Continued improvement of cash flows for households and firms due to economic reopening helped borrowers service payments and thus NPLs continued to slide,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail on Wednesday.   

Metro Manila and some provinces have been under the most lenient alert level since March, which meant businesses are now allowed to operate at full capacity.

“We think that the continuous decline of the NPL ratio is indicative of improving business conditions and robust economic recovery post-pandemic,” China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message.

“The increase in economic activities as the economy further reopened likely boosted borrowers’ incomes and cash flows, allowing them to settle their loans on time,” she added.   

BSP data showed banks’ gross loan portfolio grew by 8.72% to P11.84 trillion in August from P10.89 trillion a year ago. It also went up by 0.5% from the P11.77 trillion in July.      

Meanwhile, past due loans fell by 14.4% year on year to P496.135 billion in August, bringing the ratio to 4.19% from 5.32% a year ago.

Restructured loans rose by 4.4% to P319.892 billion, which accounted for 2.7% of banks’ loan portfolio. 

Banks continued to beef up their loan loss reserves to P418.059 billion in August from P410.848 billion a year ago. This brought the ratio to 3.53% from 3.77% a year earlier.   

The industry’s NPL coverage ratio improved to 100% from 83.52% in 2021.

However, rising interest rates may slow the decline in bad loans.

“Moving forward, we expect the NPL ratio to remain on a downward trend but the pace of decline may slow, as higher interest rates and inflation as well as the slowdown in the economy continue to pose credit risks,” Ms. Velasquez said.   

The consumer price index at the national level climbed by 6.9% year on year last month. It was the sixth straight month that inflation exceeded the central bank’s 2-4% target.

To tame inflation, the BSP has raised benchmark interest rates by a total of 225 basis points so far this year, bringing the overnight reverse repurchase rate to 4.25%.

The central bank earlier said the NPL ratio of Philippine banks might peak at 8.2% this year. The ratio stood at 3.99% as of end-December 2021, as the economy started to reopen.

Customs exceeds collection target for 9th straight month

Agents from the Bureau of Customs - Customs Intelligence and Investigation Service inspected a sugar warehouse in Quezon City, Aug. 23, 2022. — COURTESY OF BUREAU OF CUSTOMS

THE BUREAU of Customs (BoC) said on Wednesday that it exceeded its target for a ninth straight month in September, amid improved collection and higher duties on oil.

In a statement, the BoC said September collections hit P79.5 billion, exceeding the target of P61.9 billion by 28.4%. This is the ninth consecutive month it has exceeded its monthly target.

“This shows an increase of P21.9 billion in garnered revenues and a 38.1% collection improvement as compared to September of last year,” the BoC said.

In the January to September period, the BoC collected P638.7 billion, surpassing its collection target for the period by 17.8%.

Year on year, Customs collections increased by 35.9%, as oil prices soared.

As of end-September, the BoC has already collected 88.5% of its P721.5-billion target for this year.

The BoC urged all of its offices and collection districts to sustain its performance throughout the year by taking advantage of its modernization programs and reform initiatives of the Marcos administration.

The BoC is set to implement an online processing payment system via selected banks this month called the Philippine Clearing House Corp. Payment Application Secure System Version 6.0.

Last month, Budget Secretary Amenah F. Pangandaman said that P3.56 billion of the 2023 proposed national budget will be allocated to digital transformation programs of the BoC and the Bureau of Internal Revenue.

The BoC was given a P765.59-billion collection target for 2023, up by 6.11%. — D.G.C.Robles

SMC studies legal options after rate hike denial

SMC Global Power Corp. said it would explore other legal remedies to continue supplying power after the decision of the Energy Regulatory Commission (ERC) to deny its rate hike petition.

In a press release on Wednesday, the power arm of listed conglomerate San Miguel Corp. (SMC) said it would ensure that the energy supply to Manila Electric Co. (Meralco) will not be disrupted.

“We regret the ERC’s denial of our joint petition with Meralco for temporary relief on our 2019 power supply agreements (PSAs),” the company said.

On Monday, the ERC released its order denying the joint temporary rate hike sought by Meralco and SMC for the losses incurred by the latter’s two power plants.

SMC had sought the increase, citing a “change in circumstance” when surging fuel costs breached the price range contemplated during the execution of the PSAs with Meralco.

In a separate release on Tuesday, Meralco said that it would comply with the ERC order and exert all available options to prevent the termination of its PSAs with SMC.

In August, SMC said that its units South Premiere Power Corp. and San Miguel Energy Corp., administrators of the Ilijan and Sual power plants, respectively, had issued notices of PSA termination to Meralco. It said the termination is effective starting Oct. 4 if the temporary relief is not given.

After the ERC ruling, SMC Global Power said the temporary relief would have allowed it to preserve the last remaining fixed-rate PSAs of Meralco that are keeping power rates in Metro Manila low, compared with other parts of the Philippines, amid the volatility of global fuel prices.

“We will never withhold our available power capacity to the detriment of the country and the consumers,” SMC Global Power added.

ERC Chairperson Monalisa C. Dimalanta said on Tuesday that the regulator denied the temporary increase because both Meralco and SMC had not exhausted all available options before filing a rate increase petition.

Ms. Dimalanta added that SMC only submitted an unaudited financial statement to support its claim that its two power plants suffered losses, which the company placed at P15 billion.

She said SMC should follow what is in the PSAs, which set 60 days before it can terminate the supply deal after the receipt of the ERC decision.

“They should follow the contract because the contract itself is the one that set the period, it’s a fixed price financial contract,” she added.

SMC earlier said that the losses, of which it was trying to recover P5 billion through the rate increase, were caused by a “change in circumstance,” including supply disruptions triggered by a coal export ban, Russia’s war on Ukraine, and value chain issues triggered by the pandemic.

Had the ERC approved the petition for temporary relief, SMC said electricity prices in Luzon would go up by only 30 centavos per kilowatt-hour over a period of six months. It previously warned that a denial of the petition might result in a 30% increase in electricity prices.

On Wednesday, shares in SMC rose by P2.35 or 2.43% to close at P99 apiece. — Ashley Erika O. Jose

North Star seeks foreign investors after deferred IPO

NORTH Star Meat Merchants, Inc. is eyeing potential foreign and private equity investors after it deferred its initial public offering (IPO).

“We have more projects in the pipeline. We have so much more to invest in. Our end goal is to provide safe, compliant, and real protein to all Filipinos,” North Star Chief Executive Officer Anthony Ng said in an interview.

In June, the meat retailer deferred its planned P4.5 billion IPO due to market volatility and inflationary pressures.

North Star Chief Financial Officer Jed Tan said: “There are a lot of foreign, private equity interests…we are targeting foreign investors.”

Mr. Ng said that there is no target date for the refiling of the IPO, but that it will definitely push through in the near term. “We hope next year, but we’re not rushing,” he said.

“In my head, it’s a very providential move to defer the IPO at the time. We want to create value for our investors. We see our valuation going up,” he said.

Next year, the firm sees further growth but is keeping its expectations managed.

“Right now, we are targeting flat sales, coming from last year, but the bottom line is that we expect to improve a lot. We’re targeting flat, we’re being conservative,” Mr. Tan said.

The meat retailer announced that it recently inaugurated its solar energy project in Guiguinto, Bulacan with WEnergy Power Pilipinas, Inc.

“As we continue our push for food sufficiency in the country, we remain socially and environmentally conscious of minimizing our carbon footprint, reducing greenhouse gas emissions, and mitigating climate change,” Mr. Ng said.

The firm said that the savings in electricity costs will allow it to focus on its overall operations and live out its commitment to providing an adequate supply of quality meat at affordable prices.

Under the project, the company will utilize 1,846 pieces of monocrystalline solar photovoltaic (PV) panels covering 4,035 square meters.

“This newly launched project is expected to reduce the cost of power consumption and increase the proportion of clean energy in their mix as it is presumed to have 15% reduction in its monthly power expenses and a 23% reduction in carbon footprint,” North Star said.

It added that solar facility translates into an annual savings of 501 metric tons of carbon dioxide- or CO2-equivalent, which is the yearly equivalent of more than 99 million smartphones charged, or at least 26,000 LED lights powered, and planting over 406 hectares of forests.

WEnergy Global also supplied North Star’s main storage system and meat-cutting plant with an 830.7-kilowatt-peak solar PV rooftop.

“We hope that we are able to inspire other enterprises in the years to come into promoting green solutions as it will benefit not only the company but more so the society and the environment,” Mr. Ng said.

North Star, an end-to-end fresh frozen meat retailer, operates in SM Markets, WalterMart, and Alfamart across the Philippines.

Its facilities have a cold storage capacity of 8.09 million kilograms and a capacity to deliver up to 120,000 kilograms of meat daily. — Luisa Maria Jacinta C. Jocson

Ayala logistics firm, FLOW set to build data centers

AYALALAND Logistics Holdings Corp. (ALLHC) and FLOW Digital Infrastructure have agreed to a joint venture that aims to develop and operate carrier-neutral data centers in the country.

“We see long-term strategic value in expanding ALLHC’s product offering and capabilities to meet the rapidly expanding needs of the digital economy,” ALLHC Chief Operating Officer Patrick C. Avila said in a disclosure on Wednesday.

“We view this joint venture as a cornerstone of ALLHC’s growth and we believe this partnership with FLOW will provide the distinct advantage for ALLHC to become the data center provider of choice of global hyperscalers and enterprises in the Philippines,” he added.

ALLHC said the expansion is a step forward to its goal of adding complementary new economy segments to its portfolio.

It added that it “is the latest step in FLOW’s ongoing Asia-Pacific expansion as a platform providing customized solutions to meet the region’s growing demand for digital infrastructure.”

“We are very pleased to be partnered with ALLHC to deliver best-in-class solutions to meet the Philippines’ growing demand for high quality, carrier-neutral data center services,” FLOW Chief Executive Officer Amandine Wang said.

“The Philippines is at a tipping point to embrace the growth of the digital economy where digital infrastructure plays a critical role as the foundation of the information and communications technology industry,” Ms. Wang said.

The agreement allocates the first data center facility in a hyperscale campus designed to provide a total information technology capacity of 36 megawatts (MW), which can expand through a modular deployment.

“The initial roll-out of 6 MW is targeted to be ready-for-service by end of 2024,” ALLHC said.

FLOW operates in the key physical assets of the digital infrastructure ecosystem, including cloud, hyperscale, enterprise data centers, and network and fiber assets across the Asia-Pacific region.

Meanwhile, ALLHC is a subsidiary of Ayala Land, Inc. that engages in leasing industrial parks, warehouses, cold storage facilities, and commercial spaces.

On the stock market on Thursday, ALLHC shares added five centavos or 1.56% to P3.25 apiece. — Justine Irish D. Tabile

Converge proposes shared underground pipes to reduce costs

CONVERGE ICT Solutions, Inc. said installing underground pipes for telecommunication cables will translate to lower capital costs for internet service providers.

This will “make sure telecommunications infrastructure is already installed whenever new road infrastructure is built,” Converge said in an e-mailed statement on Tuesday.

To attain this goal, “multi-stakeholder coordination among government, information and communications technology players, and utility companies” is necessary, the company added.

The Department of Public Works and Highways (DPWH) is undertaking an underground cable system project in the National Capital Region.

The project involves relocating the overhead utility lines on major roads below ground. This will cover Epifanio de los Santos Avenue, Radial Road 10, and Circumferential Road 5.

According to Converge Chief Operations Officer Jesus C. Romero, the “joint use” mechanism allows the government to install underground pipes for telecommunication cables wherever there is public works construction.

“This can be done in expressways linking parts of the metro together. Submarine cables are expensive. We could do with a lot more diversity and connectivity. This joint use of infrastructure will go a long way,” he said.

“As an internet service provider, we’re willing to pay for our share [of the cost],” he added.

He said the shared use of underground pipes “will translate to lower capital costs” for Converge and “will widen access to the broadband infrastructure, especially to rural communities.”

“In pursuing this policy, cooperation among the national government agencies such as the DPWH, local government units, and private sector operators is critical as the digital infrastructure deployment has to be aligned with public works plans,” Converge also said.

Utility service providers have said they are willing to shift to an underground cable system if the government provides subsidies and if given adequate planning of the infrastructure. — Arjay L. Balinbin

SMC’s Eagle Cement acquisition seen to cut costs

BW FILE PHOTO

SHARES in Eagle Cement Corp. are seen to rise with the planned acquisition of the cement maker by San Miguel Corp. (SMC), which in turn could see its input costs decline after the deal, analysts said on Wednesday.

“The tender offer could possibly prompt Eagle’s stock price to surge during the offer period, and is likely to plunge once it has ended,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Separately, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the acquisition is important for SMC to reduce costs in its projects.

“Cement business is an important component to [SMC’s] various infrastructure projects, both ongoing and upcoming. This would help reduce input costs, especially for large infrastructure projects,” he said in a Viber message.

Both analysts said estimates placed the value of the acquisition at around P97.4 billion.

On Wednesday, SMC said that a special board meeting on Oct. 4 authorized the acquisition of 88.5% of Eagle Cement, which manufactures and distributes cement.

Both companies are chaired by Ramon S. Ang, who is also among the selling shareholders in Eagle Cement for P22.02 per share.

Eagle Cement separately said that its controlling stockholder, Ang-led Far East Holdings, Inc., was in discussions with SMC.

SMC said that the acquisition will trigger notification with and clearance from the Philippine Competition Commission (PCC) due to the value involved.

“[It has to be raised to the PCC] due to the large amount of transaction value involved as thresholds have been reduced recently, after being raised during the pandemic,” Mr. Ricafort said.

Last month, the PCC provisionally placed thresholds for mandatory mergers and acquisitions notification at P6.1 billion for the size of a transacting party, and P2.5 billion for the size of the transaction.

As defined by the PCC, size of party is the aggregate value of assets in the country of the ultimate parent entity of one of the parties to a transaction, while size of transaction is the value of assets of the acquired entity and the entities it controls.

“The conglomerate’s P97-billion acquisition for Eagle Cement is part of the business amalgamation of business tycoon [Mr.] Ang,” Mr. Limlingan said.

SMC and Eagle Cement both said that they would make additional disclosures in due time about the acquisition.

On the stock market on Thursday, SMC shares added P2.35 or 2.43% to P99 apiece, while Eagle Cement shares climbed by P3.16 or 20.52% to P18.56 each. — Justine Irish D. Tabile

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