Becoming a Major Star in the MPIC Universe
by Pia Alimon
This is a heartwarming story of a “relative newcomer” that has turned out to be a major force in expanding market share and generating substantial revenue for Metro Pacific Investments Corporation (MPIC).
MPIC has businesses in power (Meralco and MET Power Ventures), water (Maynilad and Metro Pacific Water), healthcare (Metro Pacific Hospitals and the MWell app), light rails (Light Rail Manila Corp), logistics (Metro Pac Movers), real estate (Landco), and fuel storage (Philippine Coastal Storage and Pipeline Corporation).
This “newcomer” happens to be our parent company—Metro Pacific Tollways Corporation (MPTC). While it is a recent addition to the constellation of MPIC companies — as well as in the larger MVP Group — it is already recognized as a significant member of the country’s premier infrastructure conglomerate.
Why do we say that we are now a “major star” in the MPIC Universe? Our achievements speak for themselves.
Contribution to Group Core Income. In the years 2017, 2018, and 2019, MPTC has risen to being second biggest contributor to MPIC. In 2020 — when markets contracted and economic activity slowed down — toll roads was the third biggest revenue earner of the MPIC group. This despite the fact that the COVID-19 pandemic led to the imposition of travel restrictions.
Revenue Drivers. The following milestones contributed to the double-digit core income and growth of MPTC.
Acquisitions. In 2017, we had our first major foreign acquisition with our investment in Indonesian utilities conglomerate Nusantara Infrastructure (NI). The acquisition was completed the following year, when we acquired an additional 26.40% stake to total with a majority holding in the infrastructure conglomerate. We invested further in NI’s tollway arm Margautama Nusantara in 2019. “This is our gift to the ASEAN,” our MPTC President and CEO Rodrigo E. Franco had declared.
Toll Collection. In 2019, we opened NLEX Segment 10 and CAVITEX C5 Link Segment 3A-1. Also, in 2019, we were finally able to able to implement our toll rate adjustments. This was long overdue since the last time this was done was in 2011. The opening of these expressways led to an increase in toll revenue, which is the bread and butter of our company.
Diversification. MPTC continues its innovative moves, highlighting diversification initiatives. In 2018, our group’s first foray in toll service facilities (TSFs) bore fruit with the opening NLEX Drive&Dine in Valenzuela. Opening and operating NLEX Drive&Dine is significant, as it marked our diversification from our usual expressway operations. We acquired our longtime manpower resource agency Southbend Express Services Inc (SESI) in 2019 and then the mobile startup company DibzTech in 2020. These acquisitions is part of our strategy to complete the expressway ecosystem. Aside from creating new revenue streams, we are also strengthening our philosophy of delighting our customers even more.
Efficient Housekeeping. Within a period of five years, MPTC’s financial performance has shown a growing efficiency. The long-standing policy of placing our O&M (operations and management) costs and operating costs at high productivity levels has shown favorable results.
Increasing the earnings before interest, taxes, depreciation, and amortization (EBITDA) margin means that the company’s operating expenses are lesser in relation to its total revenue. This guarantees a more profitable operation. Our EBITDA margins remain within the vicinity of 63% to 66%, which is a very good profitability picture in the industry. This means we are spending prudently and efficiently as we generate more revenues.
During the pandemic, these cost management initiatives kept our head above the water: the identification of priority projects across all departments; the implementation of Project Health Check, the suspension of employee travel and face-to-face events; as well as the review and renegotiation of engagements with service providers and consultants, among others.
Doing Well, Doing Good. With a steady stream of revenues and improving margins, there is no doubt that the tollway business has successfully transitioned from the survival to a winning mode. The revenue stream shows that vehicular traffic is making a rebound, and our good housekeeping has shown great results in terms of good margins. That’s the “doing well” part.
For the “doing good” part, we took care of our employees groupwide, and promptly shifted to Electronic Toll Collection (ETC) to contribute further to the countrywide implementation of health protocols. We gave back, too. For starters, we exempted health workers and other frontliners from paying toll.
Overall Outlook. From a macro view, seeing our tollway business’ contribution to the revenue of the entire MPIC Universe, we are heartened by all indicators that we are truly in the bigger league of players within the MPIC Group. We are all the more encouraged to play our growing role better.
From a micro view, it is evident that our daily commitment to maintain our various revenue streams and being vigilant about our resources have assured the commendable financial and operating performance of every operating unit.
Bottom line: It takes a planet of passionate professionals to propel a company to become “a major star in the MPIC Universe.” Everyone’s effort counts.