UPDATE 2-PLDT may raise Meralco stake; edges power struggle

* PLDT says willing to increase Meralco stake

* San Miguel says no plans to take over utility

* PLDT-Lopez control 48 pct, San Miguel and allies 43 pct (Adds analyst comment, detail)

By Manolo Serapio Jr.

MANILA, May 26 (Reuters) - Philippine Long Distance Telephone Co (TEL.PS) may raise its stake in the country's top power retailer after securing board control in alliance with a business dynasty and defusing a potentially explosive power struggle with conglomerate San Miguel Corp (SMC.PS) (SMCB.PS).

At an annual meeting of Manila Electric Co (Meralco) (MER.PS) shareholders on Tuesday, six nominees from an alliance of PLDT and the Lopez family that manages the power distributor were elected to the 11-seat board.

The other five seats went to San Miguel nominees.

Meralco owns the country's largest power franchise and has become an attractive target after regulators allowed it to raise power tariffs by up to 27 percent, its first hike since 2003.

Both PLDT and San Miguel have bought into Meralco to boost their own telecoms ventures using the utility's prized fibre optic network.

San Miguel has tied up with Qatar Telecom QTEL.QA to venture into wireless broadband and mobile services, competing with PLDT which dominates the local mobile services market.

PLDT and Lopez-owned First Philippine Holdings Corp (FPH.PS) together control around 48 percent of Meralco, while San Miguel and its allies have 43 percent, according to officials of the companies. The remaining 9 percent is owned by the public.

The Lopez family, which has run Meralco for decades and was once the single largest shareholder, cut its stake in March to 13.4 percent after selling a 20 percent bloc to PLDT, the Philippines' largest listed firm.

PLDT's entry into Meralco was aimed at thwarting a potential takeover by food-and-drinks group San Miguel, which last year bought 27 percent of Meralco for 27.1 billion pesos ($572 million) as it sought to diversify into heavy industry and energy.

The Lopez family has said it is open to selling its remaining stake in Meralco to PLDT, which has first rights on the shares.

COOPERATION PROMISE

PLDT, San Miguel and the Lopez business clan pledged to work together to ensure Meralco is run well and remains profitable.