Philippine Long Distance Telephone Company (PLDT), the country’s largest cellco, has announced it will buy conglomerate JG Summit’s 51.55% stake in Digital Telecommunications Philippines (Digitel) for PhP74.1bn (US$1.7bn).
The deal value includes debt…
Philippine Long Distance Telephone Company (PLDT), the country’s largest cellco, has announced it will buy conglomerate JG Summit’s 51.55% stake in Digital Telecommunications Philippines (Digitel) for PhP74.1bn (US$1.7bn).
The deal value includes debt obligations. In return, PLDT said it will issue new shares at PhP2500 (US$57) each. “JG Summit is expected to own approximately 12.8% of PLDT’s enlarged share capital post the transaction,” the conglomerate said in a statement.
The company added that if an associate company of Hong Kong-based investment company First Pacific, which owns a 26% stake in PLDT, exercises an option to buy 5.81 million of PLDT shares, JG Summit will see its stake fall to 10.1%.
In a statement on its website, PLDT explained that it eventually expects to “conduct a tender offer, being a mandatory tender offer for all the remaining Digitel shares held by the public shareholders of Digitel (who hold, in aggregate, approximately 48.45% of the issued common stock of Digitel) to purchase their Digitel shares of common stock.” The shares will be bought at PhP1.60 (US$0.03) each, either in PLDT shares or in cash.
The transaction, which is expected to complete by the end of Q2, will first need to be approved by the National Telecommunications Commission, the Securities and Exchange Commission, and the Philippine Stock Exchange.
Digitel, which owns the Sun Cellular brand and is the number three cellco, will continue operating independently from PLDT’s mobile operations. In a statement, PLDT said that it “intends to keep the mobile operations of Digitel separate and intact, and to maintain and capitalize on Sun Cellular’s operations and significant brand equity to continue serving specific segments of the market, especially those who prefer ‘unlimited’ type of services.
“Digitel’s fixed-line operations can complement those of PLDT’s in terms of both geographic and population reach, while adding approximately 450,000 subscribers to PLDT’s current base of 1.8 million subscribers.”
In the same statement, Manuel V. Pangilinan, chairman of PLDT, said “we face growing competition not just from other telcos but also from the so-called ‘over the top’ or OTT service providers that offer social networking, instant messaging and VoIP services. In the face of muted revenue growth and elevated capex requirements, this transaction provides a solution.”
ING acted as financial adviser while SyCip Salazar Hernandez & Gatmaitan provided legal advice to PLDT. Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles was legal adviser to JG Summit. HSBC advised First Pacific on the transaction.
