Leading Philippine telco Philippine Long Distance Telephone (PLDT) has acquired a majority stake in number three player Digital Telecommunications Philippines (Digitel), from owner JG Summit, after finally receiving antitrust approval.
PLDT paid…
Leading Philippine telco Philippine Long Distance Telephone (PLDT) has acquired a majority stake in number three player Digital Telecommunications Philippines (Digitel), from owner JG Summit, after finally receiving antitrust approval.
PLDT paid PhP69.2bn (US$1.6bn) for the 51.55% stake.
The purchase took place through a share swap transaction. A PLDT statement read: “Together with 3.277 billion shares representing 51.55% of Digitel’s outstanding common stock, PLDT also acquired the zero-coupon bonds issued by Digitel Group to JG Summit, which were assumed to be convertible or exchangeable into 18.6 billion Digitel shares, and assumed PhP34.1bn [US$789m] in advances made by JG Summit to Digitel Group.
“As payment for the Enterprise Assets, PLDT issued 27,679,210 new shares of common stock at the issue price of PhP2,500 [US$58] per PLDT share. As a result, the JG Summit Group presently holds approximately 12.9% of PLDT’s expanded outstanding common stock.”
The deal took months to be completed due to antitrust clearances taking much longer than anticipated.
It had initially been scheduled for completion on 30 June before being moved to 30 July and later to 26 August because of monopoly concerns from the government and competitors including Globe Telecom, reportedly saying that the newly-formed company would control about two-thirds of the Philippine mobile market.
To try and ease concerns over the amount of 3G spectrum PLDT would hold following the transaction, the company said it presented a plan to the country’s regulator to divest Connectivity Unlimited Resource Enterprises (CURE). CURE, which is a subsidiary of Smart Communications which in turn is a subsidiary of PLDT, currently owns 10 MHz of 3G frequency in the 2,100 MHz band.
The Philippine authorities auctioned five licences for 3G licences in the 2,100 MHz band in 2005, of which only four were assigned.
PLDT, which is partly owned by Hong Kong-based First Pacific and Japan’s NTT, acquired one of these licences. When it bought CURE, it gained control of another licence. With the Digitel takeover, it would have gained control over a third licence. The fourth licence is held by Globe Telecom.
In the statement released on 26 October, PLDT said that it plans to launch a tender offer at a later stage for the remaining 48.45% of Digitel currently held by the public.
When the deal was first announced in March this year, ING was acting 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 and First Pacific had hired HSBC.
