“We don’t see a legal impediment,” PLDT Chairman Manuel V. Pangilinan told reporters after the stockholders’ meeting the other day. However, the National Telecommunications Commission (NTC) still has to hold a second hearing on the transaction next Tuesday (June 21).
Meanwhile, in this week’s stockholders’ meeting, PLDT elected Pangilinan, Nazareno, Ray Espinosa, Oscar Reyes, Tatsu Kono, Takashi Ooi, Tony Tan Caktiong, Helen Dee, Juan Santos, and Lourdes Rausa Chan as Directors. Fr. Bienvenido Nebres, Pedro Roxas and Alfred Ty were elected independent directors.
PLDT needs a go-ahead from the NTC as well as the Securities and Exchange Commission (SEC) for the asset valuation and the Philippine Stock Exchange (PSE) for the block sale of the Digitel shares, among other technical requirements.
“It’s beyond our hands,” he admitted. “If everything goes well next week (at the NTC hearing), we hope it will be sooner than later. But we can’t tell how many days (it will take).”
At the annual meeting on Tuesday, PLDT stockholders approved the issuance of 29.65 million PLDT common shares worth P74.1 billion.
This will pay for 3.28 billion Digitel common shares of JG Summit Holdings (JGS) equivalent to 51.55 percent stake in Digitel, zero coupon bonds convertible to 18.6 billion Digitel shares worth P17.7 billion, P34.1 billion worth of JGS inter-company advances to Digitel, plus 3.08 billion publicly held Digitel shares to be acquired via a tender offer.
PLDT will tender an offer for the remaining 48.45 percent of Digitel shares valued at around P1.6033 each, payable with PLDT shares at P2,500 /share or equivalent cash.
Overall, the Digitel acquisition is “fair, reasonable and in the interest of the shareholders of PLDT” according to CLSA, the independent financial advisor who recommended that PLDT close the deal.
Eventually, Digitel could be delisted. “We prefer Digitel to be delisted,” Pangilinan remarked. “But it depends on the minority shareholders.”
Pending the completion of the deal, PLDT cannot yet conduct due diligence on Digitel nor can it measure the kind of impact the takeover will have on its books. At this point, “We are still competitors,” says the PLDT Chairman.
Expecting intense competition and exploding demand for broadband services, 2011 will not be an easy one for PLDT, President Napoleon Nazareno acknowledged. Also, PLDT is investing more this year, so its core income will go down to P40.5 billion but “We expect to return to our growth path by 2013.”
The important thing is, “We need to change the game,” Pangilinan argued. “We cannot do nothing or do more of the same.” Globally, market consolidation is the model that works. “At the moment, bigger is better.”
