Government seals P25.2-B PLDT sale

By Lenie Lectura

Reporter

THE government on Wednesday closed its third-biggest privatization deal in over a decade after receiving full payment of P25.2 billion from First Pacific Co. Ltd. for a 6.4-percent stake it sold in Philippine Long Distance Telephone Co. (PLDT). The Hong Kong conglomerate now holds between 29 and 30 percent interest in PLDT, the country's largest phone firm. Finance Secretary Gary Teves said this is the third biggest privatization done by the Philippine government after Petron and Fort Bonifacio. Proceeds from the transaction will be used to fund various infrastructure projects. "The additional resources arising from this asset sale will go a long way in funding the much-needed infrastructure and social services," said Teves. The government, added Teves, is still looking for more sources of revenue by disposing its shares in blue- chip companies such as food and beverage giant San Miguel Corp. (SMC) and power distributor Manila Electric Co. (Meralco). "We are looking at Meralco and San Miguel. This is something we need to monitor and we will work on this in the next few months," said Teves. He said the Department of Finance (DOF) is going to meet with the Social Security System, Government Service Insurance System, Landbank and other government institutions with interest in Meralco and SMC. "Several government institutions have an ownership of about 29 percent. So, after this meeting, we will find out if we can have a unified position if they will agree to sell and we will work out the details," added Teves. Other assets up for privatization include Radio Philippines Network (RPN-9) and Intercontinental Broadcasting Corp. (IBC-13); Philippine National Oil Co.-Energy Development Corp. (PNOC-EDC); and Philippine Postal Corp. FPC chief executive officer and managing director Manuel Pangilinan said Japan's NTT DoCoMo may still acquire half of the 6.4-percent PLDT shares which were entirely bought by FPC. When asked if FPC has any intention to split the PLDT stake with Japan's mobile phone giant, Pangilinan said, "NTT asked for a meeting so we've agreed to meet sometime in March to discuss it. It is already an internal matter between FPC and NTT." Pangilinan, also the chairman of PLDT, said it will be "difficult to quantify" just how big or small a portion of the PLDT shares FPC is ready to sell to NTT. "We are watching our position very carefully. Right now, with the purchase of the shares, FPC owns about 29 percent to 30 percent. I think we are quite comfortable with this level." FPC and NTT DoCoMo agreed in December to bid jointly for the shares but no final agreement was reached. NTT DoCoMo had said it is interested to buy an additional 3.2-percent stake in PLDT for P13 billion or about ¥30 billion. The planned team-up between First Pacific and NTT DoCoMo will increase the latter's interest in PLDT to 9.9 percent There were speculations that NTT DoCoMo is backing out from the planned partnership with FPC because opposition lawmakers are questioning why the stake was only priced at P2,025 per share, almost 20 percent  from the stock's prevailing market price. Some, however, say that NTT DoCoMo is just waiting for FPC to buy the stake outright and then purchase a portion of it. The acquisition was financed from a combination of internal resources and third-party financing. "It's a combination of internal cash resources and internal borrowings from a third-party group," Pangilinan said. He declined to identify the group. After this, FPC is keen on investing in infrastructure and telecoms sectors. However, the telecom executive said FPC is not in a hurry. "We are looking at further investing in the infra and telco in some Asian countries. But for now, I think that's enough," said Pangilinan.  The auction for the PLDT stake is derived from the government's 46-percent shareholding in Philippine Telecommunications Investment Corp. (PTIC), which in turn owns 13.8 percent of PLDT. The remaining 54 percent of PTIC is owned by Metro Pacific Asset Holdings (MPAH), a company affiliated with Pangilinan, which has a 13.87-percent stake; and Larouge BV which holds a 40-percent interest. The government's 46-percent stake in PTIC is equivalent to an indirect 6.4-percent stake in the telecommunications giant. FPC matched an offer for the PLDT shares made by Parallax Venture Fund, a unit of Singapore-based private equity firm Parallax Capital Management. MPAH exercised the right to match the winning bid for the PTIC shares as an assignee of PTIC. Pangilinan said FPC obtained its shareholders' approval Wednesday.

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