NTC to start hearings on merger of Globe Telecom, Islacom

The National Telecommunications Commission (NTC) is expected to start hearings next month on the proposed share-swap agreement between Globe Telecom, Inc. and Isla Communications, Inc.

Globe Telecom earlier merged with Islacom via an all-stock transaction. The transaction involves an exchange of a package of new Globe common and preferred shares to Islacom’s shareholders. The transaction values the equity of both companies at a combined $2.3 billion.

The partnership is expected to pave the way for the creation of a telecommunications powerhouse with leadership in digital wireless, a wireline service area footprint covering a large part of Metro Manila, Southern Luzon, Visayas, and parts of Mindanao, and full-service offerings.

Globe and Islacom have a combined 1.2 million cellphone subscribers, 320,000 landline subscribers, and complementary service areas.

Also as part of the agreement signed between Globe’s owners Ayala Corp. and Singapore Telecom Intl. (SingTel) and Islacom’s partner Deutsche Telecom, Globe will execute a one to 50 reverse stock split and a declassification of its common shares, after which it will issue 28.8 million new common shares to Islacom’s shareholders.

The purchase transaction, however, is subject to certain closing conditions, including approval by the NTC.

Sources told The STAR that the NTC will issue an order Monday or Tuesday next week that will call for the scheduling of hearings on the proposed merger.

The agreement paves the way for Ayala, SingTel, and Deutsche Telecom to become partners. The partnership will be embodied through direct holdings of new Globe common shares, and through indirect holdings of the new preferred shares through a just created holding company which is 60-percent owned by Ayala, 20 percent by SingTel and 20 percent by Deutsche.

Deutsche Telecom is Europe’s largest telecommunications company. Its joint ventures in Asia include that with Islacom in the Philippines.