PLDT, Benpres to talk about phone business

Benpres Holdings Corp. and the Philippine Long Distance Co. (PLDT) group are currenly exploring talks on a ‘second wave’ of collaboration, this time, involving their respective telephone businesses.

Benpres director Eugenio Lopez III told The STAR that the merger of their own SkyCable to that of PLDT’s Home Cable will not be the last between the two groups.

"But first things first. We first have to complete the merger of SkyCable and Home Cable, which hopefully will be finished by the end of the month as we are wrapping up our respective due diligence," Lopez, who is also president of ABS-CBN Broadcasting Corp., said.

He talked about a second collaboration between the two telecommunications and media giants (PLDT has just concluded its due diligence on GMA Networks, Inc. which it is purchasing for more than P8 billion) which may involve PLDT and Bayan Telecommunications (Bayantel) which is another Lopez-owned company.

"The telephone business is going through rough times. A collaboration might be necessary," he said, but did not say what form the ‘collaboration’ would take, although analysts said it could very well be a merger with PLDT.

Benpres is considering the sale of part of its stake in ABS-CBN, First Generation Holdings Corp., and the merged SkyCable and Home Cable in order to raise around P12 billion and trim down its debt exposure.

The planned sale is also aimed at compensating for the expected losses of some of its subsidiaries, such as Bayantel and Maynilad Water Services.

In the first quarter of 2001, Benpres suffered a P360-million loss. In Bayantel alone, Benpres booked P1.6 billion in losses.

Telephone companies have been suffering from huge losses due to undersubscription of capacities, and a reduction in revenues from international services which used to subsidize domestic telepphone services.

Earlier, Lopez said there is currently an ‘overbuild’ situation, not only in the cable industry which is in the red but also in the telecommunications industry as a whole, forcing companies into collaboration and cooperation.

Like the cable business of Sky and Home Cable, PLDT and Bayantel have been putting up lines and equipment for the same areas.

Last April 3, SkyCable and Home Cable, which account for at least 70 percent of total cable subscribers in the country, signed a memorandum of agreement to merge their respective cable operations and create a holding company with an enterprise value of P14.5 billion to manage both brands.

SkyCable, which has a bigger share in the holding company (since it has a bigger share of the cable market and more assets), will be selling part of its stake to a third party foreign strategic investor.