ETPI majority owners’ bid to acquire Smart’s stake faces rough sailing

An attempt by the controlling shareholders of Eastern Telecommunications Phils. Inc. (ETPI) to acquire the 9.8 percent stake of Smart Communications in the former is facing rough sailing, highly placed sources told The STAR.

It was learned that Smart wants ISM Communications, a publicly listed company controlled by former Trade Minister Roberto Ongpin which now owns 57.7 percent of ETPI, to acquire Smart’s stake in ETPI at the price which the Philippine Long Distance Telephone Co. (PLDT) wholly owned mobile subsidiary acquired it many years back.

Smart acquired the stake in ETPI many years before the First Pacific Group, controlling owners of Smart then, purchased PLDT from the family of businessman Antonio "Tonyboy" Cojuangco. The acquisition by Smart of a stake in ETPI was to allow the former to gain a foothold in the international gateway facility (IGF) business, as well as the landline business, then controlled by PLDT.

However, PLDT chairman Manuel V. Pangilinan in an earlier interview said it was willing to sell Smart’s stake in ETPI to Ongpin’s group since the PLDT group had no longer any need for it.

But with the Ongpin group, through Connectivity Unlimited Resources Enterprises (CURE), preparing for its entry into the cellular business after CURE acquired from the National Telecommunications Commission (NTC) the license and bandwidth for 3G (third generation mobile communications technology), the story develops a new twist, sources revealed.

This despite the fact that PLDT and the Ongpin group are not exactly strangers. PLDT’s information and communications technology arm ePLDT is a stakeholder in PhilWeb, another company controlled by Ongpin. PhilWeb in turn owns 40 percent of ISM.

It was learned that Smart may not grant CURE’s request for interconnection of the latter’s 3G network with that of the former unless Ongpin’s group agrees to acquire Smart’s stake in ETPI, not at market price, but based on Smart’s acquisition price, which is said to be much higher.

Earlier, Smart said it was planning to sue CPR Philippines for not honoring a 2001 agreement to purchase the former’s 9.8-percent equity interest in ETPI.

One of CPR’s affiliate is AGN Philippines (AGNP), the local subsidiary of an Australian group which sold its 40 percent stake in ETPI to Ongpin’s group which gave the latter control of ETPI.

Smart officials said CPR can be held liable for failure to complete their acquisition of Smart’s shares worth P214.4 million as provided in their conditional share purchase agreement (CSPA) with CPR.

Smart waived its right of first refusal in connection with the sale to PRN Philippines of British firm Cable and Wireless Plc’s 40-percent stake in ETPI.