Government to sell its stake in Eastern Telecoms

The National Government (NG) has agreed to sell its stake in Eastern Telecommunications Philippines Inc. (ETPI) to majority owner ISM Communications Corp. following a failed bidding last year, a ranking official said yesterday.

Finance Undersecretary for Privatization Crisanta Legaspi said that the government is now ready to sell its stake in the country’s oldest telephone company to ISM after no bidders showed up in last year’s public auction.

“We can now sell it to ISM. This is ready for implementation. We can probably do it by this month,” she told reporters yesterday.

Last Nov. 20, 2007, the government scheduled a public bidding for its stake in Eastern Telecoms. It had hoped to sell its 10.2-percent stake in the company. A total of 2.652 million “Class A” shares were put on the auction block but no bidders showed up.

The shares for sale were those surrendered by former Ambassador Roberto Benedicto to the Presidential Commission on Good Government (PCGG).

As part of a compromise agreement with the PCGG, Benedicto surrendered 51 percent of his equity in ETPI consisting of 2.652 million shares equivalent to 10.2 percent of ETPI’s total capital stock.

In July last year, the Supreme Court denied the petition of the heirs of the late President Ferdinand Marcos to nullify a Sandiganbayan resolution dismissing the recovery case they had filed against Benedicto.

The High Tribunal junked the case following the other party’s decision to pay the correct amount of docket fees.

In 1998, the Marcos family filed a complaint for declaration of ownership, accounting, and damages against the PCGG.

In October last year, ISM of former Trade Minister Roberto Ongpin spent P100 million to purchase 2.5 million class A shares of Eastern Telecoms from Smart Communications Corp., raising its stake in the company to 67.5 percent from 57.5 percent.

The sale of the government’s stake in ETPI is part of its privatization program.  The National Government hopes to be able to raise as much as P30 billion from the sale of state-owned assets this year.

As of end-November 2007, privatization proceeds have reached an all time high of P30 billion.