San Miguel acquires 32.7% of Liberty Telecoms

MANILA, Philippines – Diversifying conglomerate San Miguel Corp. has acquired 32.7 percent of cash strapped Liberty Telecoms Holdings Inc. (LTHI) for P1.88 billion.

LTHI led the list of top gainers yesterday, surging 1,375 percent. From only P0.20 Tuesday, LTHI touched a high of P3.05 before closing at P2.95 yesterday. A total of 40.61 million LTHI shares changed hands, valued at P114.75 million.

In a disclosure to the Philippine Stock Exchange (PSE), San Miguel said its wholly-owned unit Vega Telecom acquired 579.11 million LTHI shares from existing shareholders at P3.25 each share.

The purchase price was 22 percent lower than the earlier estimated price of P2.2 billion.

“The acquisition covered approximately 32.7 percent of the outstanding capital stock of LTHI.” San Miguel said.

The transaction is part of a plan to acquire upto 49 percent of LTHI.

San Miguel said the purchase of the remaining 16.3 percent of LTHI is still subject to management’s discussion with its joint venture partner, Qatar Telecom.

Qatar Telecom owns 27 percent of LTHI through subsidiary wi-Tribe Asia Ltd.

San Miguel has been actively diversifying its portfolio away from food and beverage and is eyeing high growth sectors like power, infrastructure, telecommunications and mining.

LTHI needs around P7.15 billion in fresh capital to boost its revenues while continuously improving and expanding its service capacity.

Under its 10-year revised rehabilitation plan approved by the Makati Regional Trial Court, LTHI will need a capital infusion of P2.04 billion ($40 million) to start formal commercial operation. It needs another P4.45 billion to fund its capital expenditure program, P729.56 million to pay short-term and long-term loans, and P336.16 million to pay liabilities to private creditors.

About P1.21 billion has been earmarked for payment of accrued interest and P421.13 million for working capital.

To accelerate revenue generalization, LTHI intends to fasttrack the deployment of Libertyphone public calling offices in year three to year five and grow the number of installed units from 2,200 by year three to around 4,021 by year five.

LTHI also plans to install Wimax broadband service infrastructure to market various data and voice services to more subscribers nationwide.

The Wimax service is expected to contribute more than 90 percent of LTHI’s projected total revenues.

“The next 10 years will see the increasing demand for this very promising service and Liberty would not want to lose the opportunity to supply the needed demand because of its capacity, existing technology and frequencies required of the service,” said LTHI.

LTHI expects to be cash positive starting year four with a net profit of P445.05 million. Revenues are likewise seen growing to P8.3 billion in the tenth year from P445 million in the fourth year.

Makati Regional Trial Court presiding judge Cesar Untalan said the approval of the revised rehabilitatin plan is only good for four years. This means that a review of all the terms and conditions of the plan shall be made on or before September 30, 2010 unless there is a good reason for the early withdrawal for the early withdrawal of the approval.

LTHI, the holding company for Liberty Broadcasting Network, Inc. (LBNI) and Skyphone Logistics, Inc., sought a moratorium of its debt payments in August 2005, squeezed by tight liquidity problems.