SMC eyes more telcos

MANILA, Philippines - Food and beverage giant San Miguel Corp. (SMC) is exploring the possibility of acquiring more telecommunications companies in its bid to strengthen its presence in the telecommunications industry.

SMC president Ramon Ang told The STAR that the broadband frequencies held by Liberty Telecom Holdings Inc. (LTHI), now 39.3-percent owned by SMC subsidiary Vega Telecom, offer great opportunities for the group. 

But a stake in other telcos as well as the planned acquisition of a controlling stake in Express Telecommunications Co. (Extelcom) would allow SMC to explore other businesses in the telecommunications industry, Ang said.

He, however, admitted it might still take some time before they will be able to buy into Extelcom due to some pending cases in court.

One of these cases involves questions on the legality of the acquisition by the group of businessman Roberto Ongpin and Ashmore Investment Management Ltd. of shares in Extelcom.

SMC earlier signed a memorandum of understanding to acquire a stake in Extelcom from Ongpin and the UK-based Ashmore Group. “We’ve signed a memorandum of understanding to the deal, but the seller undertakes to clean up the company before we finally come in,” Ang earlier said. 

Marifil Holdings Corp. used to be the biggest shareholder of Extelcom until its stake was reduced to 8.39 percent from 46.62 percent following a debt-to-equity swap mandated by the court-approved rehabilitation plan.

Marifil, owned by Bayan Telecommunications of the Lopez Group, has claimed that the dilution of its stake in Extelcom that resulted in an increase in the stake of creditor-turned shareholder Trans Digital Excel Inc. identified with the Ongpin bloc is illegal. 

If the Extelcom acquisition pushes through, Ang said Extelcom would be merged with LTHI to create a holding company and strengthen SMC’s entry in the high-growth telco industry. Vega Telecom earlier acquired 579 million shares of LTHI from 37 stockholders through a special block sale.

Ang, who now chairs LTHI,  also said SMC might match the $500-million investment of Qatar Telecom (QTel) in Liberty or “if needed, even more.” 

SMC is presently conducting a legal and financial due diligence on Extelcom to determine whether an investment will be made.

The acquisition of Liberty shares by Vega Telecom was financed from internally generated funds and was paid upon completion of the block sale.

SMC also revealed yesterday that is still discussing with QTel the business plan to be jointly pursued and implemented by the parties through the operation of LTHI. Vega Telecom Q-tel’s Wi-Tribe Asia Ltd. (for QTel), and White Dawn Solution Holdings Inc. earlier subscribed to 25 percent of the increase in Liberty’s authorized capital stock from P2 billion to P6.8 billion.

The subscriptions are for a total of 1.2 billion preferred shares, at a price of P3 per preferred share, for an aggregate value of P3.6 billion. Of this amount, P1.5 billion will be initially paid, while the balance of P2.1 billion to be paid upon capital call by the LTHI board.

Wi-Tribe Asia Ltd., incorporated in the Cayman Island , is 100 percent owned by Qtel Investment Holdings BSC, which is deemed beneficially owned White Dawn, meanwhile, is a Philippine company which is an existing shareholder of LTHI. 

Vega subscribed to 19.8 percent or 587.9 million shares; Wi-Tribe will have 12.38 percent (367 million shares), and White Dawn, 8.22 percent (244 million shares).

With the new subscriptions, Vega nows own 39.3 percent (1.17 million listed common and unlisted preferred shares) of LTHI. White Dawn will have 18.36 percent (545 million unlisted preferred shares), and Wi-Tribe, 18.27 percent (542.7 million unlisted preferred shares).