MANILA, Philippines - Shareholders of telecommunications leader Philippine Long Distance Telephone Co. (PLDT) gave their imprimatur yesterday to the company’s acquisition of Digital Telecommunications Phils Inc. (Digitel).
During yesterday’s PLDT annual stockholders’ meeting, the shareholders in particular approved the issuance of up to 29.65 million PLDT common shares at the issue price of P2,500 per share as payment for 3.28 billion Digitel common shares owned by JG Summit Holdings (JGS) representing around 51 percent of total, zero coupon bonds issued by Digitel convertible into 18.6 billion Digitel shares with a redemption value of P17.7 billion, P34.1 billion in advances made by JGS to Digitel, and the remaining 3.08 billion Digitel shares held by public shareholders to be acquired in a tender offer.
Of the 29.7 million new shares to be issued, 16 million will be issued in exchange for existing Digitel shares and the equivalent Digitel shares due to convertible bond holders. The balance of 13.6 million will be in exchange for the JGS advances.
The total value of the PLDT-Digitel transaction is P74.1 billion. With the issuance of new PLDT new shares to Digitel, JGS will own 12.75 percent of PLDT while the equity ownership of the First Pacific group will be reduced to 22.85 percent from 26.59 percent. That of the Japan NTT group meanwhile will go down to 18.2 percent from 21.09 percent.
However, First Pacific and NTT have entered into separate agreements with JGS to acquire part of the latter’s PLDT shareholdings, resulting in the two getting back their original percentage shareholdings.
PLDT expects the acquisition deal to be closed by June 30 this year.
PLDT chairman Manuel Pangilinan said that for the next two years, they have committed a total of P67 billion to expand and upgrade their cellular network to handle the rapidly rising levels of voice, SMS, and broadband traffic and to support the continuing shift of PLDT’s fixed lined to a next generation network, all-IP platform.
He told shareholders that the focus of their efforts in the next few years is to build a new future for PLDT within a rapidly changing and increasingly difficult environment.
Pangilinan reiterated the company’s commitment to keep the mobile operations of Digitel separate and intact, even as PLDT plans to capitalize on Sun Cellular’s operations and brand equity to serve specific market segments, specifically those who prefer the “unlimited” type of service.
For his part, PLDT president Napoleon Nazareno emphasized that 2011 will not be any easier for the company. “We expect competitive intensity in the market to be sustained, and we are anticipating an explosion in the demand for broadband. We foresee the continued popularity of bucket plans and unlimited offerings resulting in higher SMS volumes and voice traffic but with lower yields. Although revenues from SMS and voice would remain a significant portion of our revenues, we envision growth shifting to the broadband arena,” he said.
But because of the higher level of investments planned this year and next year, PLDT’s core income is expected to go down to P40.5 billion in each of these years.
“However, we expect to return to our growth path by 2013, stronger and better positioned to harness the opportunities in the new battlefield of broadband, even as we manage our traditional businesses of SMS and ILD,” Nazareno stressed.
Also yesterday, the following were elected as directors of PLDT: Pangilinan, Nazareno, Ray Espinosa, Oscar Reyes, Tatsu Kono, Takashi Ooi, Tony Tan Caktiong, Helen Dee, Juan Santos, and Lourdes Rausa Chan. Elected independent directors are Fr. Bienvenido Nebres, Pedro Roxas and Alfred Ty.