SMC gains majority stake in Eastern Telecoms

MANILA, Philippines - San Miguel Corp. (SMC) is now the majority owner of Eastern Telecommunications Phils. Inc. (ETPI) with a 77.7 percent stake after acquiring an additional 37.7 percent in the telecommunications company.

ISM Communications Corp., a company controlled by businessman Roberto “Bobby” Ongpin, has entered into a share purchase agreement for the sale of its remaining 37.7 percent stake in ETPI to San Miguel Equity Securities Inc., a wholly owned-subsidiary of SMC, for a total consideration of P1.51 billion.

Vega Telecom Inc., the telecommunications unit of SMC, bought ISM’s 40-percent stake in ETPI in December 2010.

The remaining 22 percent stake is held by the Africa family.

With the sale of its entire stake in Eastern, ISM is now completely out of the telecommunications business.

SMC president and chief operating officer Ramon Ang earlier said the company was looking at acquiring ISM’s entire stake in ETPI as part of its expansion in the sector. The acquisition will enable the food-to-infrastructure conglomerate to offer a full range of telecommunications services.

ETPI provides data and Internet leased circuits, full-service telephony and managed telecom services.

ISM is also in talks for the possible sale of its 32.5-percent interest in Acentic GmbH Germany, an international provider of information technology services to hotels and hospitals. The book value of ISM’s stake in Acentic is estimated at P660 million.

Host Union International Ltd., a Hong Kong special purpose vehicle jointly owned by PhilWeb and ISM, acquired a 65-percent stake in Acentic in January last year.

SM president Eric Recto declined, however, to discuss the future direction of ISM after its exit in the telecommunications industry.

“We have a number of options. I would not discount another technology deal because it is something we will continue to look at. But it is not the same business that ISM is in because if it were, then it would not make sense for us to sell Eastern,” he concluded.

ISM earlier acquired 97 percent Philippine Bank of Communications (PBCom) for P4.681 billion.

The STAR earlier reported that Ongpin is consolidating his telecommunications interests in SMC, with the sale of two of the telcos that he controls to SMC.

Aside from ETPI, Ongpin also controls Express Telecommunications (Extelcom) through Trans-digital Excel, the creditor-turned majority shareholder of Extelcom. Both ETPI and Extelcom are either directly or indirectly controlled by Ongpin, either through his personal investments or as representative in the Philippines of international fund manager Ashmore.

Extelcom has been offered to SMC, which now owns a stake in Liberty Telecom. With Liberty’s assets limited to wireless broadband frequencies, ownership of Extelcom and ETPI will give SMC not a only a cellular license but also make it a full range telco services provider.