Converge keen on Sky Cable buyout

MANILA, Philippines — Tech tycoon Dennis Anthony Uy plans to buy out Sky Cable Corp. and capture its more than 300,000 subscribers as soon as the company succeeds in erasing its over P4 billion debts.

The STAR learned from highly-placed sources that Uy is determined to save Sky Cable from the risk of bankruptcy, and his long game for the company is to turn it into a subsidiary of Converge ICT Solutions Inc.

However, Uy – who admires the household recall of Sky Cable – thinks the company has a lot to do to improve its financial standing, from paying maturing debts to reducing business costs.

Sky Cable owes P4.47 billion to lenders as of September, of which P3.18 billion are due in a year. Likewise, Sky Cable is running on a loss right now, booking a revenue of P4.12 billion while expenses reached P4.93 billion.

Uy said Sky Cable can cut spending by P1 billion a year if it lowers power consumption, removes pole rental and slashes maintenance costs. This is why Uy’s brainchild Converge signed a network sharing agreement with Sky Cable in July.

Currently, Sky Cable is in the process of tapping Converge’s fiber backbone – one of the widest in the Philippines – to improve service quality at lower costs.

For Uy, the target is to migrate at least 60 percent of Sky Cable’s subscriber base – which stands at more than 300,000 to date – to Converge fiber lines within the year.

“In due time (Sky Cable would be bought out] once Uy fixes it. Sky Cable has a lot of debts right now. Once it can pay its debts and personnel, he may come in to acquire it),” a source said.

As it stands, the source said Uy has yet to find value in buying out Sky Cable, estimating that it would require a minimum of P13 billion to take over. A proposal to acquire Sky Cable may cost P6.75 billion, as it was previously priced in the scrapped deal with PLDT Inc.

Aside from this, the buyer would have to shoulder the debts worth over P4 billion. It would also have to allocate P2 billion to sustain Sky Cable’s personnel.

In response, a senior executive of Sky Cable’s parent ABS-CBN Corp. said the company is open to entertaining any proposal that would improve its business standing.

“We are focused on strengthening Sky Cable’s long-term viability and remain open to exploring opportunities that would benefit our customers, employees and stakeholders,” the executive said.

Still, analysts agree with Uy in his decision to wait until Sky Cable shows some promise that it is worth saving, warning that whoever takes over it would inherit its financial troubles, too.

China Bank Capital Corp. managing director Juan Paolo Colet said Sky Cable may have to draw up a new business model to attract another buyer. In particular, this model should raise additional revenue and trim unnecessary expenses to enhance cash flow.

“I don’t foresee an acquisition in the near future given the debt burden and legacy issues of Sky Cable. Once those have been addressed and a sustainable business model is in place, there would be a better business case for Converge to take over Sky Cable,” Colet told the STAR.

Based on its financial report, Sky Cable’s net loss jumped by 13 percent to P418 million from January to September on declining subscriptions.

Prior to this, Sky Cable used to be a stable business, until the company lost the privilege to offer direct-to-home services when Congress denied ABS-CBN’s bid for a fresh franchise in 2020.

Since then, the Lopezes have looked to dispose of Sky Cable so they can focus their resources on content production.