PLDT questions Globe bid to acquire Bayantel

MANILA, Philippines - Dominant carrier Philippine Long Distance Telephone Co. (PLDT) is questioning the intention of Ayala-led Globe Telecom Inc. in acquiring cash-strapped Bayan Telecommunications Holdings Inc. (Bayantel).

In a Formal Offer of Evidence submitted to the National Telecommunications Commission (NTC), PLDT, represented by Angara Abello Concepcion Regala & Cruz, said there appears to be no reasonable financial benefit for Globe to acquire Bayantel.

“There appears to be no reasonable benefit for Globe to acquire the shares of Bayantel as a viable investment,” PLDT said.

PLDT stated in the filing that Bayantel has a capital deficit or negative retained earnings of P15.87 billion.

“Even assuming that Bayantel generates an annual income of P160 million post-rehabilitation, it would take at least 98 years before the entire deficiency is wiped out and for it to later declare dividends in favor of its investors and stockholders,” it added.

PLDT argued that the documents submitted by Globe and Bayantel to the NTC in support of the joint application are insignificant to prove their claim that the debt-to-equity transaction entered into would benefit both companies.

The counsel of PLDT stressed the need to review the documents submitted by Globe and Bayantel particularly the annual reports and audited financial statements of Bayantel for 2012 and 2013.

PLDT warned that the joint application of Globe would acquire a grossly disproportionate amount of frequencies in relation to their subscriber base if the takeover of Bayantel is approved by NTC.

PLDT controls 62 percent of the cellular and broadband market while Globe and Bayantel have 37 percent.

“Should Globe be allowed to control a grossly disproportionate amount of frequencies in relation to its number of subscribers, there would be no parity between the concerned players in the industry insofar as subscriber-to-bandwidth ratio is concerned,” it stated in the petition.

It pointed out that Globe would have significantly more frequencies per subscriber than the PLDT Group as there would be an estimated 70,000 subscriber gap for each MHz of bandwidth.

It added that Bayantel has no subscribers to its cellular mobile service and has yet to roll-out its nationwide cellular mobile telephone system (CMTS) despite being authorized to construct, install, and operate, and maintain the same as early as 2000.

The former Special 17th Division of the Court of Appeals issued a temporary restraining order (TRO) last Oct. 9 preventing the NTC from hearing the application of Globe to acquire Bayantel.

The appellate court enjoined the NTC from implementing its orders issued on Nov. 27, 2013, Dec. 13, 2013, and July 3, 2014 that allowed the continuation of the proceedings in connection with Globe and Bayantel’s joint application for regulatory approval.

The Pasig City regional trial court has approved the master restructuring agreement (MRA) between Globe and Bayantel. Under the transaction, Globe would acquire a 56.6 percent stake in Bayantel through the conversion of 69 percent of Bayantel’s total debt. In return, the outstanding principal debt of Bayantel would be reduced by 69 percent to $131.3 million from $423.3 million.