Sky-high debt a major factor in aborted cable TV merger

MANILA, Philippines — It was a ‘til debt do us part’ of sorts that caused the collapse of talks between telco giant PLDT Inc. and Sky Cable Corp.’s parent firm ABS-CBN, industry sources said.

Pangilinan-led PLDT was supposed to acquire the Lopezes’ Sky Cable in a P6.75-billion package but talks fell through as announced by both groups last week.

Apparently, both parties could not agree up to the last minute on the terms related to the debt that the buyer had to absorb vis-a-vis the acquisition price of P6.75 billion.

Sky Cable, sources said, had debts of roughly P13 billion which PLDT, as the buyer, would have to absorb as part of the deal.

While PLDT was willing to absorb the debt, both parties could not agree on the terms of the total buyout valuation, in relation to the debt.

“Both parties could not agree on several commercial terms,” industry sources privy to the matter said.

On Feb. 22, PLDT and ABS-CBN Corp. jointly announced they were abandoning the sale and purchase agreement they signed last year, a move that came just four days before Sky Cable was supposed to close its pay TV business.

With the deal scrapped, ABS-CBN said customers who opted to stay with Sky Cable can keep their subscriptions. Sky Cable will be able to retain its cable TV segment and Sky Fiber, its broadband service.

The Philippine Competition Commission, the anti-trust body, gave its clearance to the sale, which was disclosed to the public in March 2023. The PCC gave its clearance last January.

The sale of Sky Cable to PLDT would have reduced the financial strain of ABS-CBN and Sky Cable.

With the latest development, the Lopezes are looking at Converge founder and CEO Dennis Uy as a possible white knight.

Both parties have started exploratory talks.

What could happen, industry sources said, is a possible sharing of infrastructure and technology between Sky Cable and Converge although nothing is final yet.

Converge could then get a share in revenue from Sky Cable’s business if they reach an agreement, which could then lead to a bigger deal in the future, sources also said.

The cancellation of the Sky Cable acquisition marks the second time PLDT and ABS-CBN failed to complete a transaction.

In 2022, Cignal Cable Corp., a unit under PLDT’s MediaQuest Holdings Inc., proposed to acquire 38.88 percent of Sky Cable for P7.5 billion but this did not push through amid escalating pressures against ABS-CBN from different sectors at the time, including members of Congress.