Stock Commentary

Converge: considering SkyCable part of 'fiduciary duty'

Merkado Barkada
Converge: considering SkyCable part of 'fiduciary duty'

Converge [CNVRG 10.96, up 4.4%; 553% avgVol] [link] clarified a recent Bilyonaryo article about its reported interest in SkyCable, which is owned by ABS-CBN [ABS 6.98, up 0.4%; 26% avgVol], and confirmed that it considered acquiring ABS’s SkyCable business as part of its “fiduciary duty to create value for stakeholders”. CNVRG said that it performs “close evaluations of various investment opportunities... as they arise”, and that it does this to uncover “prospects of growing its customer base, improving customer experience, and... maximizing the utilization of [its] network.” ABS also release a clarification to confirm that SkyCable has P4.5 billion in outstanding debts, with P2.05 billion of that amount “due within 1 year”. ABS said that it is “working on plans to improve [SkyCable’s] viability.”

MB BOTTOM-LINE: SkyCable’s death spiral was all but assured once ABS and PLDT [TEL 1415.00, up 0.3%; 52% avgVol] killed the deal that would have seen TEL acquire it for P6.75 billion earlier this year. The problem arose when SkyCable received Philippine Competition Commission approval for the deal and notified customers that it would discontinue service on February 27. Three weeks later, and four days before that deadline, the deal was dead and a huge chunk of SkyCables recurring customers had already found a cable TV alternative. I like that CNVRG is sniffing around. Being in the right place at the right time can be a great way to pick up some politically distressed assets on the cheap. I’m not a superstitious guy, but my only worry in the event of a sale or a deal would be whether the ABS Curse travels with the SkyCable entity or assets, and evolves into a political problem for Dennis “The Fiber Master” Uy where there once was none.



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