Smart’s holdings consist of 2.548 million Class A shares and constitute all of its shareholdings in ETPI. The purchase price is P85 per share, which approximates Smart’s carrying cost of the investment.
With the sale of Smart’s stake in ETPI to CPR, observers expressed doubts over reports that the Philippine Long Distance Telephone Co. (PLDT) wants to acquire a majority stake in ETPI. Smart is a wholly owned subsidiary of PLDT and could have easily transferred its ETPI holdings to PLDT.
The completion of the sale is subject to certain conditions, including the waiver by ETPI and other shareholders of their respective rights of first refusal.
In a disclosure to the Securities and Exchange Commission, Smart said the divestment is part of the company’s strategy of focusing its resources on its wireless business and maintaining its leadership position in the industry.
It will be recalled that in August of last year, Smart transferred its fixed line business to PLDT thus transforming itself into a pure wireless operator.
"This divestment is a logical move for Smart and in keeping with its preeminent role in the PLDT wireless group. I look forward to Smart’s continued leadership in the wireless industry," Smart president and chief executive officer Napoleon L. Nazareno said.
For his part, CPR president Modesto Cervantes, who is also the head of EasyCall Phils. Inc., expressed confidence that CPR’s entry into ETPI would be a most welcome event to the existing shareholders.
Cervantes said CPR has received support from an Australian investor, Australian Gigahertz Network International Pty. Ltd. which has a 40-percent stake in ETPI. The Australian company earlier acquired the 40-percent interest of UK firm Cable & Wireless Plc in ETPI for $21 million.
Because of a law that prohibits foreign firms from owning more than a 40-percent stake in a local telecommunications company, Australian Gigahertz formed PRN Phils. to acquire the 17.7-percent stake held by Aerocom Investors and Management Inc. in ETPI. The deal between PRN and Aerocom is expected to be completed this month.
Cervantes recalled that he also entered into a business alliance with an Australian group in 1989, when he successfully entered the paging business and formed EasyCall. With this new venture, Cervantes said he hopes to repeat his success in the telecoms field as he emphasized that ETPI is strategically positioned to play a dominant role in the Internet, data, and broadband market.