PLDT junks plan to buy GMA 7

Telecommunications industry leader Philippine Long Distance Telephone Co. (PLDT) is no longer pushing through with its plan to acquire a stake in GMA Network Inc., following concerns raised by the investment community both here and abroad for the company to focus on its debt issue first.

PLDT president and chief executive officer Manuel V. Pangilinan also announced yesterday that there will be no acquisitions until such time that the company is able to settle its debts, which it hopes to do with a combination of financial schemes, including a sale of a portion of its stake in subsidiary Smart Communications to reduce the parent’s total debt, pursuing refinancing opportunities to extend residual debts as capital markets improve, and explore the possibility of floating bonds as soon as the situation improves.

Earlier, The STAR reported that PLDT wanted to reduce its planned acquisition in the country‘s second largest broadcasting company from an original 66.67 percent as contained in a memorandum of understanding signed among the owners of PLDT, in particular wholly owned subsidiary Mediaquest Holdings and GMA Network (which was reduced to 51 percent a few month‘s back) to only 20 percent. Because of this, GMA Network owners wanted to rethink their position about reselling.

It was learned that the GMA owners gave PLDT an ultimatum to buy the 51 percent now, but PLDT insisted on 20 percent now and 31 percent later, PLDT had to say no.

In a statement, PLDT said: "PLDT has announced that it has decided to postpone its investments in GMA Network Inc. as the company focuses on its core business and debt-related matters, given the uncertain economic climate."

In an interview, Pangilinan said that he does not even know when the MOU which contains the initial commitment to purchase the 66.67-percent stake will expire. "We’ll probably just allow it to expire," he said.

He also said that GMA Network, namely the groups of Menardo Jimenez, Gilberto Duavit, and Felipe Gozon, are now free to talk to other prospective buyers.

Pangilinan admitted that the failure of the planned acquisition of a television company could set back ‘a little’ PLDT’s convergence strategy, particularly on the video part. "However, there are other elements of our convergence strategy that are still working," he emphasized.

He also said that they continue to work with GMA and other channels, particularly in providing phone lines, such as for the highly successful gameshows Who Wants to Be a Millionaire and newcomer The Weakest Link both shown over IBC-13.

"But we never expected the convergence strategy to immediately work in the first place," Pangilinan noted.

The PLDT chief also revealed that they are looking at entering into certain arrangement with some content provider, including the major television stations, for its Internet and cable businesses.