Benpres buys out American partner Verizon in BayanTel

Benpres Holdings Corp., the flagship listed vehicle of the Lopez Group of Companies, has reached an agreement with Verizon Communications Inc. for the purchase of the American firm’s 19.4 percent stake in Bayan Telecommunications Holdings Corp., (BHTC) according to a company disclosure filed with the Philippine Stock Exchange (PSE) last Thursday.

Benpres corporate secretary Enrique I. Quiason said the company bought 21.75 million common shares owned by Verizon in BHTC for a nominal amount. With the purchase, Benpres’ stake in BHTC has increased to 66 percent from only 47 percent.

Quiason said another existing BHTC stockholder exercised its rights of first refusal to purchase 593,963 common shares from those offered by Verizon.

Burdened by its huge debt, Bayan Telecommunications Inc., a subsidiary of BHTC, widened its losses to P5.4 billion last year as against P5.3 billion in 2001. Net revenues declined by four percent to P4.9 billion.

BayanTel’s local exchange carrier, or landline services, posted lower revenues of P1.8 billion last year, down 9.8 percent from the 2001 revenues of P2 billion. This was a result of a decline in the subscriber base as the company rid its account portfolio of nonpaying customers.

Data revenues, on the other hand, rose 17 percent to P1.4 billion last year from P1.2 billion the prior year. This was attributed to the launch and expansion of the coverage of its digital subscriber line service for the corporate market.

The company said there was also an improvement in customer take-up of its data services and an increase in its domestic and international leased line net revenues.

BayanTel implemented programs aimed at stabilizing and growing its existing subscriber base. As of the end-2002, the company had more than 200,000 subscribers.

The programs that BayanTel initiated last year to promote and push its landline service were dubbed Bayan 399 and Bayan Business Deals. The company offered cheaper fixed rate basic telephone services for both the residential and business markets.

The company also launched the "24-hour Guaranteed Quick Repair" program, where the telco vowed to respond and resolve service-related problems within one day following a complaint by a subscriber.

BayanTel is aiming for a 20 percent to 30 percent growth in its data business this year. It has earmarked over P1 billion for capital expenditure this year for data services.

The company expects 2003 to be better than last year as it is optimistic of a favorable conclusion of its debt restructuring program.

BayanTel has $477 million in total debts, of which $277 million are owed to banks and $200 million to bondholders. About five percent or $26 million of the bank loans and all the bonds are unsecured.

Secured dollar- and peso-denominated bank loans comprise $216 million and P35 million, respectively.

Secured creditors are covered by omnibus arrangements, which include "all assets and all shares of stock" of BayanTel.

A revised restructuring plan was made by BayanTel last December wherein it offered 10 percent of the company to unsecured creditors through a debt-to-equity conversion scheme. BayanTel valued the 10 percent shares at $150 million.

BayanTel company also asked for a "three-fourths" reduction on the interest rates on the loans, but only "temporarily" or on the first four quarterly amortizations.