Deutsche Telekom offers 24.8%-stake in Globe Telecom to other parties

Deutsche Telekom subsidiary DeTeAsia is currently offering its 24.8-percent stake in Globe Telecom to other parties.

This developed after the European firm failed to come to an agreement with Ayala Corp. and Singapore Telecom, the other major shareholders in Globe, mainly regarding pricing with respect to Ayala and SingTel’s exercise of their right of first refusal.

If, however, there will still be no takers from third parties, Deutsche will come back to the major shareholders to once again engage in discussions. "That will be sometime middle of this month or two to three weeks from now," a highly-placed company source disclosed.

Ayala Corp. and SingTel’s right of first offer expired last Aug. 8 without arriving at an agreement with Deutsche Telekom on their offer to purchase the German telco’s entire stake in Globe. Both major shareholders were given 45 days from the time the offer was made in June to decide whether to exercise their right of first offer or not. Ayala has a 32.7-percent stake in Globe while SingTel has 29.1 percent.

Innove Communications, Inc. (formerly Isla Communications Inc.) chief operating officer Gil Genio told reporters the other day that the sale of Globe shares to other investors is subject to the restriction that a competitor cannot buy into the telco. This means that other telecom operators in the Philippines and Singapore cannot buy Deutsche’s shares.

He refused to say if there are parties already interested in Deutsche Telekom’s stake. He only said that this is now being offered to other parties. "Ayala and SingTel have the right of first refusal so they evaluated the offer. They have done that already. After that period, Deutsche can already offer to other parties. So far they have not been able to sell that to other parties. Assuming Deutsche revises its offer, they have to offer this to Ayala and SingTel. So the process will happen all over again. Deutsche is offering to third parties," Genio explained.

He also refused to divulge the offer price but at Globe’s current market capitalization, Deutsche Telekom’s 24.8-percent holding is reportedly worth between $400 million to $500 million. "Of course, what is being negotiated here is always the price. The next time they come to (Ayala Corp. and SingTel), we will have to deal with that," Genio added.

Deutsche Telekom reportedly wanted to get out of Globe as part of its overall move to divest from the Asian region and pare down its close to $65-billion debts which it incurred during its global expansion before the telecommunications bubble burst.

It has already sold its six-percent stake worth $114 million in Malaysian cellular firm Celcom and its 25-percent holdings worth $325 million in the Indonesian mobile company Satelindo.

Globe posted a net income of P4.4 billion for the first half of the year, an increase of 42 percent from the previous year’s P3.1 billion. Earlier, Globe president and CEO Gerardo Ablaza emphasized Ayala and SingTel’s continued commitment in the company.

The combined mobile phone subscriber base of Globe and Innove have reached almost 7.3 million, 34 percent higher than the 5.4 million recorded in the same period last year.

Meanwhile, Genio disclosed that Innove will absorb the operations of Globelines and Globequest by Oct. 1 and pay its parent company P8 billion to P9 billion for the transfer of the assets of the two businesses.

Innove will continue to market and sell the Globelines and Globequest services, while Globe will continue to focus on the wireless segment of the business.

With this development, Globe management believes both Globe Telecom and Innove will be better positioned within their respective businesses to meet the challenges of the increasingly competitive telecom environment and maximize opportunities through a focused approach to each segment of the business.