The deal would have allowed the backdoor listing of Next Mobile in the stock exchange.
Under the agreement, PEP would have acquired a total of 13.56 million common shares of Next Mobile for P6.58 billion. In exchange, PEP will issue 13.16 million shares to Next mobile shareholders Top Mega Enterprises Ltd., Joycelink Holdings Ltd., Gamboa Holdings Inc., Emerald Investments Inc. and Foodcamp Industries and Marketing Inc. The shares represent 96.2 percent of PEP’s outstanding capital stock.
Next Mobile president Mel Velarde confirmed that the agreement had expired as early as October last year and had not been extended due to poor market conditions at that time.
Velarde, however, said the company is back on the negotiating table with other potential investors the market has been on an upbeat mode since December last year.
Sources said Next Mobile lost interest in PEP due to the foreign ownership restrictions in the latter which is engaged in mass media. Under the Constitution, entities engaged in mass media should be-100 percent Filipino-owned.
Next Mobile is 40 percent owned by foreign nationals composed of Finnish, Swedish and Americans.
The deal would have been in line with PEP’s diversification into the telecommunications and information technology businesses.
Preparatory to the acquisition, the board of PEP approved the change in its primary purpose from entertainment to telecommunications.
In light of the continued slowdown in the movie-making industry since 1999, PEP had shut down its film production operations as well as its bingo activities and instead concentrated on roving cinema and film distribution businesses.
Next Mobile is similarly undergoing a major restructuring and will concentrate on services different from what predecessor Nextel Philippines had focused on, which was in the area of trunked radio, pager and mobile phone services.
The company intends to expand in 15 urban areas and upgrade existing switches. Cellular sites will be put up in the cities of Cebu, Davao, Bacolod, Cagayan de Oro, and Baguio.
As of end-August last year, Next Mobile had 35,000 subscribers and a network capacity of 200,000 subscribers. Around 47 percent of Next Mobile’s customers are in the freight industry.