PLDT unit buys 20% of Philweb for P502.4M

The Philippine Long Distance Telephone Co. (PLDT) board has approved the investment of its information and communications technology arm ePLDT publicly in listed entity Philweb Corp.

ePLDT will invest in and subscribe to newly issued common shares of Philweb equivalent to 20 percent of the total outstanding capital stock of the company priced at two centavos per share or an aggregate amount of P502.4 million.

The investment and subscription agreements are scheduled to be signed by the parties on May 5, 2006. ePLDT is a wholly-owned subsidiary of PLDT.

Philweb is primarily engaged in Internet-based gaming, through its appointment as principal technology service provider under the marketing consultancy agreement for Internet sports betting and Internet casino with the Philippine Amusement and Gaming Corp. (Pagcor).

As of end-April 2006, PhilWeb offers Internet sports betting in over 230 Pagcor Internet sports betting stations (ISBS) and over 40 Internet casino stations nationwide. ePLDT said it plans to assist PhilWeb in the nationwide roll-out its Internet sports betting stations and Internet casino stations, using principally the telecommunication network resources of the PLDT Group.

The investment will enable the PLDT Group, through ePLDT, to gain a firm hold on legitimate gaming content for the group’s mobile business as well as its wired and wireless broadband (PLDT DSL and Smart Bro) businesses, and to influence the nature of the content consistent with the requirement of the PLDT Group to increase the usage of its various network resources.

Officials said the investment will likewise allow the PLDT Group, through ePLDT, to have a share in the equity and business values created for Philweb by its use of the PLDT Group‚s network resources, in addition to the normal network access fees being charged by the PLDT Group.

The business of Philweb relies heavily on the extensive use of telecommunications networks to sustain its substantial service revenue and profit growths consistent with the anticipated growth of the total gaming industry.

This transaction complements and completes ePLDT’s strategy to invest in compelling online gaming content, which includes its investments in Level Up Philippines, Inc. and netGames Inc., both of which are also heavily dependent on the extensive use of the PLDT’s Group’s network infrastructure and resources.

Upon completion of the investment, ePLDT will be entitled to three seats on the 15-man board of directors of Philweb. ePLDT will also be entitled to nominate the vice chairman of the Philweb board of directors.

ePLDT in 2005 reported service revenues of P3 billion, a 42-percent increase from P2.1 billion in the previous year as its various business segments continued to post results.

Aside from its call center businesses, ePLDT’s business segments include Netopia, which undertook a significant expansion in 2005. The country’s largest Internet cafe chain now has 181 cafes nationwide.

ePLDT has also augmented its position in the online gaming industry by acquiring a majority stake in Level Up!, the pioneer and leading publisher of online games in the country. Together with netGames, its own online gaming company, ePLDT hopes to solidify its position as the premiere online gaming company in the Philippines.

"ePLDT is aligning itself with the PLDT Group’s strategy of bringing rich and compelling conten not only to its Internet subscribers but to mobile subscribers as well, eventually. In so doing, it is anticipated that demand for wired and wireless broadband services will further increase. In addition, ePLDT aspires to position itself as one of the leading content aggregators in the country," ePLDT president and CEO Ray Espinosa said.