The acquisition was approved by the PLDT board of directors during yesterday’s regular meeting. An additional 8.04 million shares of Philweb, a publicly-listed company controlled by former Trade Minister Roberto Ongpin, was purchased by ePLDT at a price of 0.026 centavos per share.
Philweb chairman Eric Recto told The STAR that this was a secondary sale from a foreign investor called Timford Investment Ltd.).
In an earlier interview, Recto said Philweb itself has no plans of selling its remaining stake to ePLDT, nor to allow the PLDT arm to acquire majority holdings.
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 has said it plans to assist Philweb in the nationwide roll-out of 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.
Earlier, PLDT president and chief executive officer Napoleon Nazareno said the merger of ePLDT subsidiaries Level Up! Philippines and netGames, together with the investment in Philweb, is expected to boost ePLDT’s capability to develop gaming content for fixed line broadband and wireless devices.
PLDT officials said the investment in Philweb complements and completes ePLDT’s strategy to invest in compelling online gaming content, which includes its investments in Level Up and netGames, both of which are also heavily dependent on the extensive use of the PLDT Group’s network infrastructure and resources.
Officials said the investment will 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.
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 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 premier online gaming company in the Philippines.
"ePLDT is aligning itself with the PLDT Group’s strategy of bringing rich and compelling content not only to its Internet subscribers but to mobile subscribers as well. 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.
Meanwhile, in a bid to expand its Internet gaming business, Philweb earlier revealed that it would purchase the shares held by a Hong Kong-listed company at ISM Communications Corp. ISM, Philweb, as well as Eastern Telecommunications Phils Inc. (ETPI), are all controlled by Ongpin.
Philweb signed an agreement with Softbank Investment (Strategic) Ltd. (SIIS) to acquire its 2.3-billion fully paid shares at ISM for $1.43 million. "With this acquisition, Philweb’s ownership in ISM will increase to 40 percent," the online gaming company said.