PLDT’s investment in PhilWeb shoots up 3X in 17 months

In a span of just 17 months, the Philippine Long Distance Telephone Co. (PLDT) group’s investment in publicly-listed PhilWeb Corp. has grown almost three times in value, company officials said.

The increase in value is traced not only to the fact that PhilWeb nows owns 24.4 percent of ISM Communications which, in turn, controls 57.7 percent of Eastern Telecoms, but also to the huge potential of the gaming market in the country.

With the total gaming market in the Philippines estimated at over P100 billion, Internet gaming companies such as PhilWeb are so far getting only a small fraction of the pie. Thus, the potential for growth is huge, the officials told The STAR.

The three-fold growth in PLDT’s investment is based on the current stock price of P0.0575 per share compared with the blended acquisition cost of P0.0215 per share, ePLDT president Ray Espinosa earlier told The STAR.

 In May 2006, ePLDT completed the purchase of 20 percent of PhilWeb valued at more than P400 million. Shortly thereafter, PLDT’s information and communications technology arm bought an additional six percent from the market, bringing ePLDT’s total shareholdings to 26 percent. ePLDT’s stake in PhilWeb is now at 27 percent.

Of the P100-billion Philippine gaming market, the Philippine Amusement and Gaming Corp. (Pagcor) accounted for P25 billion of revenues, followed by the Philippine Charity Sweepstakes Office (PCSO) at P15 billion, and the balance of P10 billion from cockpits and horseracing.

PhilWeb recently reported a more than three-fold increase in net profit for the first nine months of the year to P121.7 million from only P42.3 million in the same period last year due to the continued strong growth of its core gaming operations. PhilWeb president Dennis Valdes said the huge jump in net earnings and revenues was largely due to higher volume increases in the company’s core Internet casino and sports betting businesses.

“Not only have we increased the number of our Internet casino stations and terminals within these stations, but we continue to realize scale benefits and efficiencies, resulting in better margins,” Valdes explained.

Valdes said that PhilWeb now has 61 Pagcor Internet casino stations from only 44 as of end of last year. PhilWeb hopes to increase the number to 100 soon.

He also expects PhilWeb to sustain its income growth for the remainder of the year through the expansion or introduction of more product lines.

Last Sept. 10, PhilWeb launched TXTINGO, the first large-scale mobile phone betting game where bets are deductible from loads.

“The company is by no means content to simply grow its existing business lines. We expect to make more dramatic announcements within the year concerning new business sectors in which we have been consolidating deals for the past year,“ Valdes said.

PhilWeb recently incorporated new subsidiaries – PhilWeb Gaming Solutions Corp. to develop customized promotional gaming solutions for outside clients; PhilWeb Leisure and Tourism Corp which will venture into leisure and tourism activities; and PhilWeb Tourism and Entertainment Corp. which will build facilities in this sector.

Valdes also emphasized that PhilWeb will continue to be focused on gaming because of the still relatively huge untapped market potential. “The turnaround in our company has been driven largely by our investment in games of chance.”

Aside from the newly-launched TXTINGO, PhilWeb’s chief executive is also confident about the huge growth potential of e-Pitaka, an electronic wallet that lets players seamlessly transfer funds from their credit cards, bank accounts or mobile phone wallets into a PhilWeb-managed e-wallet.