Government to sell Eastern Telecom stake

The National Government (NG) is selling its stake in Eastern Telecommunications Philippines Inc., the country’s oldest telephone company, the Privatization and Management Office (PMO) announced yesterday.

PMO said that the government’s 10.2 percent stake in Eastern Telecoms would be sold through a public auction. A total of 2.652 million “class A” shares is up for grabs on November 20, the PMO said.

“The PMO is offering for sale through public bidding, as one whole lot 2.652 million ‘class A’ shares in Eastern Telecommunications Philippines Inc., equivalent to 10.2 percent of the outstanding shares of stock of the corporation,” the agency said.

The shares on the pipeline are those surrendered by former Ambassador Roberto Benedicto to the Presidential Commission on Good Government (PCGG).

As part of a compromise agreement with the PCGG, Benedicto surrendered 51 percent of his equity in ETPI consisting of 2.652 million shares equivalent to 10.2 percent of ETPI’s total capital stock.

Last July, the Supreme Court denied the petition of the heirs of the late President Ferdinand Marcos to nullify a Sandiganbayan resolution dismissing the recovery case they had filed against Benedicto.

The High Tribunal junked the case following the other party’s decision to pay the correct amount of docket fees.

In 1998, the Marcos family filed a complaint for declaration of ownership, accounting, and damages against the PCGG.

For the bidding, PMO said sealed bids would be received, opened, and tabulated on Nov. 20.

In case the bidding fails, the agency is willing to enter into a negotiated sale.

“In the event that the public bidding becomes a failure, the PMO reserves the right to accept proposals for the subject asset,” it said in the announcement.

No details were immediately available as to the value of the shares for sale.

However, ISM Communications Corp. of former Trade Minister Roberto Ongpin spent P2.5 million to purchase 100 million ’class A’ shares of Eastern Telecoms from Smart Communications Corp. last October 23 raising its stake in the company to 67.5 percent from 57.5 percent.

Last year, the telecommunications firm posted a net income P31 million from a net loss of P540 million in 2005.

The NG may be able to raise as much as P70 billion from the sale of state-owned assets this year.

In the first nine months of 2007, the government has already raised P42.3 billion from the sale of its 46 percent stake in Philippine Telecommunication Investments Corp. (P25.2 billion), its 20 percent interest in Philippine National Oil Co. – Energy Development Corp (P16.6 billion), the 60-hectare old Iloilo airport (P1.2 billion), and the remaining 4.6 percent stake in Philippine National Bank (P998 million).

Next year, it hopes to raise as much as P80 billion.

For 2006, the government was able to raise P5.8 billion from the sale of state-owned assets. It had targeted to raise only P25.6 billion this year but aggressive efforts to put government-owned assets on the auction block have paid off. Finance Secretary Margarito Teves said that privatization remains a key factor in raising revenues as the government works on balancing its budget by the end of next year.

Teves said the government is doing its best to manage its deficit, sell its state-owned assets and raise revenues, with the end goal of wiping out the deficit by 2008.

The government hopes to trim the budget deficit to P63 billion this year and wipe this out by 2008 or two years ahead of the original 2010 deadline.