San Miguel buying 49% of Liberty Telecom

MANILA, Philippines – Conglomerate San Miguel Corp. is acquiring an initial 32.7 percent of Liberty Telecom Holdings Inc. for an estimated P2.2 billion then plans to raise its total shareholdings in the telecommunications firm to 49 percent.

In a disclosure to the Philippine Stock Exchange yesterday, San Miguel said it intends to pursue the acquisition of the remaining 16.3 percent of Liberty Telecom with its joint venture partner Qatar Telecom (QTel).

In May 2008, QTel acquired 27 percent of Liberty Telecom through subsidiary wi-Tribe Asia Ltd.

Liberty Telecomwill likely be positioned as the corporate vehicle of the joint venture between San Miguel and QTel in their bid to penetrate the local wireless voice and data telecommunications services market.

Liberty Telecom’s shift to wireless broadband market was due to the booming demand for broadband Internet connectivity given increasing demand for online education, voice-over-Internet protocol (VOIP) and gaming as well as improving affordability of PCs and strong government commitment to develop IT and Internet-related sectors.

Liberty Telecom said it will  primarily focus on providing fixed broadband Internet and voice service to premium households and small-and-medium enterprises and complement it with a mobile broadband offering. 

In particular, Liberty Telecoms is hoping to provide high bandwidth  (oneMbps+) for upper and middle class households and SMEs, 512 kbps service for the lower to middle class, and one Mbps Nomadic service for high-end mobile users.

San Miguel has been actively diversifying its portfolio away from food and beverage and is eyeing high growth sectors like power, infrastructure, telecommunications  and mining.

In another development, Japan’s Kirin Holdings Co. Ltd. completed yesterday the sale of its 19.9-percent stake in San Miguel Corp. to Q-Tech Alliance Holdings Inc. for P39.61 billion.

Under the agreement signed by the two parties in March, Q-Tech, a company led by former Trade Minister Roberto V. Ongpin, will acquire all the 628.67 million shares held by Kirin in San Miguel at P63 each.

Kirin will use proceeds from the divestment to fund its acquisition of a 43.25-percent stake in San Miguel Brewery Inc. (SMB) valued at P58.9 billion. This deal involves 6.66 billion shares priced at P8.841 apiece.

At the same time, San Miguel disclosed to the public that its board approved a proposal that allows shareholders of its common shares to exchange their shares to a new class of shares to be denominated as Series 1 Preferred shares. The issue price has yet to be determined by management but the exchange ratio will be one preferred share for every one common share.

The Series 1 Preferred Shares, which will not be listed in the Philippine Stock Exchange, will be pesodenominated, perpetual, cumulative, non-voting preferred shares.