ISM eyes sale of 77% stake in Eastern to San Miguel

MANILA, Philippines - Ongpin-led ISM Communications Corp. plans to sell its 77-percent stake in Eastern Communications to diversifying conglomerate San Miguel Corp. (SMC) within the year, a top company official said.

ISM president Eric Recto said they also want to leverage their telco assets and use them to launch a bigger involvement in the telecommunications investing.

The STAR earlier reported that businessman and former Trade Minister Roberto Ongpin is consolidating his telecommunications interests in SMC, with the impending sale of two of the telcos that he controls to the conglomerate.

Aside from Eastern, Ongpin also controls Express Telecommunications (Extelcom) through Trans-digital Excel, the creditor-turned-majority shareholder of Extelcom.

Both Eastern and Extelcom are either directly or indirectly controlled by Ongpin, either through his personal investments or as representative in the Philippines of UK-based international fund manager Ashmore.

Like Eastern, Extelcom has been offered to SMC, which now owns a stake in Liberty Telecom. With Liberty’s assets limited to wireless broadband frequencies, ownership of Extelcom and Eastern will give SMC not a only a cellular license but also make it a full range telco services provider.

SMC president and CEO Ramon Ang said TDE is still finalizing some details before the sale of its stake in Extelcom can proceed.

A knowledgeable source told The STAR that one of the details being worked out on is what the final structure will be as far as Ongpin’s telco interests are concerned.

With SMC chairman Eduardo Cojuangco Jr. preparing to unload his entire 15-percent equity interest in SMC in favor of Top Frontier Investment Holdings, a company similarly controlled by Ongpin, the source said a sale of Eastern and Extelcom to SMC will in effect mean that Ongpin will just be transferring his telco companies to SMC, which he will eventually control.

If the Ongpin-owned Top Frontier avails of the option buy in the next two years the 493.37 million shares in SMC owned by the 44 corporate stockholders associated with Cojuangco’s group, Top Frontier will end up owning 60 percent of SMC. 

 Another issue that needs to be worked on by Ongpin’s group, sources revealed, is what will happen to ISM if it sells its entire 77 percent stake in Eastern. Once the sale materializes, ISM will end up being a shell company, with no other assets.

Meanwhile, Eastern is looking at a high single-digit growth in revenues this year driven by growth in data and Internet businesses.

“We may probably hit the same bottom line as last year and our revenues may grow by six to eight percent,” Eastern president and chief operating officer Mario Locsin said.

According to him, Eastern will likely generate revenues of P1.1 billion this year while net income is expected to remain steady at P130 million.

Eastern registered revenues of P987 million last year and achieved its target net income of P130 million.

The company also recorded P7 million to P8 million in net profit in the first three months of the year and revenues of P250 million.