San Miguel acquires 40% stake in Eastern Telecoms

MANILA, Philippines - Diversifying conglomerate San Miguel Corp., through its wholly owned subsidiary Vega Telecom, has beefed up its telecommunication portfolio by acquiring 100 percent of AGN Philippines Inc. (AGNP), a company that owns around 40 percent of Eastern Telecommunications Philippines Inc. (ETPI).

ISM Communications Corp., a company controlled by businessman Roberto “Bobby” Ongpin, sold 100 percent of the outstanding and issued capital of AGNP to Vega Telecom following the execution of a share purchase agreement last Dec. 30, 2010.

Just last week, SMC president and chief operating officer (COO) Ramon Ang told The STAR that the Philippine telecommunications industry remains a highly profitable industry with a 65 percent EBITDA margin due to very limited competition.

He said there has been no material market share changes over the last four years and the industry continues to be dominated by two players who control over 90 percent of revenues.

“The industry is ripe for a new entrant like San Miguel Corp. who would take advantage of its distribution scale and local market knowledge. San Miguel is well positioned to launch its mobile broadband services given its access to various fourth-generation frequencies allowing it to provide LTE (long term evolution or the newest standard in mobile network technology) services for the benefit of its voice and data customers,” he pointed out.

Ang added that the market outlook for 2011 will remain the same — extremely profitable from a regional and global standpoint — but should drastically change in 2012 when SMC completes it roll out. “The Filipino telco consumer will be the ultimate beneficiary with a highly reliable and intelligent network, significantly superior services, and faster connectivity,” he said.

It was earlier reported that SMC has already signed a memorandum of understanding (MOU) to acquire a stake in Extelcom, another telco controlled by Ongpin. “We’ve signed a memorandum of understanding to the deal, but the seller undertakes to clean up the company before we finally come in,” Ang said.

Vega also owns 39.3 percent of Liberty Telecom, SMC’s launchpad into the highly competitive telco business and there are plans to increase its stake to 49 percent.

SMC, also through Vega, earlier acquired a controlling stake in Bell Telecommunication Philippines Inc. to beef up its telecommunications investments with a cellular network service.

Vega subscribed to new shares of stock of Two Cassandra-CCI Conglomerates, Inc. (TCCI), Perchpoint Holdings Corp. (PHC) and Power Smart Capital Limited (PSCL). Through these subscriptions, Vega shall own up to 75 percent of the outstanding capital stock of the said corporations. TCCI, PHC and PSCL collectively own 100 percent of the outstanding capital stock of BellTel.

The STAR earlier reported that Ongpin appears to be consolidating his telecommunications interests in SMC with the sale of two of the telcos that he controls to SMC.