Globe sees no hitch in Bayan takeover

MANILA, Philippines - Publicly-listed Globe Telecom Inc., partnership between conglomerate Ayala Corp. and Singapore Telecom, sees no hindrance in the planned acquisition of cash-strapped Bayan Telecommunications Inc. (Bayan) of the Lopez clan.

Globe president and chief executive officer Ernest L. Cu said in a press conference that the company is looking at a merger with Bayan after successfully buying out 96.5 percent of the Lopez firm’s outstanding bondholders.

 â€œCertainly if an agreement is reached that would be the path,” Cu stressed.

He pointed out that the company does not see any hindrance in the proposed merger unlike the acquisition of Digital Telecommunications of the Philippines Inc. (Digitel) from Taipan John L. Gokongwei by dominant carrier Philippine Long Distance Telephone Co. (PLDT).

 â€œIt doesn’t create a monopolistic type of structure unlike the PLDT-Digitel deal since frequencies will still be below what our competitor has. We don’t anticipate any issues that they can bring up,” Cu explained.

The PLDT Group surrendered the 3G frequency of CURE being used by its wireless arm Smart Communications Inc. to NTC in the middle of last year. The divestment of CURE’s 10 megahertz 3G frequency was one of the conditions set by the NTC in approving the sale of Gokongwei’s 51.55-percent stake in Digitel to the PLDT group for P69.2 billion in 2011.

The PLDT Group wants to recover P2.215 billion from the sale of CURE’s 3G frequency. It would be recalled that Smart acquired CURE from former trade minister Roberto Ongpin in 2008 for a total consideration of P419.54 million. It invested P1 billion in CURE after acquiring it from the Ongpin group.

Cu pointed out that Globe paid a discounted amount of $130 million for the $430 million worth of debt acquired or 96.5 percent of the total bondholders of Bayan and Radio Communications of the Philippines Inc. (RCPI).

He disclosed that the company is now in discussions with the Lopez Group that controls Bayan for possible commercial arrangements.

 â€œSeparate discussions have been made regarding a wide range of commercial arrangements with the controlling shareholders of Bayan, but no definite agreement has been reached,” he clarified.

The Globe chief executive added that the company plans to ask the rehabilitation court for an amendment of the rehab plan to ensure continued service to Bayan’s fixed line and broadband customers.

Bayan has reportedly settled a total of P8.19 billion in total debt since it filed for corporate rehabilitation in 2004. In the first nine months of last year, the company paid P908.3 million worth of debt.

The debt-ridden telco provider had been subject to court-supervised rehabilitation proceedings since 2003 and intends to pay its $325 million outstanding debt within 2023.

Globe chief financial officer Alberto De Larrazabal said the company hopes to file an amended rehabilitation plan before the rehabilitation court within the month or early next month to ensure the long-term viability of Bayan.

De Larrazabal said Globe is reviewing the 2023 deadline of the rehabilitation as well as the level of debt that the company pays that is currently pegged at 60 percent of the principal amount.