MANILA, Philippines - Ayala-led Globe Telecom Inc. is confident of turning cash-strapped Bayan Telecommunications Holdings Inc. (Bayantel) around amid questions from rival Philippine Long Distance Telephone Co. (PLDT) about the financial benefits of the planned acquisition.
In a comment filed before the National Telecommunications Commission (NTC), Globe, represented by the law firm Salalima, Castelo, and Ungos, said records would show the company has been able to stamp its class in the market by delivering innovative products to the satisfaction of its customers in just a little over 20 years in the mobile communications industry.
“It is the same dynamism that has given Globe a clear-eyed view in the immense potential of a revitalized Bayantel – a Bayantel that will, in the not-too-distant future, duplicate for its own customers the same transforming and enriching experience that Globe’s subscribers have come to know,” the company stated in the seven-page comment.
PLDT, represented by Angara Abello Concepcion Regala & Cruz, said there appears to be no reasonable financial benefit for Globe to acquire Bayantel that has a capital deficit or negative retained earnings of P15.87 billion.
The dominant carrier argued that it would take at least 98 years before the entire deficiency is wiped out and for it to later declare dividends in favor of its investors and stockholders assuming it generates a net income of P160 million per year.
“These matters are absolutely none of PLDT’s business, apart from the fact that they are not relevant to the present proceedings,” Globe said.
The former Special 17th Division of the Court of Appeals issued a temporary restraining order (TRO) last Oct. 9 preventing NTC from hearing the application of Globe to acquire Bayantel.
The appellate court enjoined the NTC from implementing its orders issued on Nov. 27, 2013, Dec. 13, 2013 and July 3, 2014 that allowed the continuation of the proceedings in connection with Globe and Bayantel’s joint application for regulatory approval.
The Pasig City Regional Trial Court has approved the master restructuring agreement (MRA) between Globe and Bayantel. Under the transaction, Globe would acquire a 56.6 percent stake in Bayantel through the conversion of 69 percent of Bayantel’s total debt. In return, the outstanding principal debt of Bayantel would be reduced by 69 percent to $131.3 million from $423.3 million.
In May last year, Globe and the Lopez Group asked the rehabilitation court to restructure Bayantel’s $423.3 million debt to prevent default.