Corporate News

By Imee Charlee C. Delavin,
Senior Reporter

PLDT, Globe complete payments to SMC

Posted on May 31, 2017

PLDT, Inc., and Globe Telecom, Inc. on Tuesday completed the last tranche of payment for its P69.1-billion joint acquisition of San Miguel Corp.’s (SMC) telco assets despite the pending petition filed by the Philippine Competition Commission (PCC) to the Supreme Court.

PLDT and Globe vowed last year to deliver improved Internet service after the National Telecommunications Commission (NTC) warned them to boost Internet speeds within a year or it will revoke its approval for them to take over the spectrum owned by San Miguel Corp.
Officials of both PLDT and Globe said the consummation of the deal with the P13-billion payment to Ramon S. Ang-led SMC is merely to comply with existing commitments made under the deal.

“We have made final payment for the Vega transaction [yesterday]. In doing so, we are simply complying with our payment obligation under the contract with SMC, the performance of which has not been enjoined by any court order,” PLDT Public Affairs Head Ramon R. Isberto said in a text message when asked whether the company settled its payment to SMC.

Globe and PLDT were scheduled to make the third and final payment to SMC on May 30. Under the deal signed last May 31, the two telco giants acquired the coveted 700-megahertz (MHz) spectrum, which is able to penetrate walls and useful for providing in-building coverage.

Globe President and Chief Executive Officer Ernest L. Cu also confirmed that the Ayala-led network already completed the payment.

“The payment, tapos na (it’s done), I think so. It was part of our agreement,” Mr. Cu told reporters at the sidelines of the “Makatizen Card” launch on Tuesday.

The Globe executive dismissed as a mere “suggestion” the PCC’s earlier call that the firms’ hold off its final payment to SMC pending the Supreme Court’s decision on their ongoing appeal.

“[T]hey shouldn’t be talking right. They’ll be held in contempt if they do that... They issued a suggestion,” Mr. Cu said. “[After the payment], we will just continue to rollout the spectrum, that’s what we’re doing because it improves the service.”

Last April, the PCC asked the Supreme Court to lift the injunction against its review of PLDT and Globe’s joint buyout of the SMC telecommunications assets and sought to stop PLDT from further proceeding with the final payment or “performing any action for the consummation or implementation of the terms of the acquisition” while the case is ongoing.

“What we’re asking the Supreme Court is to allow us to review and in addition to that, issue order to PLDT to, in the meantime, discontinue its consummation, including the payment of the last tranche... because it will be more difficult to undo it if the consummation is completed, [we’ll have] much more limited options and remedies later on and it will be more costly for the parties,” the PCC said.

The anti-trust body argued that the telco companies should wait for the resolution of pending cases before the Supreme Court and the Court of Appeals before proceeding with their final payment in “due respect” to the highest court of the land.

“As things stand, the courts have yet to decide whether Globe and PLDT are legally entitled to proceed with their transaction. The PCC upholds the principle that all parties should respect and afford the courts the necessary latitude to decide on this issue. The telco firms should not preempt the judiciary’s decision by taking actions which would make it more difficult to implement forthcoming rulings,” PCC said in an earlier statement.

“The telco firms, by choosing to proceed with the final payment for the acquisition of SMC’s assets, and announcing this publicly in advance, appear to challenge this principle,” it added.

PLDT and Globe vowed last year to deliver improved Internet service after the National Telecommunications Commission (NTC) warned the two telco giants to boost Internet speeds within a year or it will revoke its approval for them to take over the spectrum owned by SMC.

Globe’s Mr. Cu said on Tuesday that it is “compliant and will continue to be compliant with the NTC.”

“Well, the services continue to inch up in terms of the mobile side and I think we’re starting to see an inching up of the fixed line as more and more connections above 10 Mbps are introduced in the country. The reason why are averages are low is because we’re still living with legacy connections for both telcos... As we bring about 10, 20, 50 and 100 Mbps into the homes, there is no way for the average to go but up, it’s just a matter of time,” Mr. Cu said.

Luis A. Limlingan, managing director at Regina Capital Development Corp., said the completion of the payments to SMC will make it more difficult for the anti-trust body since it hinders the latter’s legal mandate to review the deal.“If the deal also pushes through, it will also strengthen the duopoly in the telco industry,” he said in a text message.

The business community is closely watching the case, as it could set the tone for future action by the PCC on mergers and acquisitions.

On Tuesday, telco shares ended higher with PLDT adding P5 or 0.28% to end at P1,760, while Globe shares also increased by P42 or 2.04% to P2,060 apiece.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls.