Corporate News

San Miguel hikes stake in Eastern Telco

Posted on October 21, 2011

DIVERSIFIED CONGLOMERATE San Miguel Corp. has moved to increase its stake in Eastern Telecommunications Philippines, Inc. after sealing a deal to acquire an additional 37.7% stake for P1.508 billion, disclosures to the local bourse yesterday showed.

The purchase of the shares from ISM Communications, Inc., owned by San Miguel director Roberto V. Ongpin, would increase the San Miguel group’s holdings in Eastern Telecommunications to around 78%.

San Miguel Equity Securities, Inc. struck the share purchase agreement with ISM Communications after the group’s board of directors approved the deal last month.

In December 2010, San Miguel, through Vega Telecom, Inc., bought an effective 40% stake in Eastern Telecoms, also from ISM Communications.

San Miguel, in an aggressive expansion away from its traditional food and drinks businesses in the last three years, has added infrastructure, telecommunications, power and oil refinery to its portfolio.

But its telecommunications venture has yet to take up a substantial share of the saturated local market.

San Miguel also holds stakes in Bell Telecommunications Philippines, Inc., and Liberty Telecommunications Holdings, Inc.

Liberty Telecoms recently recorded a P713.162-million net loss in the first half from P411.378 million on the back of higher cost and expenses for expansion.

Eastern Telecommunications’ business, meanwhile, includes providing data, voice and Internet services through fixed lines to business process outsourcing firms.

San Miguel’s first-half net income surged by 72% to P10.8 billion from year-ago levels.

This had been driven by strong revenues mainly from its oil refinery unit Petron Corp. and other ventures under SMC Global Power Holdings Corp.

ISM Communications, for its part, posted a net income of P13.456 million in the first half, 35.23% lower than P20.778 million in the same period last year.

The hike had been attributed to one-time gains from sales of ISM Communications’ stakes in companies.

Share prices in ISM Communications closed 1.45% lower at P3.39 apiece.

Shares in San Miguel meanwhile declined by 0.39% to P110.60 each yesterday, while shares in Liberty Telecoms remained unchanged at P3 since Oct. 17. -- Reuters with Cliff Harvey C. Venzon