SingTel and Ayala offered DT’s Filipino stake

30 Jun 2003

Deutsche Telekom [NYSE: DT] is reported to have offered its stake in Globe Telecom [PNK: GTMEF] to the Filipino operator’s other main shareholders Singapore Telecom (SingTel) [SI: TELE] and Ayala Corp as part of the ongoing divestment of its Asia-Pacific telecoms portfolio. The German operator, which has told shareholders it will reduce its crippling EUR56.3 billion debt pile to EUR50 billion by the end of the year, has already sold stakes in businesses in Malaysia (Celcom) and Indonesia (PT Satelindo), and on Friday stepped up its efforts to find a buyer for its 24.8% stake in Globe, the second largest player in the Philippines’ burgeoning mobile market. Although no offer price has been released, DT’s stake is valued at around USD425 million.

As Globe’s largest shareholders, SingTel (29.1%) and Ayala (32.7%) have first right of refusal on the shares, although Filipino ownership restrictions mean the Singaporean operator would only be able to purchase 10.9% of DT’s stake before reaching the ceiling placed on foreign investors. With around six million customers Globe narrowly trails market leader Smart Communications in the Filipino mobile sector. It provides a nationwide GSM service under the brand name Globe Handyphone, while its subsidiary Islacom provides services under the Islacom and Touch Mobile brands, the latter having been launched in September 2001. In August 2002 Globe was the country’s first operator to launch a multimedia messaging service (MMS), having begun offering GPRS the previous December.

DT chief executive Kai-Uwe Ricke is facing a testing six months at the helm of Europe’s largest fixed line operator, with the need to reduce debts being compounded by the advent of fresh competition in its domestic market. Additionally, next month sees the introduction of pre-selection codes which negate the need for subscribers to dial a prefix to route their calls via an alternative operator. DT has reacted to the heightened competition by submitting a new tariff structure to regulators and by expanding its range of unmetered ISDN services.

Germany