17 Jul 2009
San Miguel Corp hopes to complete its acquisition of Extelcom of the Philippines in the next few months, having now signed the purchase agreement, GMANews reports. Under the deal, the seller – entrepreneur Roberto Ongpin and UK-based Ashmore Investment Management – have an undertaking to ‘clean up the company’ before San Miguel assumes management control, the paper said. The Ongpin-Ashmore group will first purchase shares in Extelcom from the telco’s creditors Trans Digital Excel; Extelcom is currently under corporate rehabilitation with a total outstanding debt of PHP9.017 billion (USD186.9 million). Upon completion of the complex deal, San Miguel will become the operator’s largest single shareholder. The company has also entered into a joint venture agreement with Qatar Telecom, GMANews said.
Extelcom plans to relaunch itself in the domestic mobile market and intends to invest USD1.3 billion to build a network of 5,365 base stations over ten years, a move that will support its ambition to become a market leader in the country. It plans to use a combination of debt and equity to bankroll its aggressive expansion plans, and aims to deploy a network with broad population and geographic coverage in the first five years. In an earlier statement, Extelcom said that given the opportunity to exit ‘rehabilitation’ it would become a credible telecoms player and heat up competition in the Philippines’ mobile market resulting in lower voice call rates and higher cellular penetration. The cellco has submitted an application request to the National Telecommunications Commission (NTC), stating its plan to focus both on network coverage and service quality.
According to TeleGeography’s GlobalComms database, Extelcom was the country’s first mobile operator when it launched services in 1992 over its AMPS network offering services in the 800MHz band. However, the arrival of GSM competition marked the beginning of the end for AMPS, and the cellco soon found itself floundering in the wake of the likes of Globe Telecom and Smart Communications. Extelcom was awarded a GSM concession in 2001 and revealed plans to move to the new technology, but in 2003 it changed direction, and said it was looking to install a CDMA-based network instead. The operator appeared dead and buried until rumours emerged it was looking to re-enter the wireless market via the GSM platform. According to Extelcom director Luisito Sapiera, the company intends to utilise its existing frequency allocation in the 880MHz-890MHz frequency band, together with its paired link, the 925MHz-935MHz frequency band, which it is asking from the NTC. Earlier this month Filipino conglomerate San Miguel Corp confirmed it was in negotiations to acquire Extelcom, which is currently controlled by former creditor turned shareholder Trans Digital Excel. Trans Digital holds its majority interest in Extelcom as a result of negotiations with Millicom International Cellular, one of the original shareholders in Extelcom.