A move by Philippine Long Distance Telephone Company (PLDT) to meet the terms of a recent Supreme Court ruling on foreign ownership through the issuing of voting preferred shares has gone off-track, the Philippine Daily Inquirer reports citing a PLDT statement. The telco says it failed to drum up enough backing for the plan and fell short of securing a quorum of shareholders needed to approve the measure to increase its capitalisation via the share issue. The issuance of new shares is designed to lift Filipino ownership of the telecoms giant to over 60% – in compliance with foreign ownership restrictions under the Constitution. Local laws dictate that international firms are not allowed to own more than 40% of a ‘utility’ company’s total stock.
In June 2011 the Supreme Court asked the Securities and Exchange Commission (SEC) to launch an inquiry into whether or not PLDT had breached constitutional limits on foreign ownership. The court’s decision followed a petition submitted by lawyer Wilson Gamboa who is seeking to reverse the sale of the government’s 46% stake in PTIC, part owner of PLDT, to Hong Kong-based First Pacific in 2007. The deal, which was equivalent to a 6.4% indirect stake in PLDT, upped First Pacific’s PLDT stake to over 30%. Gambao argues that as a result of the sale, First Pacific and NTT DoCoMo of Japan ended up owning more than 50% of PLDT’s outstanding common shares – breaching the 40% limit set down by the Constitution.
However in a setback to its plans, PLDT now says: ‘Based on the validated and tabulated proxies reported by the company’s transfer agents, the number of preferred shares necessary to bring the total shares represented in person or by proxy will most likely not be secured … The board of directors plans to call another special meeting of stockholders on such date to be announced in due course.’ PLDT’s possible breach of foreign ownership rules has been used by rivals such as Globe Telecom in its bid to stop PLDT’s takeover of Digitel Telecommunications Philippines Inc (Digitel).