Globe may take up to 70% of Bayan, report says

27 Nov 2012

Ayala-led Globe Telecom could potentially acquire a 70% controlling stake in fellow Filipino operator, Lopez Group-owned Bayan Telecommunications (Bayan), the Philippine Star cites unnamed sources as saying. Globe is already planning to purchase USD180 million-worth of debt held by its rival’s creditors, which it plans to pay via cash and stock shares. It can then convert Bayan’s debt into equity as the ailing company looks to put itself firmly on the road to recovery. Although the telco has turned EBITDA positive, sources within Bayan reportedly told the paper that its debt burden is hampering efforts to secure additional funding for much needed network expansion.

For its part, Globe Telecom sees the purchase of Bayan’s 180MHz operating licence and frequencies as key to its plan to provide customers with higher quality voice and data services, and to use the bandwidth to implement LTE. Further, the acquisition will also give it access to Bayan’s roughly 190,000 fixed line subscribers and a broadband subscriber base of around 140,000 – which is expected to double this year. Bayan also owns a huge majority in the country’s National Digital Transmission Network (NDTN).

According to TeleGeography’s GlobalComms Database, in November this year Globe offered to acquire fellow telco Bayan’s) debt from its creditors, ahead of a move to buy out the company. In a stock market filing Globe confirmed that it launched the tender offer to buy 100% of Bayan’s debt – including the liabilities of its Radio Communications Inc subsidiary. The offer expires on 18 December, although Globe has the option to extend the deadline, and is conditional on it receiving the acceptance of 70% of holders of Bayan’s USD200 million of senior notes – originally due in 2006.

Bayan has been under court rehabilitation since July 2004 and as such, any firm looking to buy into the company must first secure creditor approval. Bayan hopes to have paid off its USD325 million debt completely by 2023.

Philippines, Globe Telecom (incl. Innove)