23 Dec 2013
Financially troubled Filipino telecoms operator Bayan Telecommunications (Bayan) has announced it is focusing its efforts on delivering fixed telephony services on eastern Visayas following the court’s approval of its rehabilitation plan. The Manila Standard Today quotes Globe Telecom general legal counsel Froilan Castelo as saying that Globe’s takeover of Bayan’s debt along with its active participation in the court-approved rehabilitation would ensure the group’s ability to deserve service to customers. ‘The rehabilitation of Bayan will mean more competitors in the industry serving a very broad and rapidly growing market, especially for its niche in fixed-line services and data connectivity with strong social media implications,’ Castelo said. It is understood that the Pasig Regional Trial Court has confirmed a master restructuring agreement between the ailing operator and Globe Telecom which the latter considers ‘pro-competition, pro-consumer and pro-fair trade’. The agreement recognises a general sentiment from the Filipino industry concerning the need for Bayan’s rehabilitation, starting with major creditors such as Goldman Sachs Group, Clearwater Capital Partners, Avenue Capital and the UK-based Spinnaker Capital.
TeleGeography’s GlobalComms Database notes that in November this year, Globe Telecom submitted a request with the National Telecommunications Commission (NTC), seeking approval for its plan to take control of Bayan. At the time, president and CEO of Globe, Ernest L Cu, was quoted as saying: ‘In anticipation of the court mandated second tranche of conversion that would potentially bring Globe ownership to Bayan into majority, Globe and Bayan filed last October a joint application for regulatory approval with the NTC for the change in the controlling interest in Bayan.’ The first tranche of conversion was completed in October 2013, after Bayan issued common shares equivalent to 39% of the company, to Globe and its senior creditors. Prior to that, Globe had bought up 98.26% of the telco’s loans, along with 100% of the liabilities of Bayan unit, Radio Communications of the Philippines (RCPI). It paid out a total of USD130 million, significantly lower than the USD400 million book value of Bayan’s total debt. The conversion of 69% of Bayan debt into equity would give Globe an equity ownership of 55%. ‘We reiterate that the restructuring of the debts and Globe’s conversion into equity could further strengthen collaboration with Bayan in respect to our leg networks, corporate data and broadband businesses,’ Cu added, saying he expects to receive NTC approval within the year.