PLDT looks to derail Globe’s Bayan takeover bid

19 Aug 2015

Philippine Long Distance Telephone Company (PLDT) has submitted a filing to the telecoms watchdog, the National Telecommunications Commission (NTC), asking it to reverse its earlier decision giving the go ahead for Globe Telecom’s takeover of Bayan Telecommunications. In its paper, PLDT argues that the acquisition should have gone through the correct channels – i.e. Congressional approval should have been sought – rather than as happened, the NTC rubber-stamping Globe’s conversion of Bayan’s debt into equity. To recap, in November 2013 Globe submitted a request to the NTC seeking approval for its plan to take control of 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. On 2 July this year the NTC approved a joint application from Globe Telecom and Bayan for the conversion of the latter’s USD423.3 million of debt into equity, effectively paving the way for Globe’s takeover of the ailing operator.

PLDT argues, however, that despite Bayan’s failure to deploy mobile services under the terms required by its provisional authority, the watchdog ‘sanctioned an outright transfer of the radio frequencies disguised as a gradual takeover of Bayan by Globe’. In its petition, PLDT goes on to say: ‘With all due respect, this Honourable Commission erred in exempting Globe and Bayan from the required prior Congressional approval considering that the debt-to-equity transaction between Globe and Bayan is not contemplated under the equity of treatment clause.’

PLDT’s case centres on the fact that it is unhappy that Globe will end up with what it considers a disproportionate share of radio frequency spectrum as a result of the takeover. Last month its mobile arm Smart Communications opposed the takeover plan, but had its case thrown out by the NTC. Further, in January this year PLDT submitted a formal objection to the NTC, arguing that Ayala-led Globe already holds 45MHz of frequencies, whilst PLDT only holds 35MHz and it would be disadvantaged by the plan. At the time it said: ‘Globe would have significantly more frequencies per subscriber than PLDT Group, such that, for each MHz bandwidth, there is an estimated 70,000 subscriber gap. Simply stated, there are 70,000 subscribers of the PLDT Group that would suffer for each MHz that would be disproportionally assigned to Globe.’