Corporate News & Analysis: Solicitor General Declares TEL/GLO/SMC Deal Null & Void

The PH Solicitor General deemed the acquisition of PLDT (TEL) and Globe (GLO) of San Miguel’s (SMC) telecom assets null and void.  This spells trouble for the two telcos as they have already set up cell sites using SMC’s 700 Mhz spectrum.  More importantly, it opens a window for a third party into the PH telecom sector.  TEL and GLO will also be fined 1-5% of the PHP69.1 bn transaction (PHP691 mn-3.46 bn).  It was not reported, but SMC will most likely return the PHP69.1 bn to TEL/GLO and get its telecom assets back.  SMC will also eventually find a buyer or probably a partner for the telecom assets.  This development further adds to the two telcos’ short term woes.  The peso weakened in the past month increasing their forex losses from their USD denominated debts.  In the medium to long term, a third party competitor can reduce their mobile and broadband subscriber bases and weaken their earnings.

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