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.
The Coporate News & Analysis report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report.