San Miguel says it barely made money from telco divestment
MANILA, Philippines – San Miguel Corporation barely made money from its decision to sell telecommunication assets to Philippine Long Distance Telephone Company (PLDT) and Globe Telecom, Incorporated.
San Miguel president and chief operating officer Ramon S. Ang made the statement in an interview on the sidelines of the San Miguel Brewery Incorporated's annual stockholders' meeting.
"It was just cost recovery. We hardly made anything from our divestment in the telecommunications business," Ang said.
He also admitted that it was a "very hard decision" for the conglomerate. (READ: San Miguel selling telco assets to PLDT, Globe)
"I was also disappointed. It was a very hard decision for the company and when we discussed this with the management of telco, everybody was very, very sad," Ang said.
"The reason we decided to do that is because we think it will be a long dragging battle, court cases etc, and it will be a disservice to our people and consumers by holding on to that frequency and wait for foreign technical partners to come in – which most of them are so scared to come in because of the legal challenges that are in place," he added.
PLDT and Globe earlier urged the National Telecommunications Commission to reallocate the 700-megahertz frequency band assigned to San Miguel. (READ: The future of 700 MHz band remains unclear)
But with the divestment, Ang said San Miguel will focus on expanding its core businesses – tollways, oil refinery, petrochemicals, food, and power generation.
Ang said talks between San Miguel, PLDT, and Globe started two months ago, after negotiations with San Miguel and Australian firm Telstra Corporation collapsed. (READ: Telstra-San Miguel venture a bumpy, costly ride – think tank)
"They approached us," Ang said.
San Miguel was supposed to launch a 3rd major telco player this year. (READ: Ramon Ang: We hope to open 3rd major telco by 2016)
San Miguel was also in talks with Globe for a tower sharing agreement. But negotiations did not prosper, according to Ang.
Under the deal, San Miguel agreed to sell its telecommunication assets to PLDT and Globe for P69.1 billion.
PLDT and Globe jointly acquired 100% equity interest in San Miguel’s Vega Telecom Incorporated for P52.08 billion and the assumption of P17.02-billion liabilities.
Vega owns an 87% stake in Liberty Telecom Holdings Incorporated, the unit formed by San Miguel.
Vega also owns direct and indirect stakes in companies including Bell Telecommunication Philippines Incorporated, Eastern Telecom Philippines Incorporated, Express Telecom, and Tori Spectrum. They will pay P897 million more for New Century Telecoms Incorporated and eTelco, Incorporated. – Rappler.com