NTC okays Globe takeover of Bayantel
MANILA, Philippines – The National Telecommunications Commission (NTC) finally gave Globe Telecom Incorporated the green light to take over Bayan Telecommunications Incorporated (Bayantel).
In a 19-page decision, the NTC approved the joint application filed by Globe and Bayantel for a debt to equity transaction, wherein Globe would take at least 54% controlling stake in Bayantel.
NTC commissioner Gamaliel Cordoba, deputy commissioner Carlo Jose Martinez, and deputy commissioner Delilah Deles signed the decision dated July 2.
In the ruling on the case docketed under NTC Case No. 2013-218, NTC cited the Supreme Court ruling in Montoya vs Ignacio “the law really requires the approval of the Public Service Commission in order that a franchise, or any privilege pertaining thereto, may be sold or leased without infringing the certificate to the grantee.”
The regulator gave assurances that it has adopted safeguards to foster and ensure a level playing field, including conditions attached to the approval of the frequency sharing arrangement between Globe and Bayantel.
“The Commission finds that the acquisition by Globe of controlling interest in Bayantel pursuant to the court-approved amended rehabilitation plan and master restructuring agreement neither poses any prejudice to the public interest and convenience nor will make the service fail to operate or function better,” it added.
NTC pointed out that it does not find any reason to defer the proceedings of the joint application in the absence of an injunction form the Court of Appeals.
The approval came exactly 21 months after the joint application was filed in October 2013.
Rival Philippine Long Distance Telephone Company (PLDT) opposed the planned takeover of Bayantel by Globe. (READ: PLDT urges gov't to auction Bayantel's contested frequencies)
PLDT argued that there appeared to be no reasonable financial benefit for Globe to acquire Bayantel, which had a capital deficit or negative retained earnings of P15.87 billion ($352.05 million).
It added that NTC should also auction the radio frequency of Bayantel that has not been used for 14 years. It warned that Globe stands to acquire a grossly disproportionate amount of frequencies in relation to subscribers, as it currently accounts for 32% of the cellular market as against PLDT’s 68%.
The following also opposed the takeover: Smart Communications Incorporated; Digitel Mobile Philippines Incorporated; Cruz Telephone Company Incorporated; Philippine Association of Private Telephone Companies; Eastern Telecommunications Philippines Incorporated; Telecommunications Technologies Philippines Incorporated; and Next Mobile.
Globe argued, however, that the radio frequencies being disputed by PLDT are vital to the rehabilitation of Bayantel that was approved by a lower court in Pasig City in August 2013. (READ: Globe to PLDT: No need to auction Bayantel frequencies)
Bayantel has been under a court-assisted corporate rehabilitation since 2003 and got the approval of the Regional Trial Court (RTC) Branch 158 in Pasig City in August 2013 for its amended Rehabilitation Plan, wherein Globe would convert its debt holdings into equity.
The Pasig City RTC approved the master restructuring agreement (MRA), wherein Globe would acquire a 56.6% stake in Bayantel through the conversion of 69% of Bayantel’s total debt.
In return, the outstanding principal debt of Bayantel would be reduced by 69% to $131.3 million from $423.3 million.
Bayantel’s outstanding debt stood at $497 million when it was placed under corporate rehabilitation. It has reportedly settled a total of P8.19 billion ($181.69 million) since it filed for supervised rehabilitation proceedings. It also intends to pay its $325 million outstanding debt within 2023. – Rappler.com
$1 = P45.08