Globe Telecom Inc on Tuesday plans to buy out the Lopezes in Bayan Telecommunications Inc.
“That’s one of the options that is being discussed. Right now they own 97 percent [of Bayan]. It depends on the amount that the court allows us. What is currently provided under the current rehab plan is only up to 40 percent,” Alberto M. de Larazabal, Globe chief financial officer and treasurer told reporters in a briefing after the company’s annual stockholders’ meeting.
“The intent is to end up with the majority stake. So, we will have to work with the rehab court in arriving at an amended rehab plan that we think is the best interest of the company,” he said.
Globe recently acquired 98.26 percent of Bayan’s loans and 100 percent of Radio Communications of the Philippines Inc’s (RCPI) liabilities. RCPI is a unit of Bayan. The acquisition cost $130 million, lower than the $400 million face value of Bayan’s aggregate debt.
Larazabal said Globe has yet to determine the total amount of its ownership after the debt conversion, adding that the company is working closely with Bayan’s equity holders for the joint application of the amended rehab plan “within [a] few weeks.”
“There are two parts of the exercise. The first part is the rehab court and the second part is the NTC approval because it would entail change in ownership on [} franchised entity. So, its two government processes that we have to deal with,” Larazabal said, adding that rehab court and NTC approval is expected “within six months or so.”
Under its rehab plan, Bayan and RCPI are scheduled to emerge from rehabilitation by 2023. As of September, Bayan had settled P908.28 million worth of debts. Since 2004, the telco had paid creditors a total of P8.19 billion.
Bayan went into court-supervised rehabilitation proceedings in 2003 after it failed to service debts amounting to $325 million.
Globe expects no regulatory hurdle to its acquisition of Bayan. “It’s a nice acquisition in different perspective. They’ve got a very good data business and it has fiber in Quezon City that we don’t have,” Larazabal said.
Globe recently secured NTC approval of the joint use of Bayan’s frequencies in the 1750-1760 megahertz/1845-1855 megahertz range.
The joint use agreement will allow Globe to address increasing demand for voice, SMS and mobile data services, and will allow Bayan to offer its mobile telecom services to customers.
Besides frequency, Bayan has an existing nationwide network composed of satellite, terrestrial and land/submarine-based cable facilities.
Globe is also in talks for a possible content partnership with ABS-CBN Corp, which the Lopezes also own.
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