The rehabilitation time frame of Bayan Telecommunications has been shortened by 10 years as the Regional Trail Court of Pasig City allowed Globe Telecom to assume its debts, the Ayala-owned telecommunications company said.
“The rehabilitation of Bayantel will mean more competitors in the industry serving a very broad and rapidly growing market especially for its niche in fixed-line services and data connectivity with strong social media implications,” lawyer Froilan Castelo, general legal counsel of Globe, in a statement said.
Castelo also noted the optimism of telecom stakeholders about the rehabilitation of Bayantel.
He explained that the Regional Trail Court of Pasig City-directed Master Restructuring Agreement (MRA) between Bayantel and Globe is actually “pro-competition, pro-consumer and pro-fair trade.”
The MRA is based on a broad sectoral recognition of the need for Bayantel’s rehabilitation starting with its major creditors like Goldman Sachs Group, Clearwater Capital Partners, Avenue Capital and the UK-based Spinnaker Capital.
Castelo also mentioned the concurrence of the solicitor general and the approval last year by the National Telecommunications Commission of the court-mandated joint use of Bayantel’s frequencies.
The impending rehabilitation of Bayantel, a subsidiary of listed Lopez Holdings Inc., will create a vibrantly competitive atmosphere in the telecommunications industry that would augur well for customers.
In a rehabilitation plan, a corporation experiencing financial distress can file for relief from the courts and suspension of the payment of its debts while it is being nurtured back to good financial health.
Recover financial health
The key in rehabilitation is that a company should be allowed to recover its financial health so that its employees and stakeholders would not be affected. Bayantel was weighed down by its foreign debts, incurred when the peso was still half its exchange rate.
Bayantel posted P5.22 billion in core revenues in 2012, 8 percent higher than the year before, thanks to the substantial growth in its data and voice services.
In its report, Bayantel said data-service revenues grew to P3.56 billion last year, up 11 percent, or P256 million from 2011, driven by increasing demand for data connectivity and Internet connection.
The company’s digital subscriber line (DSL) revenues, meanwhile, grew year-on-year by 13 percent to P1.7 billion in 2012, because of the increased usage of social-media applications and the adoption of the Internet for educational purposes.
The number of Bayantel’s DSL subscribers increased by 12 percent from last year to 132,000.