Do foreigners control Vega Telecom?

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Emeterio Sd. Perez

Emeterio Sd. Perez

A “conglomerate map as of June 30, 2016” listed Philippine Long Distance Telephone Co. and Globe Telecom Inc. as 50:50 stockholders of Vega Telecom Inc., which, in turn, wholly owns Liberty Telecoms Holdings Inc.

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Liberty Telecoms showed the map in a posting on the website of the Philippine Stock Exchange in connection with the company’s annual stockholders’ meeting on Aug. 18.

The ownership presentation was premature since it came ahead of the results of an offer by Vega Telecom to buy out the public of their 165.883 million Liberty Telecoms common shares, which represent 12.82 percent.

As the new owners of Vega Telecom, Globe Telecom and PLDT should not have pre-empted the public by coming out with a map of ownership on page 40 of Liberty Telecoms’ definitive information statement. It was too presumptuous for the two companies to make such presentation when they had yet to announce the results of their offer to buy out the public before delisting Liberty Telecoms from the stock exchange.

How can Vega Telecom claim 100 percent ownership in Liberty Telecoms as early as June 30 when the amended “tender offer report” was posted only on Oct. 25 on the PSE website? After the tender, its ownership in Liberty Telecoms was less than 100 percent.

Less significant

The last time the public were significant stockholders of Liberty Telecoms Holdings Inc. was on Dec. 31, 2014 when they owned 223,154,590 common shares, or 17.25 percent. By July 2015, their holdings dropped to 165.883 million common shares, or 12.82 percent, a decline that resulted from their sale of 57.271 million common shares in an offer by Vega Telecom to buy them out.

The public still owned 165.883 million Liberty Telecoms common shares when Vega Telecom made again another offer to acquire all the remaining common shares it did not own yet. In its latest filing, Vega Telecom, now jointly owned by Globe Telecom and PLDT, said its offer to buy at P2.20 per share attracted the holders of 107.013 million common shares, or 8.27 percent.

Looking at Vega Telecom’s effort to get rid of outsiders, some of the public stockholders may have chosen to remain stockholders of Liberty Telecoms. Apparently, they are more optimistic of the future of their holdings even if PLDT and Globe Telecom take Liberty Telecoms private again.

Future beckons

The public that chose to remain with Liberty Telecoms owns 58.870 million common shares, or 4.55 percent. Their holdings may no longer be as significant as when they owned 223.155 million common shares, or 17.25 percent. Still, 4.55 percent public ownership means Vega Telecom owns only 95.45 percent in Liberty Telecoms and not 100 percent as shown in the company’s “conglomerate map.”

Even if the public ownership is less than five percent of outstanding, Globe Telecom and PLDT cannot ignore it as co-owners. They know what’s ahead for them as they look forward to reaping the fruits of their gamble by not selling out.

After all, it’s BellTel that they are after. The transfer of telecom assets of Liberty Telecoms to its unit should make P2.20 per share tender a good bargain for the PLDT and Globe Telecom. Those among the public who opted to hold on to their Liberty Telecoms’ common shares can only be right.

BellTel is the future of Liberty Telecoms, which must be the reason that Globe Telecom and PLDT are in a hurry to delist it. By owning 100 percent in Liberty Telecoms, they would also be controlling 100 percent in Vega Telecom.

Ownership profiles

Globe Telecom has two principal stockholders. Singapore Telecom International Pte. Ltd. and Ayala Corp. own 62.646 million common shares, or 47.19 percent, and 40.725 million common shares, or 30.68 percent of 132.759 million outstanding common shares, respectively.

PLDT, Globe Telecom’s joint partner in Vega Telecom, is a wholly owned subsidiary of Indonesian-controlled First Pacific Co. Ltd., which is based in Hong Kong. The computation of PLDT’s ownership profile is based on common shares.

In an ownership filing, PLDT listed in a public ownership report corporate stockholders that were presumed to be Filipino companies.

First Pacific’s and Japanese-owned NTT group’s ownership of PLDT common shares makes the telecom giant a foreign stock corporation The issuance of 150 million PLDT voting preferred shares to PLDT Beneficial Trust Fund, deemed to be a Filipino stockholder, was intended to dilute foreign ownership in PLDT. It did not.
Instead, the inclusion of preferred shares in the capital stock served only to confuse the computation of public ownership.

Indirect holdings

SingTel’s 47.19 percent ownership in Globe translate to indirect ownership of 23.595 percent in Vega Telecom while PLDT owns the entire 50 percent.

Yes, the sharing of ownership in Vega Telecom is 50:50, which means 50 percent for Globe Telecom and 50 percent for PLDT. The question is how this 50:50 ratio would be defined when it comes for representation in the Vega’s board. Who will represent Globe Telecom?

In the case of PLDT, no question could be asked about board representation. Being Indonesian-owned, PLDT, along with NTT, may allocate to them majority holdings in Vega Telecom, relegating Globe Telecom to minority representation on the board of Vega Telecom.

How about the public? Globe Telecom reported the public as holders of 29.237 million common shares, or 22.02 percent. Does this ownership mean they are entitled to at least a nominee to the board? Not at all.

Meanwhile, the public can only wait for the final sharing of ownership in Vega Telecom between Globe Telecom and PLDT. The problem is, being a stockholder of Liberty Telecoms, Vega Telecom may not be covered by the full disclosure rule.

esdperez@gmail.com

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1 Comment

  1. There were three groups of shareholders that filed a complaint with the SEC based on this disclosure in the PSE EDGE system: Clarification of News Reports Sep 20, 2016 11:31 AM 4-13 C05421-2016
    I hope the Manila Times gets to interview them. There is also a discussion in financemanila forum in the liberty telecoms thread about the PSE mysteriously not releasing the results of its investigation on Liberty Telecoms and that the issue is about to reach the courts and the Philippine Senate. I hope the Manila Times continues to cover this controversy.