THE National Telecommunications Commission (NTC) on Friday approved the acquisition by Globe Telecom Inc. of a 54-percent stake in Bayan Telecommunications Inc. (Bayantel) under a debt-to-equity transaction.
“With ample safeguard adopted by the commission to still foster and ensure a level playing field, including the conditions attached to the approval of the frequency sharing arrangement between Bayantel and Globe, the commission finds that the acquisition by Globe of a 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,” the regulator said.
In a separate disclosure to the Philippine Stocks Exchange, Globe said the commission has authorized “… Globe to convert its debt holdings in Bayantel into equity, which will result in a controlling interest by the former of at least 54 percent of the latter’s outstanding shares.”
“The debt-to-equity conversion transaction between Globe and Bayan will precisely enable the latter’s continued viability as a service provider, allowing it to exit rehabilitation and enhance its current service offering to the public,” Globe General Counsel Froilan Castelo said in another statement.
Rival Philippine Long Distance Telephone Co. (PLDT) has opposed the joint application of Globe and Bayantel on grounds that the competition would gain significantly more frequencies per subscriber than the PLDT Group.
“If the Joint Application of Globe and Bayan is approved, Globe and Bayantel, which have only 37 percent share as against PLDT Group’s 62 percent share of the cellular and broadband market, would be acquiring a grossly disproportionate amount of frequencies in relation to its subscriber base,” according to PLDT.
Globe, however, argued that the points raised by PLDT were not the bone of contention.
“The only genuine issue in the instant application is whether or not the debt-to-equity conversion transaction between Globe and Bayan — a transaction approved by the Regional Trial Court in Pasay City, Branch 158, sitting as Rehabilitation Court in the Matter of Corporate Rehabilitation of Bayan docketed as SEC Case no. 03-25 — would vest in the former more than 40 percent of the described capital stock of the latter,” the telco noted in a an earlier statement to the NTC.
Under a court-assisted corporate rehabilitation since 2003, Bayantel agreed to an amended rehabilitation plan that allowed Globe as principal creditor to covert its debt holdings equivalent to at least 54 percent of Bayantel’s outstanding shares into equity.