IN business, joint venture refers to a 50-50-percent sharing of ownership in a stock corporation. In layman’s term, this partnership is simply alliance of capital. In short, they who have the money rule that even competitors unite for business convenience.
The latest example of a joint venture involved the Philippines’ two dominant carriers. Globe Telecom Inc. and PLDT Inc. have formed a partnership to buy the telecom assets sold to them by San Miguel Corp.
As the buyers, they have been perceived to be monopolizing the telecommunications industry. If so, the government may want to look at how this has happened because telecommunications industry is open to anyone who can afford to venture into it.
Globe Telecom and PLDT compete with each other in providing telephone landlines and mobile phone services. They are not monopolies but possess billions that enable them to dominate the telecom industry that is open to other players.
There used to be Digital Telecommunication Phils. Inc. (Digitel) of the Gokongwei group; but it gave up its independent corporate status to become a PLDT stockholder. As a result, JG Summit Holdings Inc., the family’s listed holding company, directly owns 17.209 million PLDT common shares, or 7.96 percent.
As a significant PLDT stockholder, JG Summit received P1.824 billion in cash dividend, which came in two tranches—P49 per common share on Sept. 1 and P57 per common share on April 1.
With three telecom companies competing with one another, there can be no monopoly. It was more for the sake of a P52.848-billion team-up that Globe Telecom and PLDT temporarily set aside its competing interests to give way to the acquisition of SMC’s telecom assets.
As an old popular saying goes, in union, there is strength. But that of PLDT and Globe Telecom is not merely a union. Without the money, they would not have united their financial strength to acquire SMC’s telecom assets.
At the par value of P5, PLDT would not be very rich. Its 216.056 million outstanding common shares are worth P1.08 billion. By market value, it is a market heavyweight. At its stock’s last traded price of P1,602 on Wednesday, PLDT had the market value of more than P346.121 billion.
As of June 30, PLDT reported, in a consolidated financial filing, retained earnings of P6.556 billion including net income of P12.486 billion in the first six months.
For the year 2015, PLDT had consolidated net income of P18.749 billion.
Globe Telecom, on the other hand, traded higher than PLDT on Wednesday. It closed trading at P1,810 giving its 132.742 million outstanding common shares market value of P240.264 billion.
Unlike PLDT, Globe Telecom said its outstanding capital stock consisted of 132.758 million common shares with P50 par value; 158.515 million voting preferred shares with P5 par value; and 20 million non-voting preferred shares with P50 par value.
In a six-month consolidated financial filing, Globe Telecom reported retained earnings of P18.634 billion. Its net profit during the six-month period amounted to P4.64 billion.
With these financials that suggest profitability, the government reaps the benefits due it in terms of taxes that must be spent for public service.
For taxable year 2014, Smart Communications Inc., a PLDT subsidiary, was the second top taxpayer. It paid the Bureau of Internal Revenue P9.454 billion in taxes.
As No. 54 among the top 500 top taxpayers, PLDT paid BIR P820.372 million.
Globe, which is co-owned by Ayala Corp. and Singapore Telecommunication International Pte Ltd., was No. 7 with tax payments of P4.739 billion.
With these tax payments lifted from data collated by BIR every year, why dismantle the hen that lays the golden egg?