TWO subsidiaries of Indonesian-owned First Pacific Co. Ltd. hold a total of 47.6 million common shares, or 22 percent, of 216 million outstanding common shares of Philippine Long Distance Telephone Co. These subsidiaries are Philippine Telecommunications Investment Corp. (PTIC) and Metro Pacific Resources Inc. with 26 million common shares, or 12 percent, and 21.5 million common shares, or 9.97 percent, respectively.
Including 7.6 million PLDT common shares, or 3.5 percent, which First Pacific also indirectly owns thru a “non-Philippine subsidiary,” the Indonesian-controlled group holds a total of 55.2 million PLDT common shares, or 25.6 percent of the outstanding common shares. This makes First Pacific only a significant stockholder and not the majority stockholder of PLDT.
NTT Communications Inc. and NTT DoCoMo Inc. of Japan hold 12.6 million PLDT common shares, or 5.8 percent, and 31.3 million PLDT common shares, or 14.5 percent, respectively, for a total of close to 44 million PLDT common shares, or 20.3 percent.
PLDT’s public ownership
A public ownership report (POR) posted on the website of the Philippine Stock Exchange listed unnamed foreigners as owners of 115.2 million PLDT common shares, equivalent to “17.30 percent.”
Readers of The Manila Times have reason to be puzzled by the small percentage of foreign ownership of PLDT’s outstanding capital stock. Why only 17.30 percent when Indonesians and Japanese stockholders own a total of 99.2 million PLDT common shares, equivalent to a sizeable 45.9 percent?
This is a case of computation for convenience. PLDT used only outstanding common shares in computing the holdings of Indonesian and Japanese stockholders to show their significant control of close to 46 percent.
Dividing 115.2 million common shares by 666 million “outstanding common and preferred shares” equals 17.30 percent, a low percentage way below the 40-percent limit on foreign ownership of public utility companies such as PLDT. Had PLDT used 216 million outstanding common shares as divisor in the computation, the result would be 53.3 percent, which would be way above the 40-percent foreign ownership limit.
Because of the selective computations, PLDT came out with only 17.30 percent foreign ownership in its POR. As for the public ownership of 116.4 million common shares, it divided this by 216 million outstanding common shares, which resulted in 53.86 percent, a majority ownership that should enable them to control the board.
Applying PLDT’s own POR formula by using 666 million shares as outstanding capital, below are the percentage equivalents of the common shares owned by First Pacific and the NTT group:
First Pacific owns 55. 2 million PLDT common shares, which represent 25.6 percent of 216 million outstanding common shares. When divided by 666 million, its holdings would be reduced to 8.3 percent.
On the other hand, the NTT-owned 44 million PLDT common shares, or 20.3 percent of the outstanding common shares, would be equivalent to only 6.6 percent.
Together, the Indonesians and the Japanese own only 14.89 percent of PLDT’s 666 million outstanding capital stock. Despite this minority ownership, First Pacific elects 11 directors to PLDT’s 13-person board while NTT’s two companies get one seat each.
Incidentally, PLDT has only two foreigners who are both nominees of NTT Communications and NTT DoCoMo. First Pacific’s 10 directors, who are all Filipinos led by PLDT chairman Manuel V. Pangilinan, include three independent directors who are selected and appointed by the Indonesian-owned company to enjoy the same pay and perks as those received by regular directors.
James L. Go completes PLDT’s 13-person board as the lone nominee of JG Summit Holdings Inc., the listed flagship of the group of companies controlled by businessman John Gokongwei Jr. and his family. JGS owns 17.3 million PLDT common shares, or 4.7 percent.
On the other hand, the publicly held 116.4 million common shares, or 53.86 percent of PLDT’s 216 million outstanding common shares, would be equivalent to only 17.5 percent of the outstanding capital stock of 666 million shares.
The ownership profile presented by PLDT in its public ownership report may be puzzling but legal at the same time. Due Diligencer is making this assumption because the Securities and Exchange Commission allowed PLDT’s presentation.
Remember the order of the Supreme Court in its ruling on the Gamboa case questioning foreign ownership in PLDT? Recognizing the expertise of SEC officials on securities, the high court ordered them to investigate foreign ownership in PLDT.
The SEC, led by Chairperson Teresita Herbosa, either failed or ignored the SC directive because it did not review PLDT’s ownership profile to determine compliance with the 60-40 ownership ratio in favor of Filipinos. Instead, it allowed the company to issue 150 million voting preferred shares to PLDT Beneficial Trust Fund which are also voted by First Pacific. The issuance was intended to dilute foreign ownership in PLDT to meet the 40 percent limit.
Is PLDT compliant with the 60-40 ownership ratio? This is a very basic question that only the SEC has the power to answer to erase the suspicion that foreigners other than First Pacific may take advantage of the loopholes in the 40-percent limit to foreign ownership.