• A third telecom player? Think again



    PLDT Inc. is undoubtedly the biggest and most profitable telecommunications group of companies operating in the Philippines.

    “We are the largest and most diversified telecommunications company in the Philippines, which delivers data and multi-media services nationwide,” the company boasted in a posting on the website of the Philippine Stock Exchange (PSE).

    To show proof of its consistent profitability, an unaudited but consolidated third-quarter filing

    shows retained earnings of P9.214 billion as of Sept. 30, 2017, up from P3.483 billion as of Dec. 31, 2016, proof of its consistent profitability.

    That’s a huge increase of P5.371 billion, net of dividends due common and preferred shares, which could be good for the public stockholders who are in the market for dividends either in cash or in stock.

    As of April 17, 2017, PLDT had authorized capital stock of 771.5 million shares divided into 234 million common shares with a par value of P5 per share; 150 million voting preferred shares with a par value of P1 per share and 387.5 million non-voting preferred shares with a par value of P10 per share.

    Of PLDT’s authorized capital stock, 666.057 million shares were outstanding, of which 216.056 million were common shares, 150 million voting preferred shares, and 300 million non-voting preferred shares, according to a general information sheet (GIS) as of April 17, 2017.

    Of PLDT’s 563.415 million Filipino-owned shares, 10,257 stockholders held 113.414 million common shares; three owned 300 million non-voting preferred shares; and only one held 150 million voting preferred shares. The company’s 1,503 foreign stockholders were limited to owning 102.642 million common shares.

    Incidentally, PLDT could not distribute as dividend either in cash or in stock its P9.214 billion retained earnings because the amount was based on consolidated financial filing.

    Unlisted Mermac
    Globe Telecom Inc. belongs to the group of companies of Ayala Corp., which, in turn, is controlled by the Zobel de Ayala family through Mermac Inc.

    As of Sept. 30, 2017, Globe Telecom’s outstanding shares totaling 311.431 million consisted of 132.916 million common shares with a par value of P50 per share; 158.515 million voting preferred shares with a par value of P5 per share; and 20 million non-voting preferred shares with a par value of P50 per share.

    In a consolidated financial filing, Globe Telecom reported retained earnings of P23.081 billion as of Sept, 30, 2017; P18.475 billion as of Sept. 30, 2016; and P19.422 billion as of Dec. 31, 2016.

    In its GIS, Globe Telecom divided its authorized capital stock into 148.934 million common shares; 180 million voting preferred shares; and 40 million non-voting preferred shares. Based on par value, it valued its capital stock totaling 348.934 million shares at P10.247 billion. Of the authorized, 311.274 million shares were paid up as of the date of filing in 2017.

    By the way, the number of outstanding shares reported in a quarterly filing may not tally with the numbers shown in a GIS because of additional issuances of common shares under insiders’ stock option plan.

    Globe Telecom listed in its GIS a total of 3,815 stockholders. Of the total, 3,768 were Filipinos, who held 53.95 million common shares; five held 158.515 million voting preferred shares; and 12 were credited with 19.882 million non-voting preferred shares.

    Of the foreigners who owned 78.927 million Globe Telecom shares, three Singaporeans held 62.646 million common shares; 25 identified only as “others” of different nationalities, 16.162 million common shares; one Singaporean, one voting preferred share; and one “other,” one non-voting preferred share.

    Due Diligencer’s take
    With Globe Telecom and Smart Telecommunications Inc. as subsidiaries of Ayala Corp. and PLDT, respectively, does the country need another telecom player?

    From the point of view of those dissatisfied with the present services of Globe Telecom and Smart, it would seem a third company would provide the answer. Would having a foreigner-controlled telecom industry participant in the country solve the problem of what could be perceived as below-par performance of Globe Telecom and Smart?

    A new telecom company owned by foreigners would find it difficult to compete with the two existing players. Look what happened to Digital Telecommunications Philippines Inc., which used to be the telecom unit of the Gokongwei group. It is now part of PLDT’s telecom conglomerate.

    Would a new player, which would probably be Chinese, agree to an ownership structure, which would give at least 60 percent of its outstanding capital stock controlled by Filipinos?

    There would be persistent questions as to how a new telecom company would compete effectively with the present players. Will the government provide the infrastructure needed for it to operate more efficiently?

    Will a 100-percent foreigner-owned telecom company agree to get its ownership structure diluted to 40 percent by giving 60-percent control to Filipinos? Just asking.



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