After a two-year battle, the telecoms regulator in the Philippines has finally given Globe Telecom approval to take a controlling interest in BayanTel, which has been under corporate rehabilitation since 2003.
The National Telecommunications Commission (NTC) last week cleared Globe’s proposal to convert its BayanTel debt holdings into a 54 per cent stake.
Globe took on most of BayanTel’s debt in 2012 and the next year acquired a 38 per cent interest in the troubled operator after it converted debt into common shares and had planned to convert an additional portion of the $423.3 million debt to raise its stake to as high as 56.6 per cent, BusinessWorld reported.
But the debt-to-equity proposal was opposed by market leader PLDT, which urged the NTC to reject the deal, arguing a merger would “defeat competition”.
After a protracted court battle, the Philippine’s Court of Appeals last November affirmed the joint use of 1.8GHz spectrum by Globe Telecom and BayanTel, the first step in paving way for the long-awaited merger of the two firms to move ahead.
PLDT had argued at the time that the merger violates telecoms law as it would give Globe 95MHz of 4G spectrum. Globe general counsel Froilan Castelo insisted that the telecoms industry “should not be held hostage by a single dominant player”.
BusinessWorld quoted NTC director for regulation Edgardo Cabarios as saying: “The opposition argued that Globe’s acquisition of more than 50 per cent of BayanTel would give it additional spectrum, which would be grossly disproportionate. But based on our studies, that’s not true. The PLDT group still has more assigned spectrum than Globe.”
The approved debt-to-equity conversion will enable Bayan’s continued viability as a service provider, allowing it to exit rehabilitation and enhance its current service offering and putting it on track to get back on its feet by 2023, Castelo told BusinessWorld.
“Globe will certainly add value to BayanTel, bringing financial and technical support and synergies, as well as experience and our own culture of innovation,” he added.
PLDT’s mobile unit, Smart, has a 59 per cent market share while Globe, with 47.5 million connections, has a 40 per cent share, according to GSMA Intelligence.