THE rehabilitation of Bayan Telecommunications Inc.—currently being aided by Globe Telecom Inc.—will ultimately bring about a positive impact to the local telco sector, the two industry players said in a filing with the Court of Appeals.
Responding to the claims made by rival Philippine Long Distance Telephone Co. (PLDT), the two companies argued that Globe’s acquisition of Bayantel will augur well for consumers to enjoy wider choices, as well as better product offerings.
“The successful rehabilitation of a public utility is a matter of high state concern, for it would open up the consumer market to more choices, promote greater competition, and foster better products and services,” the two telcos said. “This will result in a free market where rapidly evolving technologies have greatly facilitated communications and access to information, resulting in massive public enlightenment.”
The debt-to-equity conversion transaction between Globe and Bayantel will also enable the latter’s continued viability as a telecommunications provider, allowing it to “exit rehabilitation and enhance its current infrastructure and network, build more cell sites and related facilities, as well as enrich more people’s lives through the wonders of telecommunication.”
In particular, it will allow the Lopez-led telecommunications company “to continuously provide better and technologically advanced services at affordable rates.”
As their joint application has run on for more than a year already, both parties stated that the P5-billion rehabilitation effort is starting to adversely affect “more than 1,000 employees whose jobs are in peril and whose families’ future are in dark doubt.”
The joint petition was filed in October 2013. Roughly 15 months later, the National Telecommunications Commission (NTC) has yet to act upon the plea.
In September 2013 the Regional Trial Court in Pasig City approved the rehab plan which seeks to significantly reduce the debt burden of the Lopez-led firm through a conversion of up to 69 percent of debt to equity, which translates to $131 million in two separate tranches of conversion.
The first phase of conversion was completed in October 2013, after Bayan issued common shares for a 39- percent equity stake in the company to Globe and its other creditors.
The second tranche of conversion involves 40 percent of the debt to be converted to equity.
Once completed, Globe would effectively hold a 57-percent stake in Bayan. The Lopez family is looking at divesting its entire shareholding in its telco business, pending the approval of the NTC.
The successful rehabilitation of Bayantel is seen by many as a milestone achievement in judicial history, helping steer the company toward a better financial position and enabling it to provide social and economic gains for the Filipino consumers, he said.
The acquisition would aid Globe in further improving the quality of its network as it would enable further growth in data with the additional spectrum from the Lopez-led firm, Fitch Ratings earlier commented.
But rival PLDT opposes the takeover, filing a petition before the NTC to disprove the acquisition, saying that “it perpetuates an anticompetitive and anticonsumer telecommunications environment.”
The telecommuncations business of tycoon Manuel V. Pangilinan said the conversion would result in an imbalance in the total spectrum of Globe and Bayantel to its number of subscribers.