The P69.91-billion mega telecom deal between conglomerates San Miguel Corp., PLDT Inc. and Globe Telecom Inc. could go awry, with the Philippine Competition Commission out to ruin the purely sale and purchase transaction.
The PCC may also unwittingly open the acquisition deal to corruption with its ominous order to the two telecom players to stop paying the third and final tranche of the deal to San Miguel.
The PCC, to recall, asked the Supreme Court to lift the injunction on the review of the P69.1-billion deal. The Office of the Solicitor General filed on behalf of the PCC a petition before the Supreme Court to lift the preliminary injunction issued by the Court of Appeals, which halted the anti-trust body’s review of the acquisition of San Miguel’s telecom assets by PLDT Inc. and Globe Telecom.
The PCC made the plea, invoking its responsibility to prevent monopoly and promote a level playing field in the Philippines.
“By this petition, we elevate the matter to the highest court of the land to finally allow us to fulfill our legal mandate in the interest of promoting competition in the telco market,” PCC chairman Arsenio Balisacan said a news briefing in April .
“What we are asking [Supreme Court] is to issue order to PLDT in the meantime to discontinue its consummation of the last tranche because it’s more difficult to undo,” he says, adding the consummation of the P69.1-billion telco deal would be more costly and limit PCC’s remedies.
The last payment of PLDT for the acquisition of the 50-percent stake in Vega Telecom Inc., Bow Arken (the parent company of New Century Telecoms, Inc.) and Brightshare (the parent company of eTelco Inc.) was supposed to be on May 30. PLDT already paid San Miguel P19.8 billion as of December 2016.
The other 50 percent of the P52.8 billion, excluding the liabilities, would be settled by Globe.
But the PCC order for the two telcos not to pay the third and final tranche to San Miguel will trigger off a new issue to PCC’s attempt to kill the deal, as it now pries into the financial angle and not just into the anti-competition nature of the transaction.
PLDT and Globe may ignore the directive but a number of obstructions can still crop up.
Industry observers are asking what will the status of that third and final tranche of payment if the PCC is able to carry out its directive to hold the payments. Will it go into escrow? Will San Miguel demand a guarantee for the eventual payment of the last tranche of the deal?
Other financial questions will have to be addressed, such as possible interest charges arising while the payments are suspended. There is also a need to identify a third party that will be managing the third and final payment while it is held in escrow or while it is suspended.
The PCC, if it succeeds in its attempt to suspend the payment, will be effectively in control of the transaction legally and financially. Will handling money in private transactions be part of its mandate, or will it be again assuming more than what its role is all about?
The PCC’s order to suspend the final stage of the San Miguel deal will also eventually encroach into the area of the regulatory mission of the National Telecommunications Commission. If the deal is eventually be rescinded, what will happen to the 700 MHz frequency that is now being co-used by both telecom players? Will the whole bundle be returned, not to San Miguel, but to the NTC for the agency to eventually bid them out?
Will PLDT-Smart and Globe be refunded for what they have paid out? Will San Miguel keep the money and have a chance to get back the 700MHz frequency by bidding for it?
Whichever way the deal goes and PCC’s attempt to kill the deal, one can be sure that not only breadcrumbs are there for the taking, but also money to be had along the way to ‘perdition.’
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