Biz Buzz: Superstition and pragmatism
He has suggested commuting home to Davao from Manila by air everyday, but he won’t fly to Manila for something as important as his proclamation as President by Congress? Interesting.
But now that Rodrigo Duterte has been proclaimed the next President of the Philippines, the outgoing Davao City mayor is expected to resume his regular visits to Manila to prepare for the beginning of his six-year term of office.
Keen observers have noted that Duterte—who has, among others, Pastor Apollo Quiboloy’s Cessna Citation Sovereign private jet at his disposal—has uncharacteristically stayed put in Davao since winning the May elections.
The popular theory is that Duterte has been avoiding getting on planes pending his electoral victory being made official by the authorities since if (knock on wood) anything untoward happens to him, the second placer in the polls, Mar Roxas, would be next in line for the presidency (there are differing opinions on this, but that’s the story going around).
Some businessmen who know Duterte say this is the real reason why he skipped this week’s proclamation in Congress—he simply didn’t want to get on a plane before his win was made official. Call it a mix of superstition and pragmatism.
With Duterte now having been proclaimed, expect the incoming President to be less conservative with his travel plans and be more visible in Manila. That would definitely make it easier for favor-seekers and those wanting to be appointed to government positions to seek an audience with him. Daxim L. Lucas
Tender offer puzzle
WITH the freefall in shares of Liberty Telecoms Holdings in the aftermath of San Miguel Corp.’s decision to unload the telecom assets under Vega Holdings (which owns 87 percent of Liberty), market players lament the deafening silence on whether the telecom duopoly that bought the assets would make a tender offer.
“I’m surprised why no one has mentioned the tender offer requirement. Not the seller, not the buyers, not the Philippine Stock Exchange, not even the Securities and Exchange Commission. Is the investing public supposed to just keep on guessing? Whose duty is it to tell the buyers that a tender offer is required?” veteran stock broker Joseph Roxas, president of Eagle Equities Inc. told Biz Buzz.
Roxas is among those who argue that the tender offer requirement—which gives minority shareholders the opportunity to exit when there’s a change in shareholder control—is applicable in the case of Liberty even if PLDT and Globe Telecom did not buy Liberty shares directly.
“There is a precedent for indirect buyouts,” Roxas said, citing the Supreme Court jurisprudence in 2007 in the case Cemco Holdings Inc. vs National Life Insurance Co. of the Philippines. The ruling affirmed the SEC finding that the acquisition of petitioner Cemco of the shares of stock of Bacnotan Consolidated Industries Inc. (BCI) and Atlas Cement Corp. (ACC) in Union Cement Holdings Corp. (UCHC) was covered by the mandatory offer rule under Section 19 of Republic Act No. 8799, otherwise known as the Securities Regulation Code.
Union Cement was 60.51-percent owned by UCHC, a non-listed company and Cemco, with 17.03 percent. In 2004, BCI and subsidiary ACC decided to sell to Cemco shares held by BCI and ACC in UCHC equivalent to 21.31 percent and 29.69, respectively. Cemco’s beneficial ownership—direct and indirect—in UCC has increased by 36 percent and amounted to at least 53 percent of the shares of UCHC.
In this case, the high court affirmed a ruling by the SEC and the Court of Appeals that the indirect acquisition by Cemco of 36 percent of Union Cement shares through the acquisition of the non-listed UCHC shares was covered by the mandatory tender offer rule. Doris Dumlao-Abadilla
Wanted: stronger telco regulator
MANY Filipinos were undoubtedly disappointed over news that a third telecommunications player was no more, after incumbents Philippine Long Distance Telephone Co. and Globe Telecom jointly acquired the telco unit of San Miguel Corp.
The misgivings were directed at the present telco duopoly, but perhaps we should also look into the inadequate regulatory environment that brought us here.
This is evident from a timeline detailed by the National Telecommunications Commission over how discussions—at least those that involved the NTC—progressed between SMC, PLDT and Globe before the P70-billion telco deal was announced on May 30, 2016.
Apparently, the NTC knew as early as April 11, 2016 about plans for a potential partnership and network sharing between SMC and incumbent telco players, via a notice from SMC’s Bell Telecommunications, the main assignee of the coveted frequencies.
That’s consistent with statements made by SMC president Ramon S. Ang, who said he was approached by the two players shortly after the conglomerate’s talks with Australia’s Telstra Corp. Ltd. collapsed in March.
This possibility was floated anew on May 5, 2016, or a day after PLDT chair Manuel V. Pangilinan told local media he was open to an SMC partnership.
It gets more interesting after that.
The NTC responded on May 17 that infrastructure sharing “is encouraged” as this would lower costs and hasten the rollout of services to the benefit of consumers. A week later, on May 24, the three groups approached the NTC for approval of the co-use on nationwide basis of the 2G and 4G assets of BellTel.
Three days later, on May 27, this was approved by the regulator, paving the way for the deal to close the next Monday.
If that’s all so shockingly fast, well, that’s because it is. Recall that PLDT and Globe had been asking the NTC to free up frequencies now being acquired about a decade ago. These were mostly ignored.
The speed at which the deal was consummated points to a system that prefers to leave tough decisions in the hands of powerful private-sector incumbents. They were left to work out a solution themselves and work it out, they did. This is the result.
It’s not all the NTC’s fault but the current framework made things this way. Right now, the newly-formed Philippine Competition Commission is looking into the deal.
Yes, you know what we’ll say: Abangan! Miguel R. Camus
Wanted: Professional Naia chief
INCOMING Transportation Secretary Art Tugade faces a difficult task ahead in his bid to resolve the massive issues and problems at his department.
Among the most urgent tasks he has on his plate is the management of the Ninoy Aquino International Airport (Naia) the ground zero of the Duterte’s administration’s effort to improve the country’s transportation systems. While Tugade is known to be competent and tough, he cannot do everything by himself. As such, there is a need for him to appoint a competent and professional general manager for Naia.
And what Naia needs is a strong and competent manager, instead of a political trapo (traditional politician) or someone to whom a political favor is owed. The country’s premier international aviation gateway needs someone who understands airport operations and will not keep planes from circling in the air for hours, or having three-hour power outages while stranding thousands of passengers.
Naia needs somebody who has experience managing the operations of the equivalent of three shopping malls combined with 500 flights a day and the lives of millions of passengers on the line. Of course, this appointment should be properly vetted to ensure that the country gets someone who is competent, transparent, an expert in airport operations and bold enough to fight corruption and vested interests.
(Duterte—who has made known his dislike for legal delays—may also want to look into the matter of an air cargo company operating in Naia having secured a court injunction not only against the biggest foreign carrier operating in the country but also against Naia itself.)
While Tugade may already have a shortlist of candidates for Naia general manager, it won’t hurt to consults airport stakeholders like Philippine Airlines, Cebu Pacific and airline associations, as a weak or incompetent appointee will have significant negative repercussions on the country. Daxim L. Lucas
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