PLDT’s foreign ownership remedy stalled

Philippine Long Distance Telephone Co.’s (PLDT) move to comply with the recent Supreme Court ruling on foreign ownership through the issuance of voting preferred shares has stalled, the company said on Tuesday.

In a statement, the company said it failed to muster a quorum of shareholders required to approve the increase in its capital structure to include the new shares.

The company said a total of 73.27 percent of its common shares were expected to be represented at the special stockholders’ meeting scheduled on Tuesday in Makati.

“But based on the validated and tabulated proxies reported by the company’s transfer agents, the number of preferred shares necessary to bring the total shares represented in person or by proxy will most likely not be secured,” PLDT said in a disclosure.

Under the company’s by-laws, at least two-thirds of its preferred shares need to be represented in person or by proxy during a shareholders’ meeting for a quorum to be met.

“The board of directors plans to call another special meeting of stockholders on such date to be announced in due course,” PLDT said.

At its supposed shareholders’ meeting on Tuesday, PLDT planned to approve its issuance of 150 million new preferred shares that allowed holders to have a voice on the company’s board.

These differed from the company’s current stock of preferred shares, which did not have voting rights. This centralized PLDT’s decision-making power to holders of PLDT’s common shares, most of which are owned by foreigners.

The new shares are meant to raise Filipino ownership of PLDT voting shares to over 60 percent of the total, thereby complying with the foreign ownership restrictions in the Constitution.

Under Philippine law, foreign entities are not allowed to own more than 40 percent of a utility company’s total stock. PLDT is currently controlled by Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT DoCoMo.

The new shares will have a lower par value than PLDT’s common shares. The new shares will also have a reduced dividend yield.

The SC’s decision stemmed from a petition by PLDT shareholder Wilson Gamboa, who asked the high tribunal in 2007 to nullify the sale of the government’s stake in the company to the First Pacific group, which is represented in the country by Manuel V. Pangilinan.

Although the SC decision is still under appeal, PLDT’s foreign ownership violation has been used by rivals against the company in its bid to acquire rival mobile brand, Sun Cellular.