PLDT keeping Rocket stake despite disappointing performance

PLDT Inc. chair and CEO Manuel V. Pangilinan admitted this week that the telco’s 2014 investment in Germany’s Rocket Internet was “disappointing” but that it would continue to hold on to its minority stake.

Pangilinan, who was responding to a shareholders’ query, was referring to the steep drop in the share price of Rocket Internet, which was listed in the Frankfurt Stock Exchange.

Rocket is best known here as the company behind popular online retailers Zalora and Lazada, now controlled by Chinese e-commerce giant Alibaba.

PLDT’s investment in Rocket, which replicates successful startup models around the world and exports these to specific emerging markets outside the United States and China, was the largest tech deal made by a Filipino company when it was sealed two years ago.

PLDT paid 333 million euros (P17 billion) for a 10-percent stake, which has since been pared down to the present level of 6.1 percent after Rocket went public.

After early gains, Rocket’s share price has started declining as investors raised questions about the value of its portfolio companies. Currently, PLDT’s stake is worth a little more than half what it poured into the firm  two years ago.

PLDT, in the first quarter of 2016, booked an asset impairment charge of P1.6 billion due to the decline in Rocket’s share price. That helped pull down its net income by 34 percent to P6.2 billion.

Pangilinan said he was “in touch” with Rocket founder and CEO Oliver Samwer. He said the Rocket chief executive was “mindful” of their concerns about the Berlin-based tech company’s recent performance.

Still, Pangilinan said there was no plan for PLDT to unload its stake in the company.

“I think we should hold on to it. Oliver has gotten the message,” Pangilinan told reporters.

Starting 2015, PLDT has made investments in tech companies overseas, but of a much smaller scale. Earlier plans to make tech investments similar in size to the Rocket deal are no longer in the cards.

In March, PLDT, through its Silicon Valley-based venture capital arm PLDT Capital, closed a $5-million investment in California-based Matrixx Software, whose platform is expected to bolster the telco giant’s ability to monetize digital assets like content and services. Miguel R. Camus