WHILE San Miguel Corp. (SMC) has been praised for the blockbuster sale for its 700MHz radio frequency to PLDT Inc. and Globe Telecom Inc., 10 minority stockholders of Liberty Telecoms Holdings Inc. (LIB), SMC’s subsidiary that owned the frequency, submitted a letter-complaint dated Aug. 25 to the Securities and Exchange Commission, Shareholders’ Association of the Philippines and to President Duterte for the paltry offer price tendered to minority shareholders to comply with the requirements to delist.
To recall, PLDT and GLO surprised the market with their individual statements on May 30 this year that both acquired full ownership of SMC’s Vega Telecom, Inc. (VTI), with each taking 50-percent stake. The main purpose of the purchase was obviously to get hold of the prized 700MHz frequency asset.
As part of the requirements for delisting, Vega has filed a voluntary tender offer of P2.20 apiece to acquire the remaining 12.82 percent or 165.88 million common shares of LIB’s minority stockholders. The tender offer period started on Aug. 24 and will end on Sept. 21, 2016.
LIB is one of five subsidiaries of VTI, which serves as the holding company for SMC’s telecom investments.
LIB is the holding firm for Tori Spectrum Telecom Inc. (formerly known as Wi-tribe) and for Skyphone Logistics Inc. (SLI). In 2005, LIB and its subsidiaries Tori and SLI suspended business operations due to lack of capital to operate and continue their business. They filed for corporate rehabilitation with the regional trial court in Makati City.
On May 12, 2015, the court gave LIB a clean bill of health to operate and continue business.
VTI engaged the services of Punongbayan & Araullo to render a “fairness opinion” on the tender offer price of P2.20 a share, or for the equivalent total amount of P364.94 million for the minority stockholders. The accounting firm even described the amount to be “above and a premium on the prospective fair value range of P0.08 to P0.33 per common share of Liberty.” The firm described the offer as “more than fair and reasonable.”
The 10 minority stockholders think otherwise, resenting vehemently the opinion. First, according to them, “For the record, in 2009, LIHI (Liberty Telecoms Holdings Inc.) became a subsidiary of San Miguel Corp., which acquired 32.7 percent of the company through Vega Telecom. In 2010, SMC in partnership with Qtel launched its 4G Wi-Tribe wireless broad band service using the frequencies owned by LTHI in the 2500 MHZ band.”
In 2015, SMC acquired full ownership of LIB. At the time, LIB was still holding the license for the 700MHz radio frequency. Moreover, 80MHz out of the 100 MHz under the 700 MHz band was then under the direct disposition of LIB, they added.
Second, the valuation made did not clearly show how the “P70-billion sale was distributed to the different SMC telcos,” they claimed.
Third, LIB should be spared from shouldering part of the P17.02 billion liabilities of Vega Telecoms. The basis of sharing, furthermore, “should not only be limited to the number of shares of each telco company of SMC but also with full consideration to LTHI’s full (ownership on the) 700 Mhz,” they added.
They ended their plea by stressing the fact that LIB was the holder of the most valuable asset of VTI—“the license over the 700 Mhz.” To them, this is “the crown jewel of the SMC telecoms entities.”
In short, LIB should be entitled to 80 percent of the blockbuster deal.
(You may reach the Market Rider at marketrider@inquirer.com.ph , densomera@msn.com or at www.kapitaltek.com)