CONGLOMERATE San Miguel Corp. (SMC) defended the nondisclosure of crucial asset reassignments in 2015 made by Liberty Telecoms Holdings Inc. before the company, along with SMC’s entire telco business, was sold to PLDT Inc. and Globe Telecom more than a year later or on May 30, 2016.
SMC wrote the Philippine Stock Exchange and the Securities and Exchange Commission in separate letters dated Sept. 8, 2016, copies of which were obtained by the Inquirer. SMC was giving its side to regulators after Liberty’s minority shareholders raised complaints about the company’s valuation in an ongoing buyout offer for their shares.
Apart from explaining its reasons for nondisclosure—which was premature information—the letters provided a glimpse into the conglomerate’s aborted telco ambitions and the massive resources it needed to get the business off the ground.
The letters also implied that Liberty continued to hold the frequencies—telco frequencies are government assets assigned to private entities—meaning these were not “canceled.”
The reassignment of valuable radio frequencies, or those in the 2500 and coveted 700 Megahertz bands potentially worth billions of pesos, was now tagged as the reason behind the “lowball” offer made by PLDT and Globe for shares held by Liberty’s minority stockholders.
The tender offer price was P2.20 a share, but a report from stockbrokerage firm Papa Securities, which has been critical of the valuation, said it should be closer to P5 each. A fairness and valuation opinion obtained by Vega for the deal said radio frequencies were not considered in Liberty’s valuation.
PLDT and Globe launched the tender offer via Vega Telecom, the SMC telco unit they jointly acquired along with two other SMC-related vehicles for P70 billion last May. The tender offer was launched last month and would be completed Sept. 21 this year, after which the delisting process for Liberty will start.
SMC told the PSE in its letter there was no need to disclose the reassignment of radio frequencies made by Liberty’s unit, Tori Spectrum Telecom Inc. (formerly Wi-Tribe Telecoms Inc.), to another Vega subsidiary, Bell Telecommunications, when it was approved by the National Telecommunications Commission in March 2015.
That was because it was still considered “soft information” at the time, given that SMC was quietly putting in place plans to launch its mobile telco business via Vega and the latter’s various units holding different spectrum assets.
“It is considered ‘soft information’ and its untimely disclosure then would not only have been premature, but would have stymied its development and implementation. More importantly, such untimely disclosure would have created undue market speculation,” SMC said in its letter to the PSE.
The centerpiece of SMC’s telco strategy involved a “Unified Rollout Plan” with BelTell at the helm, in cooperation with Tori, Express Telecoms and Hi-Frequency Telecommunications Inc via various co-use agreements.