Capital restructuring eyed to address PT&T debt woes

Listed Philippine Telegraph & Telephone Corp. (PT&T) is poised to implement a capital restructuring plan that would settle long-running obligations ahead of the entry of a foreign strategic partner.

A key feature of the plan, according to PT&T chief operating officer Miguel Bitanga, is the conversion of its creditors into preferred shareholders, which was outlined under the company’s court-mandated rehabilitation.

This was linked to a series of steps, including increasing PT&T’s authorized capital. This would pave the way for the entry of a strategic partner, deemed crucial in PT&T’s goal of becoming a third telco player to challenge incumbents PLDT Inc. and Globe Telecom.

“This is one of the things we are now resolving, the debt situation,” Bitanga said.

PT&T chair Salvador B. Zamora II earlier told the Inquirer that PT&T, established in 1962 and was once a rival to telco giant PLDT Inc., had accumulated debts of about P12 billion under its previous owners.

When Zamora’s group took over in the middle of 2017, it tapped SGV & Co. to conduct an audit on PT&T for its capital restructuring, Bitanga said.

“SGV is wrapping up its audit. Then we can meet with the PSE [Philippine Stock Exchange] and discuss the next steps,” he said.

He said PT&T was still in talks with foreign groups for tie-ups.

Asked about a [GMA News Online] report on the company having advanced talks with a Korean telco, Bitanga said this was for a “specific purpose” and not necessarily for the latter to be its operating partner.

He declined to name the Korean group. However, Zamora earlier told the Inquirer that PT&T was in talks with South Korea’s LG Plus, part of South Korean conglomerate LG Corp.

Bitanga said PT&T also remained in talks with China Telecom, which was named by the Duterte administration as China’s candidate amid calls for a third telco player in the Philippines.

PT&T, which has fixed-line internet operations in Metro Manila and is eyeing to eventually enter the mobile business, is among several local groups vying for this status, given the current administration’s desire for more competition in the telecommunications space.

Incumbents PLDT and Globe Telecom, aware of the looming threat, said they would ramp up spending to bolster their networks, especially in terms of high-speed mobile and fixed internet.

PLDT earlier said it would raise capital spending in 2018 to P50 billion while Globe will spend $850 million (P42 billion) this year.