PLDT raising cash, unloading stake in Germany’s Rocket Internet
Telco giant PLDT Inc. announced the beginning of its exit from Germany’s Rocket Internet as it seeks to raise money to finance its historic capital spending of P58 billion in 2018.
PLDT told the Philippine Stock Exchange on Monday that it committed to sell around 6.8 million of its shares back to Rocket Internet for about 163.2 million Euros (P10.5 billion).
This amounted to over half (or 67.4 percent) of its roughly 10.1 million shares in the company, which recently announced the buyback of up to 15.47 million shares at 24 Euros apiece. PLDT, through PLDT Online, currently owns about 6.1 percent of Rocket Internet.
PLDT first invested in Rocket Internet in 2014, lured by the company’s ambitious goal of rapidly replicating successful startups models and rolling these out in emerging markets.
At an investment of 333 million Euros, it was hailed as the largest-ever overseas tech investment by a Philippines-based company. With the current buyback price, PLDT is selling its shares at a roughly 27 percent loss.
Among Rocket Internet’s businesses at the time were online retailers such as Lazada and Zalora. But stiff competition prompted it to change course. It sold Lazada to China’s Alibaba Group in 2016. Last year, the Ayala Group acquired a 49 percent state in Zalora Philippines.
By 2016, PLDT chair and CEO Manuel V. Pangilinan was describing the investment in Rocket Internet as “disappointing.”
In its PSE disclosure, PLDT noted that it has yet to finalize the final number of shares to be sold.
“The final number of PLDT Online tendered shares accepted by Rocket will be determined after the offer period which is expected to end on May 2, 2018. If greater than 15,472,912 Rocket shares are tendered, the Rocket shares to be sold by PLDT Online will be reduced proportionally,” PLDT said in the filing.
PLDT had been hinting at a sale since late 2017. This was because of plans to pour larger investments into its network infrastructure given increasing demands for better internet services and the specter of a new market challenger entering within the year.
The Philippine government is currently drafting the rules toward the selection of a new major telco player, with a radio frequency bidding exercise scheduled around the middle of 2018.
The objective is to break the PLDT and Globe Telecom duopoly, which the administration blames for the poor quality of telco services in the country.
