The Gokongwei group is selling more of its shares in Philippine Long Distance Telephone Co. (PLDT) to the phone firm’s principal shareholders to raise cash to bankroll new ventures.
In a disclosure, listed JG Summit Holdings Inc. said it had sent a notice of intention to exercise its “call option” to sell PLDT shares to the dominant carrier’s co-owner, NTT DoCoMo, Japan’s leading telecommunications group.
JG Summit’s call option was included in the company’s deal to sell then subsidiary Digitel Telecommunications Philippines Inc. to the PLDT group, led by Manuel V. Pangilinan.
Under this provision, JG Summit had the option to sell part of its stake in PLDT, which it received as payment for the Digitel shares it sold, to Hong Kong’s First Pacific Co. Ltd. and Japan’s NTT.
JG Summit said it wanted this condition added in the purchase agreement for Digitel to give the parent firm an easy way to monetize the PLDT shares it received. JG Summit said it planned to use the fresh funds to finance ventures in infrastructure and power generation, among others.
In its disclosure, JG Summit said it would sell 4.56 million shares in PLDT, worth P11.4 billion at P2,500 per share, to NTT.
Earlier this month, JG Summit exercised a similar call option, selling P14.5 billion worth of PLDT shares to First Pacific Co. Ltd.
Upon completion of the transaction, JG Summit will have trimmed its stake in PLDT to 17.14 million shares, or about 7 percent of PLDT’s common voting stock.
Analysts have said that the JG Summit’s sale of Digitel, which operates the Sun Cellular brand, to PLDT significantly altered the landscape of the country’s highly competitive and lucrative telecommunications market.
Earlier in the decade, Digitel pioneered in “unlimited” voice call and text message offers that significantly brought down the cost of telecom services for consumers.
PLDT and rival Globe Telecom Inc. were forced to introduce similar offers, driving profit margins down drastically.
PLDT now corners about 70 percent of the telecom industry in terms of revenue and the number of subscribers.