Surprise twist: Sky Cable sale to PLDT aborted

MANILA,  Philippines  —Broadcaster ABS-CBN Corp. will now have to find a new funding source to extinguish debt as the P6.75-billion sale of the broadband business and related assets of its subsidiary Sky Cable Corp. to PLDT Inc. fell through.

The termination of the deal —announced a month after the antitrust agency Philippine Competition Commission had cleared the transaction—came as a surprise to market analysts. Shares of ABS-CBN at the stock market fell by 3 percent on news of the aborted deal.

READ: PCC approves sale of Sky Cable broadband business to PLDT

In an interview with the Inquirer, analysts expressed concerns over the potential impact of the termination on the management of ABS-CBN debt levels.

But the media company told the Inquirer, “It does not affect ABS-CBN’s ability to service our debt. We have kept all our debt payments current even after the loss of our franchise.”

The transaction—signed in March last year—would have meant P4 billion in gross proceeds for the media company, which it had earmarked to settle obligations and fund content creation.

“Obviously, they will have to look for another avenues to settle their debt obligations now that the deal has been canceled,” Regina Capital Development Corp. head of sales Luis Limlingan said.

ABS-CBN’s debt

China Bank Capital Corp. managing director Juan Paolo Colet said it was crucial for ABS-CBN to “explain how they will manage their debt load considering that the deal was supposed to pay off loans.”

READ: ABS-CBN gets debt reprieve after putting up collateral

According to the latest ABS-CBN financial report, its long-term obligations amounted to P23.81 billion as of end-September 2023.

Colet also said the media company must “promptly explain” the reason why they aborted the sale and its plans moving forward.

“It’s very surprising and many in the market were caught off-guard,” he added.

Both companies have yet to reply to inquiries as to why the agreement was scrapped.

With this, the cable TV subscriptions of existing Sky Cable customers will continue. The ABS-CBN unit was originally set to sign off by Feb. 26.

“Meanwhile, Sky’s internet broadband service Sky Fiber remains unaffected,” the company added.

Back in 2022, the Lopez group and tycoon Manuel Pangilinan had planned to join forces via P4-billion joint venture between ABS-CBN and TV5 but it was terminated after receiving backlash from certain government officials.

READ:  ABS-CBN, TV5 Network terminate deal

TV5’s Cignal Cable Corp. was supposed to invest in Sky Cable as well, but the deal was likewise called off along with the much-anticipated collaboration.

Moody’s Investors Service previously projected that PLDT would have grown its revenues by about 6 percent in 2023 to 2024 with the consolidation of Sky Cable business and its broadband revenue contribution.

As PLDT exits the Sky deal, the telco giant bought a 34.9-percent stake in Manila Electric Co. (Meralco) unit Radius for P2.12 billion last month.

Radius has a congressional franchise to construct, install, establish and operate telco services. Its fiber facilities span 150 enterprise buildings, over 200 residential villages and more than 200 villages.