Corporate watchdog slaps fine on Liberty Telecoms for non-disclosure

The Securities and Exchange Commission ruled that Liberty Telecoms Holdings Inc. committed non-disclosure violations when it made public a crucial telco frequency sharing deal more than 16 months after it was approved by the National Telecommunications Commission.

The decision was delivered on the same day a controversial tender offer for Liberty’s minority shareholders, who held almost 13 percent of the company, was completed on Oct. 20.

For failing to disclose material information, Liberty would be fined a total of P346,000.

The SEC arrived at that figure by explaining it was Liberty’s first offense, meaning a basic P100,000-fine plus P500 per day for the 492 days of continuing violation.

Liberty, however, was allowed to conclude its tender offer, despite complaints raised by the minority shareholders over the “lowball” tender offer price of P2.20 per share.

The minority shareholders, who were banking on a third-party fairness opinion to consider Liberty’s valuable telco frequencies, including those in the 700 Megahertz band, said the fair offer price should be closer to P5 per share. No value was assigned, as the SEC took the view that radio frequencies could not be valued unless used. Liberty’s frequency assets were not being used at the time of the sale.

The tender offer ended at noon on Thursday. The SEC allowed its conclusion even as it seemed to agree with minority shareholders that “material” information was withheld “which would reasonably be expected to affect the investors’ decisions ” in relation to their Liberty investment.

Liberty disclosed Friday it was considering delisting from the PSE by Nov. 21.

The tender offer was triggered after Liberty owner Vega Telecom said the company would be taken private. Vega is the unlisted telecommunications holding company that conglomerate San Miguel Corp. sold to PLDT Inc. and Globe Telecom for almost P70 billion on May 30. It was the same entity that launched the tender offer.

The tender offer was originally slated to end last month. However, complaints raised by the minority investors prompted the SEC to require the disclosure of more information, including the co-use agreement of Liberty’s telecommunication frequencies.

Since the co-use happened while Liberty was still owned by San Miguel, the conglomerate wrote the SEC to say that no disclosure was made given that the co-use, which was approved on March 2015, was still considered “soft information” at the time.

SMC was seeking to challenge the PLDT- Globe Telecom duopoly, with particular focus on the lucrative mobile broadband sector. It argued that disclosing the co-use would have “stymied its development and implementation and such untimely disclosure would have created undue market speculation.”

That plan did not push through after SMC’s prospective partnership with Australia’s Telstra Corp. collapsed and the conglomerate sold its telco business to PLDT and Globe.

In its decision, the SEC said the claim that a disclosure was premature was “without merit” since the co-use was already cleared by the NTC.

“The information or fact of the reassignment is already considered a material fact which would reasonably be expected to affect the investors’ decisions in relation to LIB’s [Liberty] securities,” the SEC said.