Philippines: PLDT, Globe buy $1.5 billion San Miguel telecoms assets

The Philippines’ two main telecoms firms together agreed to buy conglomerate San Miguel out of the sector for $1.5 billion, pledging to invest heavily to boost snail-pace internet service in the country’s biggest deal in nearly three years.

Shares in both Philippine Long Distance Telephone and Globe Telecom Inc jumped after they said they will buy San Miguel’s telecoms units in a 50-50 purchase valued at $1.48 billion. The pair will finance the deal via debt and asset sales.

San Miguel’s move to pull out of what was a fledgling business for the food-to-power group is subject to regulatory clearance and comes more than two months after talks on a joint venture with Australia’s Telstra collapsed. San Miguel said it plans to allocate proceeds to other infrastructure projects.

The deal also follows hard on the heels of president-elect Rodrigo Duterte’s warning that he may ease rules on foreign ownership of firms to stoke one of Asia’s fastest-growing economies, plagued by chronically slow web speeds. But it also cements the grip of a pair that effectively control all of a market worth about $6 billion by annual revenue, raising the bar for potential new entrants.

“It’s not that easy to come in,” Wilson Sy, director of Manila-based fund manager Philequity Management Inc. “Capital expenditure is so huge…Additional players will find it difficult versus those who are entrenched.”

Full Content: Reuters

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