PLDT subsidiary selling bulk of Rocket Internet shares

MANILA, Philippines – PLDT Incorporated is disposing of bulk of its shares in Rocket Internet SE – a German investor in technology start-ups – for a lower price of €24 (P1,545.28) per share, or a total of about €163.2 million (P10.51 billion), to partly fund its historic high capital spending budget for 2018.

The listed telecommunications giant told the local bourse on Monday, April 16, that its indirect subsidiary, PLDT Online Investments Private Limited, will accept the public share purchase offer for at least 6.8 million of its Rocket Internet shares, or about 67.4% of the total number it directly holds.

The share price of Rocket Internet during its debut on the Frankfurt Stock Exchange on October 2, 2014 was at €37 (P2,382.71) per share. Last Friday, April 13, Rocket Internet shares dipped to €24.88 (P1,601.92) each.

Back in August 2017, Rocket Internet announced the buyback of over 15.47 million shares through a public share purchase offer in the amount of €24 per share.

This was after Rocket Internet shares had been sliding since January 2015, as investors questioned the company’s strategy, Business Insider reported.

Because of Rocket Internet’s “disappointing” performance, PLDT booked P5.4 billion in impairment charges in the 1st half of 2016.

It was in August 2014 when PLDT invested €333 million ($362 million) for a 10% stake in the German firm – the Philippine telco’s biggest overseas investment to date. It was then diluted further to a 6.1% ownership stake.

Rocket Internet’s most prominent brands include leading Southeast Asian e-commerce businesses Zalora and Lazada.

“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 15.47 million Rocket shares are tendered, the Rocket shares to be sold by PLDT Online will be reduced proportionally,” PLDT said in a statement.

PLDT’s bottom line has been declining for 4 straight years since 2013 due to its “digital pivot.” (READ: PLDT’s digital pivot spills over to Japan)

PLDT chairman and chief executive officer Manuel Pangilinan said the company has earmarked a historic high capital expenditure (capex) of P58 billion in 2018, to improve its broadband and data business units.

Pangilinan had reported that PLDT’s core income for 2017 slightly declined 1% to P27.688 billion, from P27.857 billion in 2016.

Its service revenue declined to P151.16 billion in 2017, from P157.21 billion in 2016. The telco’s expenses, meanwhile, increased by 7% to P150.415 billion in 2017, from P140.56 billion in 2016.

“We are not completely out of the woods yet, but we are getting there,” the PLDT chief had said. – Rappler.com