NOW Corp blames DICT’s Rio for drop in shares, eyes charges

Ralf Rivas
NOW Corp blames DICT’s Rio for drop in shares, eyes charges

Rappler

But Information and Communications Technology Secretary Eliseo Rio Jr fires back, saying that NOW Corporation's wound could have been self-inflicted

MANILA, Philippines – The messy spat between publicly-listed firm NOW Corporation and Information and Communications Technology Secretary Eliseo Rio Jr raged on, with the former leaning toward more legal battles.

In a statement released on Monday, October 15, NOW Corporation linked the dip in its share prices to Rio’s statements regarding the case of its affiliate company NOW Telecom against the National Telecommunications Commission (NTC).

Rio said the case was delaying the selection process for the country’s 3rd major telecommunications player.

But NOW Telecom accused the NTC of inserting money-making provisions into the selection process which were not discussed during public consultations.

Miguel Lopez, investor relations head of NOW Corporation, said their lawyers are assessing the damage supposedly caused by Rio’s “reckless statements.”

The stock market is highly driven by sentiments.

Lopez particularly zeroed in on Rio’s statement suggesting that NOW Telecom’s bid to become the 3rd telco player dented NOW Corporation’s finances.

Rio highlighted NOW Corporation’s net income of P6.3 million in 2017, while the participation fee for the bid cost P1 million.

Lopez said Rio’s statement “effectively questioned NOW Corporation’s financial capacity” and led to the sharp decline of its stock prices.

NOW Corporation share prices from September 14 to October 15, 2018. Graph from the Philippine Stock Exchange website

NOW Corporation claimed that its share prices dropped sharply by 52% after Rio’s statements were published in various media outlets. 

The company closed at P5.88 on Monday.

“Mr Rio achieved his objective. He made NOW Corporation owners P7 billion poorer because of his reckless and unethical utterances which triggered the sudden decline in the company’s stock prices last October 10 and 11. It wiped out a significant part of NOW Corporation’s market capitalization in a matter of days,” Lopez said.

‘Consider the timeline’

In a text message to reporters, Rio laid out a timeline, establishing that NOW Corporation’s share prices rose after NOW Telecom announced it bought bid documents.

Rio also suggested that it was NOW Telecom’s case and not his statements that caused the free fall.

“October 8, NOW [Telecom] posted on [Facebook] that they bought bidding document[s] to join the selection process for the [new major player]. On that same day, NOW filed an injunction in court against NTC with prayer,” Rio said.

“The next day, October 9, NOW stocks increased to P8 at opening, due to news that they bought the bidding document with hashtag #getreadytorumble. However, in the afternoon of October 9, news came out that NOW filed a case against NTC and their stocks [began] to fall to P7.49,” he added.

Rio also underscored that NOW’s share prices were falling even before he made his statement.

“On October 10, when the public learned of the case of NOW against NTC, their stock drastically fell that by 12 noon the stocks plunged to P5.15 or -31%. It was only at 1:47 pm that my official statement was made in the DICT (Department of Information and Communications Technology) on October 10,” Rio said.

Jumps and dips

Looking at the year-to-date chart, it can easily be seen that NOW Corporation shares are volatile.

The company’s stock price was generally dormant in 2016 and 2017, trading at the P2 level.

But when rumors spread like wildfire in early 2018 that it is eyeing the telco space, prices jumped to almost P16. 

NOW Corporation's two-year chart. Graph from the Philippine Stock Exchange website

While some who are part of various Facebook groups on stocks and investments are eager to get a piece of NOW – even calling themselves NOWranians – investment houses seem generally cold to NOW Corporation.

None of the 4 analysts from different companies Rappler interviewed wanted to jump in on the hype.

“It’s still all about the company’s stability. It’s very risky to put money into speculation,” a source said.  Rappler.com

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author

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.