MVP-Ongpin connection: PLDT gives up Cure, Philweb

MANILA, Philippines – The previous deals between the groups of businessmen Manuel V. Pangilinan and Roberto V. Ongpin are unwinding.

After announcing in 2011 that Pangilinan-led Philippine Long Distance Telephone Co. (PLDT) is giving up the 3G license of Connectivity Unlimited Resource Enterprise Inc (Cure), which it previously acquired from the Ongpin group, on Wednesday, July 11, PLDT said it is also giving up its unit’s 27% stake in Ongpin-led online gaming firm PhilWeb Corp.

The share purchase agreement between ePLDT, the information and communications technology arm of PLDT, and Philweb represents an estimated 660% return for the Pangilinan group, stressed a statement released by the latter on July 11.

Six years ago, ePLDT acquired the 397.89 million Philweb shares for P500 million. According to the July 11 announcement, ePLDT is selling back the all its stake to Philweb at P10.70 per share or for a total of P4.25 billion.

“Having made over 660% return on its original investment in 6 years, ePLDT wanted to realize its profits,” ePLDT said.

“Philweb, on the other hand, was happy to acquire the ePLDT stake because its cash flow was sufficient to pay for its acquired shares and would therefore result in higher earnings per share for the company by reducing the outstanding shares by approximately 27%,” ePLDT added.

The ePLDT-Philweb transaction will be completed by end-2012 and executed via 4 tranches: First (on July 13) and second tranches priced the shares at P10.70 apiece, while the 3rd and 4th tranches also priced these at P10.70 but with a 3% interest per annum.

“The respective management of ePLDT and Philweb have also pledged to continue working with each other on various on mutually beneficial projects,” PLDT said.

Before Philweb, there was Cure

PLDT’s divestment in Philweb came around the same time it is finalizing its consolidation of the assets and its stake in Cure.

Cure was acquired by the PLDT group in 2008 largely for the Ongpin-led firm’s 3G license. The National Telecommunications Commission (NTC) is tasked with issuing only five 3G licenses.

Cure was established in 2001 by companies controlled by the Ongpin group as the former trade minister’s corporate vehicle for his business group’s telecommunications-related acquisitions. Cure was granted a 25-year congressional franchise in 2001, but became active only when the NTC awarded it one of the four 3G licenses in 2006. The other licenses were Globe Telecom, Sun Celluar and Smart Communications.

PLDT used Cure’s 3G license to launch Red Mobile, a mobile service that piggybacks on the infrastructure of PLDT’s mobile service unit, Smart Communications.

Following the acquisition of a controlling stake in Gokongwei-led third-liner Digital Telecommunications (Digitel) in October 2011, PLDT is required to surrender Cure’s 3G back to the NTC. Smart will instead add Digitel’s 3G in its portfolio. 

Smart will then migrate Cure’s 1.4 million subscribers into its fold and combine it with Smart’s 47.6 million and Digitel’s 14.7 million subscribers, the PLDT group commands a 70 percent control of the domestic mobile market.

PLDT has poured about P1 billion into Cure and it would likely receive an equivalent amount when Cure is sold. PLDT acquired Cure from the Ongpin group in 2008 for $10 million. – Rappler.com

Related stories: 

• Globe needs PLDT’s Cure, CEO says
• PLDT: Goodbye, CURE

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