San Miguel Corp., the Philippines’ largest company, moved to shore up investor confidence after a planned US$1 billion wireless telecom venture with Australia’s Telstra collapsed Monday.
Liberty Telecoms Holdings Inc., San Miguel’s listed vehicle for the deal, plunged 16 percent on volume that rose more than six times the three month full-day average, Bloomberg reports.
In Sydney, Telstra shares gained 2.3 percent.
San Miguel President Ramon Ang said the group remains on track to begin providing wireless phone and high-speed internet services with Telstra offering support.
He said it will consider other joint-venture opportunities for its telecommunications business but is “not rushing.”
PLDT and Globe, the Philippines’ two established phone companies, surged on expectations the collapse of Telstra-San Miguel joint venture will weaken the latter’s ability to compete for wireless users.
PLDT surged 12 percent, the most since 2011. Globe rallied 7.9 percent, the sharpest gain since June 2013.
San Miguel built a phone network with Telstra’s help to challenge PLDT, the former telephone monopoly, and Globe, the nation’s only other wireless carrier.
“The discontinuation of talks between Telstra and San Miguel will delay the entry of a formidable third telco into the Philippines’ market,” Fitch Ratings Inc. said in statement. This will support the credit strength of Philippine Telephone and Globe in the short term, Fitch said.
San Miguel and Telstra had worked hard on the deal before agreeing they could not continue talks, Ang said.
Telstra chief executive Officer Andy Penn said the two companies lacked “commercial arrangements that would have enabled us all to proceed”.
PLDT and Globe have raised capital spending to boost their digital network capacity in anticipation of San Miguel’s entry.
They have also asked the government to reallocate the 700 megahertz spectrum, which has been largely assigned to companies related to San Miguel.
Ang in November said PLDT and Globe have more than enough frequencies between them and all they need is to improve what they have.
“Without Telstra, the perception in the market is that San Miguel’s telco venture will not be as great, since Telstra has the technical expertise,” said Rafael Palma Gil, Manila-based trader at Rizal Commercial Banking Corp, which has US$1.72 billion in assets under management.
“The announcement is definitely feeding the positive sentiment on PLDT and Globe. These stocks have underperformed in the past few months because of cloud over the industry by the threat of a third player entering the market.”
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