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San Miguel buys Petron, enters telecoms venture


MANILA, Philippines - San Miguel Corp., Southeast Asia’s largest food and beverage company, went on a buying spree on Monday, announcing its plans to acquire a substantial stake in Petron Corp. and a telecommunications partnership with a Qatari company. San Miguel said it has reached an agreement to buy 50.1-percent stake of London-incorporated investment fund Ashmore Investment Management Ltd. in Petron, the Philippines’ largest oil refiner. No other details were disclosed. The company also disclosed that it has partnered with Qatar Telecom to “look into opportunities in the wireless broadband, mobile and mobile broadband businesses in the Philippines." “San Miguel believes that the Filipino consumer will be the ultimate beneficiary of its intended investments since customers will now have access to a reliable service provider offering affordable high-speed wireless broadband and communication solutions," the company said. QTel is an integrated Telecommunications player based in Qatar, operating either GSM or WiMax Services in 16 countries with a population coverage of 550 million, and a subscriber base of 55million. It is controlled by the State of Qatar. QTel envisions itself to be among the Top 20 telecom companies in the world. It recently completed acquisition of the second largest Mobile operator in Indonesia for $1.8 billion. Through its Wi-Tribe brand, the company has successfully introduced High Speed Broadband wireless (WiMax) services in a number of emerging markets. The local market was rife with rumors that San Miguel will be buying a stake in Bayan Telecommunications Inc., which has posted P2.57-billion losses for the first nine months of the year, as its vehicle to enter the local telecommunications industry. Next: San Miguel’s diversification gets mixed reactions San Miguel’s diversification gets mixed reactions Analysts gave mixed reactions to the conglomerate’s latest investments after it acquired the Government Service Insurance System’s 27-percent stake in Manila Electric Co. for P30 billion in October. San Miguel was following through with its earlier intentions to diversity into infrastructure and mining businesses, Jet Lazaro, Abacus Capital trader, said. With an ample war chest—A$325 million from the sale of Tasmanian brewer J. Boag & Son which San Miguel used to own—Lazaro said the company has the money to back its aggressive investment plans. However, he noted that the telecommunications industry may already be too crowded and its entry too late. “I think the broadband business will be like the cellular phone business later. Profits will go down once the price becomes lower owing to competition," he said. It would make sense for San Miguel to buy an existing telecommunications company instead of building the capital intensive infrastructure, Lazaro said. “It took PLDT (Philippine Long Distance Telephone Co.) years to build its infrastructure," he said. Claire Quiray, Accord Capital Equities trader, however, said San Miguel was taking advantage of low valuations of companies these days owing to the global financial crisis. She added that San Miguel was going into other growth areas besides its core food and beverages manufacturing businesses. “I don’t think they will leave their core business," she said. Last year San Miguel has announced that it will be allocating about $750 million, equivalent to a 10th of its total assets, in new businesses such as power generation and transmission, mining and infrastructure. - GMANews.TV
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