PLDT warns SC ruling impact on share prices

Philippine Long Distance Telephone Co. (PLDT) on Wednesday warned that the recent Supreme Court ruling on foreign ownership may have a negative impact, "dramatically" weighing on its share prices. "It’s extremely disappointing personally for me as a Filipino... It would have a negative and adverse impact on the financial markets here and abroad..." PLDT chairman Manuel V. Pangilinan told reporters on Tuesday. “Our share prices dropped by P75 today. Last night, when we were tracking our PDRs share price was down by $1.52 [because of the news]." PDRs or Philippine depositary receipts represent a number of shares of stock traded in the stock market. As a negotiable certificate, the instrument allows foreigners to buy shares of restricted companies such as telcos. Pangilinan was referring to the SC ruling that ordered the Securities and Exchange Commission to fine out if PLDT violated the constitutional provision that limits to 40 percent foreign ownership of public utilities. The ruling was made in relation to the petition filed by human-rights lawyer Wilson Gamboa, who wants to annul the sale of government-acquired 111,415 PLDT shares under the name of Philippine Telecommunications Investment Corp. (PTIC) to Hong Kong-based First Pacific Co. Ltd. The transaction was valued at P25.2 billion. Other business companies are in a similar equity structure as that of PLDT that, when discovered by the market, would also have an adverse impact, Pangilinan said. "These common and preferred stocks of PLDT [are] something that we have inherited in 1998. So, PLDT lives with this common and preferred capital structure for many, many years," Pangilinan said. A game-changing rule The Supreme Court order is a "game-changing rule," he added. "… It’s not good from a foreign investors perspective to be changing rules that are important," Pangilinan said. Pangilinan said 64 percent of PLDT’s common shares are owned by foreigners, while 34 percent is owned by Filipinos. Including preferred shares, Filipinos own 87 percent and foreigners 13 percent, Pangilinan explained. "How you will bring it to 40 percent? ...Twenty-four percent of the shares must be divested. Who will buy these shares? Are there enough funds from the local investors? [PLDT share prices are] going to go down dramatically," Pangilinan asked. "I don't understand why we are committing economic suicide," he added. In a related development, Pangilinan said PLDT has extended its deadline for regulatory approval to no more than one month. "We are speaking to Digitel [Digital Telecommunications Phils. Inc.] about extending the June 20 deadline. Digitel understands why there is a delay," Pangilinan said. The National Telecommunications Commission has extended the hearings on the PLDT-Digitel transaction after the request of second-ranked Globe Telecom Inc. The next hearings are scheduled for July 5, 7, 12 and 14. PLDT is buying 51.5 percent of Digitel from JG Summit Holdings Inc. in a share swap deal valued at P69.2 billion. — VS, GMA News