After being publicly questioned by lawmakers and the telco regulator, media conglomerates ABS-CBN Corp. and PLDT Inc. have decided to end their investment deals that supposedly amounted to billions of pesos.
The deals that have been terminated involve the following: the acquisition by ABS-CBN of 34.99 percent of total voting and outstanding capital stock in TV5 Network Inc., a PLDT unit, for P2.16 billion; and the P2.86-billion investment by Cignal Cable Corp. into Sky Cable Corp.
The two contracts also carried 8-year maturing deals amounting to P11.5 billion in convertible notes and debt instruments. These have been terminated as well.
“The termination was formalized through a memorandum of agreement. The parties confirmed that they have not implemented any of the transactions covered by the Sale and Purchase Agreement and the debt instruments agreement,” a disclosure read.
Last week, the two companies said they decided to temporarily suspend the investment deals, as the National Telecommunications Commission (NTC) and lawmakers raised issues on the legality of the transactions.
Sagip Partylist Rep. Rodante Marcoleta, who claimed during the elections that he killed the franchise of ABS-CBN, earlier called on the NTC and the Philippine Competition Commission to review the deals.
Zamboanga Sibugay Rep. Wilter Palma also filed a resolution to conduct a legislative inquiry on the franchise of TV5 for possible violations.
NTC Commissioner Gamaliel Cordoba said the agency will look into the partnership agreement, noting alleged violations of ABS-CBN.
‘Alternate strategy’
When sought for comment on the impact of the termination of the deals, Regina Capital and Development Corp. Managing Director Luis Limlingan said the two groups can explore other methods to optimize synergies.
“Well, I guess for one the two groups will not be able to share their respective programming yet, which would have been beneficial to SkyCable and Cignal probably. They may just have to look for an alternate strategy to do so,” he said.
Terry Ridon, Infrawatch convenor, said the termination of the deal was an “unfortunate development” and bodes ill for the future of business, governance and talent in the Philippines.
“It shows how extraneous factors can terminate initiatives which could have raised our standards of public service, culture and innovation. This also serves as a warning to business: that free enterprise will only be free if businesses align with the politics of those in power,” he said.
“This is not the governance climate that the country needs today, particularly at this time of great economic difficulty. With this development, investors looking at the Philippines as a prospective investment destination will might as well bring their funds to other emerging economies with a better governance outlook.”