GMA7-TV5 Merger: PLDT in Talks With Banks to Fund the Acquisition

PHILIPPINE LONG Distance Telephone Co. (PLDT) has begun approaching creditors to prepare for plans to acquire GMA Network, Inc. after already raising funds from an asset sale, a ranking official yesterday said.

“We are talking to our bankers,” PLDT Chairman Manuel V. Pangilinan told reporters in a chance interview.

“We are preparing [funding] in the event that the deal materializes,” Mr. Pangilinan added, referring to ongoing talks to buy into broadcaster GMA Network.

The bulk of the funding, however, will come from PLDT’s cash flow, Mr. Pangilinan said.

Already, PLDT has raised some P4 billion after divesting its 27% stake or 397 million shares in PhilWeb Corp. at P10.70 apiece.

Mr. Pangilinan said negotiations with major shareholders of GMA Network continues, reiterating that his camp is still hoping that a deal will be closed within the year.

“It is still under discussion. The time table is beyond our control. [A deal before year end] is what we would like to see,” Mr. Pangilinan said.

The acquisition of GMA Network will help his business adjust to the changing landscape of the telecom industry, he said.

“PLDT has a choice of staying as a highway… providing access [to content]. But as you know, technology on the access side of telcos is changing drastically,” he said.

PLDT said it was looking to book P37 billion in core net income this year, 5.13% lower from last year amid tight competition in the telco industry and lower margins in the broadband business.

“At the same time, the layer above us, the Internet… is something that we perceived to be a threat in the long term. We thought that we should get into the content production layer and integrate the highway with content production,” he added.

In the meantime, PLDT is still deciding on which investment vehicle it will use if its acquisition of GMA Network pushes through.

“It think the ePLDT Corp. could take up the PDRs (Philippine Depository Receipts) since GMA has PDRs structure,” he said when asked if the company preferred to use another unit, Mediaquest Holdings, Inc., as the investment vehicle.

Mediaquest Holdings already controls Associated Broadcasting Co., the operator of broadcaster TV5. Mediaquest Holdings also has a minority stake in BusinessWorld and reportedly in other broadsheets.

Shares of PLDT slid by 0.37% to P2,696 apiece while GMA stood unchanged at P10.30 yesterday. -- Cliff Harvey C. Venzon

SOURCE: bworldonline.com

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