MANILA, March 29, 2011 (AFP) - Philippine Long Distance Telephone and a key rival announced a 69.2 billion-peso ($1.59 billion) merger on Tuesday amid intense competition and falling profits.
PLDT chairman Manuel Pangilinan said his company would acquire a 51.5 percent stake in Digital Telecommunications Philippines Inc., also known as Digitel, in a share swap with principal shareholder JG Summit Holdings.
The deal leaves JG Summit with about 13.7 percent of the bulked-up PLDT. After the deal is closed PLDT will be required to make a tender offer for all remaining shares held by Digitel shareholders.
"For PLDT, this transaction fortifies its position as the leading telecommunications company in the Philippines," Pangilinan said in a joint statement.
James Go, chief executive of JG Summit, the holding firm controlled by Filipino-Chinese industrialist John Gokongwei, said the deal allows the conglomerate to remain in telecommunications.
PLDT, Digitel and Globe Telecom, a joint venture between the Philippines' Ayala Group and Singapore Telecom, dominate the Philippines' fiercely competitive telecommunications sector.
PLDT earlier reported nearly flat calendar 2010 net profits while warning of of slight profit declines in 2011 and 2012 due to intense competition. Digitel and Globe Telecom have yet to report their 2010 net profits.
Digitel and JG Summit asked the Philippine Stock Exchange to suspend trading in their shares Tuesday, while PLDT shares closed unchanged at 2,036 pesos.
