PLDT to buy Sky Cable for P6.75B

 

By The Manila Times

THE third time could be the charm for PLDT Inc., which has been seeking to take over ABS-CBN Corp.'s cable TV and broadband business, following an announcement on Thursday of a P6.75-billion deal for Sky Cable Corp.

In disclosures, both PLDT and ABS-CBN said the Pangilinan-led telco would be purchasing 100 percent of Sky Cable's outstanding capital stock from the broadcast network, Lopez Inc. and Sky Vision Corp.

The deal remains subject to certain conditions, including that of securing all government approvals, Sky Cable getting out of the pay TV and cable business, and focusing solely on broadband, stockholder consent, and that "no event shall have occurred that would prevent a party from fulfilling its obligations or the transactions contemplated from happening."

PLDT Chairman Manuel Pangilinan previously offered to buy Sky Cable from embattled ABS-CBN in 2020 but dropped the bid due to monopoly issues. One of PLDT's affiliate businesses is Cignal TV Inc., which also provides cable TV services.

Cignal then offered to buy 38.9 percent of Sky Cable for P2.86 billion last year as part of a deal between ABS-CBN and PLDT where both would have taken stakes in each other. The agreement, however, was called off after regulators and legislators objected.

ABS-CBN, which lost its franchise in 2020 after Congress refused to renew the authorization, is now focused on creating content and servicing former rivals such as GMA-7 and Pangilan-owned TV 5.

In its disclosure, the firm said the Sky Cable sale "was a strategic decision resulting from, among other things, the significant capital expenditure requirements of Sky Cable to maintain its competitiveness."

"The proceeds from the sale of the shares of ABS-CBN and the settlement of Sky Vision's obligations to ABS-CBN will be used by ABS-CBN to settle and fund its retirement obligations," it added.

"The sale of the company's ownership in Sky will also allow ABS-CBN to focus its resources on content creation."

PLDT, for its part, said "the proposed transaction is aligned with PLDT's mission to narrow the digital divide by expanding broadband connectivity and supports the government's push to expand the nation's digital infrastructure."

It is also "expected to benefit the existing broadband subscribers of both PLDT and Sky by strengthening and expanding the coverage of their offerings and services, particularly in remote areas, and upgrading overall customer experience through the combined expertise, resources and capabilities of PLDT and Sky."

How the cable TV business would be wound down was not detailed. ABS-CBN said the service would continue while regulatory approvals were being secured.

"Once approvals are obtained, Sky Cable is committed to working with all its cable TV subscribers to ensure a transition to their preferred service," it added.

ABS-CBN will receive approximately P4 billion for its 58.7-percent stake in Sky Cable. It will receive 94 percent of this once closing conditions are satisfied, with the rest to be paid upon delivery of registration and tax clearance certificates.

The overall purchase price was said to have been based on an agreed implied equity valuation minus Sky's recorded payables and contingent liabilities as of Dec. 31, 2022, based on Sky's latest audited financial statements and a PLDT due diligence review.

PLDT's share price fell by P10, or 0.76 percent, to P1,300 while ABS-CBN's lost 0.68 percent, or 5 centavos, to P7.26 amid a 0.95-percent drop for the benchmark Philippine Stock Exchange index.