PLDT (TEL) after shedding assets, buying Sky Cable from ABS?

Someone has said that in deal making, if you are a buyer pretend to be a seller and if you are a seller pretend to be a buyer.

After Business World has reported that the Philippine Competition Commission (PCC) green-lit DMC Urban Property Developers, Inc.’s acquisition of Smart Towers, the Makati-based office building assets of PLDT Inc. (TEL), another news outfit the Philippine Star/PhilStar Global has reported that MVP Group’s PLDT is vying for Lopez owned Sky Cable.

Business World and the Philippine Star are units of Hastings Holdings, Inc. and according to the disclosure in the Business World report, Hastings Holdings, Inc. – a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. — maintains interest in BusinessWorld through the Philippine Star Group, which it controls.

Hastings is a wholly-owned subsidiary of MediaQuest and holds all the print-related investments of MediaQuest, including equity interests in the three leading newspapers: The Philippine Star, Philippine Daily Inquirer, and Business World. For clarity PLDT (TEL) used to have a 70% economic interest through the Hasting PDRs but it assigned them to the PLDT Beneficial Trust Fund, thus, TEL no longer has an economic interest in the newspapers the Philippine Star, Philippine Daily Inquirer, and Business World. The PLDT Beneficial Trust Fund is the defined benefit pension plan covering all the regular and permanent employees of TEL.

Our take on the two press releases by TEL through the news outfit it presumably controls is that TEL is indeed disposing of assets to help fund its actions to address the “triple threat position” it is facing.

The disposal of the Smart Towers by TEL was an actual transaction to raise 5 Billion Pesos (as reported) . The news about the acquisition of Sky Cable could be a deal making tactic. Someone may have said in one of the tributes to TEL boss MVP that in deal making, if you are a buyer pretend to be a seller and if you are a seller pretend to be a buyer and this could be the actual exercise of that principle.

As what we commented earlier TEL is pressured to raise funds to address the “triple threat position” it is facing and there are only a few assets left that can be crystallized. One of the assets is the MediaQuest MediaQuest PDRs which is being carried in the books at 9.8 Billion Pesos as of end of 1H 2020. The MediaQuest PDRs ultimately provide TEL an enconomic interest in Cignal TV. It could be that TEL itself has been approached and pressured by a new telecom powerhouse for the sale of that unit to them and to shore up the value of that unit TEL is pretending that it is not a seller but an acquirer itself finding a weaker target in Sky Cable of ABS-CBN.

The news that TEL is acquiring Sky Cable of ABS came out of nowhere. ABS said in their disclosure clarifying the news that SkyCable has not solicited the bid to sell the company, nor has ABS-CBN Corporation made any decision with regard to a divestment of Sky Cable. That release of that news must have an intention. What it is, is worth monitoring.

Disclaimer and Disclosure: This is an independent analysis for discussion purposes with the aim of giving stock traders and investors an independent perspective.  Accuretti Systems Inc. in the course of day to day trading may have own, or is considering buying or disposing, the shares of the companies mentioned in this commentary.

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