MANILA: Debt-laden Deutsche Telekom AG stepped up its pullout from Asia yesterday by offering its US$427mil stake in Globe Telecom Inc to other major shareholders of the second largest phone company in the Philippines.
Globe said Deutsche offered to sell its entire stake to Singapore Telecommunications Ltd (SingTel), which now holds 29.1%, and Philippine conglomerate Ayala Corp, which owns 32.7%.
No offer price has been disclosed but, at Globe's current market capitalisation, Deutsche's 24.8% holding is worth about 23 billion pesos.
Analysts said they expected SingTel and Ayala, which have the right of first offer for 45 days, to show strong interest.
“SingTel would probably go for it,” said Himanshu Chaturvedi, an analyst with DBS Vickers Securities. “It would really be positive if they can raise their stake in a company with a lot of growth momentum.”
Given the 40% foreign shareholding limit in Philippine phone companies, SingTel could buy only 11% to 12% of Deutsche's stake.
“That works out to a price tag of S$346mil, which SingTel could well afford,” Chaturvedi said, adding that SingTel was expected to generate S$2.33bil in free cash-flow in the current year.
But a higher stake in Globe may not be that significant for SingTel as it only contributes about 12% to the firm's associate earnings.
SingTel and Ayala are seen having little trouble coming up with the cash, although Ayala is also trying to reduce debt.
The German telecoms giant, under new chief executive Kai-Uwe Ricke, is trying to further cut its debt of 56.3 billion euros, much of it built up during a global acquisition spree at the height of the telecoms boom.
It has already raised 4.9 billion euros through asset sales and aims to cut the debt to about three times core earnings or 50 billion to 53 billion euros by the end of this year.
Deutsche sold its 6% stake in Malaysian cellular operator Celcom for US$114mil earlier this month and sold its 25% stake in Indonesia's second largest mobile firm, Satelindo, in May 2002 for US$325mil. – Reuters