SingTel – BT

SingTel raises stake in Globe to 47.34%

SINGAPORE Telecom is raising its stake in associate Globe Telecom to 47.34 per cent from 44.47 per cent.

In a statement yesterday, SingTel said that it will pay Ayala Corporation 4,598 million pesos ($140 million), or 1,210 pesos per share, for 3.8 million shares in Globe, the second largest telco in the Philippines.

According to Bloomberg, Ayala owned 33.3 per cent of Globe before the deal.

SingTel said that the price was arrived at on a willing-seller willing-buyer basis, taking into account projected future cash flows, comparables and the prevailing market price.

On Thursday, the closing price of Globe on the Philippine Stock Exchange was 1,185 pesos.

SingTel bought its initial 44.47 per cent stake in Globe in 1993 for $882 million.

‘This transaction is in keeping with our strategy to increase our holdings in our regional associates when the conditions are right,’ said SingTel spokesman Chia Boon Chong.

SingTel has said that its acquisition strategy is to raise stakes in associates or invest in new markets, focusing on Asia.

In September last year, SingTel spent $1.17 billion on a 30 per cent stake in Warid Telecom, Pakistan’s fourth-largest mobile operator, with 14 million customers.

For SingTel’s financial year ended March 31, 2008, Globe’s pre-tax profit contribution to the group was up 9.4 per cent to $317 million, benefiting from 8 per cent appreciation of the peso.

For the first quarter of 2008, Globe reported core net income of 3.5 billion pesos, down 4 per cent as customers cut spending while struggling to cope with rising food and fuel prices.

Globe president Gerardo Ablaza said in April that sales were weakening and it would be difficult to match last year’s double-digit growth rate.

The Philippines’ economic growth is expected to ease from last year’s 31-year high of 7.3 per cent as a possible recession in the US, its main trading partner, hits exports and as rising inflation crimps consumer spending.

The World Bank expects growth in the Philippines to slow to 5.9 per cent this year.

But the economic slowdown has not dampened new cellphone subscriptions. Globe’s mobile subscribers rose 26 per cent to 21.3 million from a year ago.

Globe has 38 per cent of the Philippine mobile industry, against rival PLDT’s 55 per cent.

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