Smart required to conduct IPO under new franchise
SMART Communications, Inc. will be required to conduct an initial public offering (IPO) in the next two years, once the extension of its legislative franchise is signed into law by President Rodrigo R. Duterte.
The House of Representatives adopted the Senate-approved version, which among others required PLDT, Inc.’s wireless subsidiary to conduct an public offering of at least 30% of its authorized capital stock in any securities exchange in the country within two years from its effectivity.
The House version earlier effectively removed the IPO requirement by including the phrase: “unless the grantee is wholly owned by a publicly listed company.”
“The Senate introduced amendments to the House- approved version and the House concurred with the Senate- approved version,” a representative from the office of Senator Grace Poe, who chairs the Senate Committee on Public Services, told BusinessWorld. This was also confirmed by Senate public services committee secretary Antonette B. Cordero.
The extension of Smart’s franchise by another 25 years was sent to Malacañang for Mr. Duterte’s signature on March 23. Smart’s legislative franchise expired on March 27.
The Senate- approved bill also deleted the term “co-use” in the application of the franchise so that the word would not be invoked in anticompetition practices, recognizing the duopoly of Smart and rival Globe Telecom, Inc.
The Senate also amended the equality clause introduced by the House, which would allow Smart to enjoy future incentives that will be granted to new players.
“Any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or which may hereafter be granted under prior review and approval of Congress, shall become part of this franchise and shall be accorded immediately and unconditionally to the herein grantee: provided, that the foregoing shall neither apply to nor affect provisions of telecommunications franchises concerning territory covered by the franchise, the life span of the franchise or the type of service authorized by the franchise,” the equality clause read.
Sought for comment, Smart, through PLDT, said it will “defer comment on this matter.”
PLDT has earlier maintained there is no need for its wireless subsidiary to conduct an initial public offering, saying “the listing obligation has been complied with when PLDT, a listed company with a public float of over 50%, acquired 100% of Smart Communications in March 2000.”
The House of Representatives approved House Bill ( HB) Number 4637 or “An Act extending for 25 years the franchise granted to Smart Communications, Inc. on Jan. 16, while the Senate approved its version on March 13. The Senate version was sent back to the House on March 14. The House “concurred with the Senate amendments” on HB 4637 on March 15.
Luis A. Limlingan, business development head at Regina Capital Development Corp., said on Thursday the potential public offering of Smart “may affect” its parent firm PLDT “negatively.”
“Smart, I think, is the more profitable business versus PLDT. I think most investors find Smart more attractive over PLDT so it may affect PLDT negatively,” Mr. Limlingan said in a mobile phone reply when sought for comment.
“Of course the public would like another IPO. I think listing would be good for the general public so that utility companies such as these would be very transparent with the dealings. It will also give the fair value of Smart as the standalone franchise instead of it being bundled with the rest of the PLDT group,” he added.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls.