Philippine Long Distance Telephone Company (PLDT) has reportedly sold a stake in the company to a local affiliate BTF Holdings. The move is in order to comply with yesterday’s ruling from the Supreme Court that upheld an earlier investigation into concerns that the carrier was in breach of foreign ownership rules. Last year, the Filipino court adjudged that only voting shares should be considered when determining the precise level of foreign ownership in domestic companies – currently capped at 40% for public utilities. Under this definition PLDT is technically 64% owned by foreign investors, and following this week’s ruling, PLDT has apparently issued ‘redeemable preferred shares with full voting rights’ to dilute its foreign ownership. As such, today the telco offloaded 150 million shares to BTF Holdings, a subsidiary of its Beneficial Trust Fund, for PHP150 million (USD3.61 million), increasing local ownership of its voting shares to 64% from 41%, and diluting foreign ownership to 36% from 59%.
As reported by TeleGeography’s CommsUpdate, earlier this week the Supreme Court ruled that PLDT breached the 1987 Constitution where it concerns a 40% cap on foreign firms owning stakes in public utilities. Associate Justice Antonio Carpio confirmed: ‘There is no dispute, and respondents do not claim the contrary, that foreigners own 64.27% of the common shares of PLDT, which class of shares exercises the sole right to vote in the election of directors, and thus foreigners control PLDT.’ The decision asserted that with a 35.73% holding of PLDT common shares, ‘Filipinos do not control PLDT’ – contrary to local laws.