San Miguel's Liberty Telecom searching for new head

By Mary Ann Ll. Reyes, The Philippine Star

Posted at Jan 20 2011 07:44 AM | Updated as of Jan 20 2011 03:44 PM

MANILA, Philippines - The much awaited fourth telecommunications player in the country is now looking for a new leader who can navigate it through the rough waters of the highly competitive telco industry.

The board of Liberty Telecoms Holdings Inc. (LTHI), a subsidiary of diversifying conglomerate San Miguel Corp. (SMC), announced yesterday that it has accepted the resignation of its president and chief operating officer Anastacio “Boy” Martirez, and that it has directed its nomination committee to search and identify a successor.

Martirez, former marketing head of Smart Communications, tendered his resignation from all positions he held at LTHI, including as board director.

Martirez is a nominee of Qatar Telecom (Qtel) – SMC’s foreign partner in LTHI –

LTHI said it was informed that Martirez has accepted a position with the Greater Asia region of Qtel and that as part of this transaction, he had tendered his resignation from all his positions, which includes his positions as director, president and COO of LTHI.

There are rumors that a foreigner is being eyed to replace Martirez, but the Philippine Constitution requires that all the executive and managing officers of a public utility enterprise must be Philippine citizens.

Asked for comment, an SMC official said the foreigner, reportedly a Norwegian, will just be a consultant for the company.

In the same board meeting, LTHI’s directors resolved to amend the company’s articles of incorporation to increase the number of board seats from seven to nine, and to amend the by-laws in order to provide indemnification to directors and officers.

Meanwhile, the board also accepted the resignation of Aida German as treasurer, with the qualification that she shall continue to occupy the position of director for finance. Paul Bernard Causon was elected treasurer.

Analysts said as a fourth player in the highly competitive telecommunications industry, much is expected from SMC, and many wonder how it will be able to offer anything new to a market that seems to already have everything.

But SMC president Ramon Ang said he is optimistic about prospects for their group in the telco industry.

He told The STAR that the Philippine telecom industry remains a highly profitable industry with 65% EBITDA (earnings before interest, taxes, depreciation and amortization) margins due to very limited competition.

“There has been no material market share changes over the last four years and the industry continues to be dominated by two players who control over 90% of revenues,” he said.

Ang pointed out that the telco industry is ripe for a new entrant like SMC who would take advantage of its distribution scale and local market knowledge.

“San Miguel is well positioned to launch its mobile broadband services given its access to various fourth-generation frequencies allowing it to provide LTE (long term evolution) – the newest standard in mobile network technology-services for the benefit of its voice and data customers,” he said.

Ang stressed that the market outlook would drastically change in 2012 when SMC completes its rollout. “The Filipino telco consumer will be the ultimate beneficiary with a highly reliable and intelligent network, significantly superior services, and faster connectivity,” he said.

SMC’s wholly-owned subsidiary Vega Telecom owns 39.3% of Liberty Telecom although there are plans to increase this further to 49%.

Vega also recently acquired 100% of AGN Philippines Inc. (AGNP), a company that owns around 40% of Eastern Telecommunications Philippines Inc. (ETPI),

ISM Communications Corp., a company controlled by businessman Roberto “Bobby” Ongpin, sold 100% of the outstanding and issued capital of AGNP to Vega Telecom following the execution of a share purchase agreement last Dec. 30, 2010.

When asked whether ISM, which owns 77% of ETPI, plans to sell its remaining stake to the SMC Group and when, ISM president Eric Recto told The STAR that this matter is still being studied.

Recto, in an earlier interview, said ISM intends to sell its entire stake amounting to 77% in Eastern to SMC.

SMC has also signed a memorandum of understanding (MOU) to acquire a stake in Express Telecommunications Inc. (Extelcom), another telco controlled by Ongpin. “We’ve signed a memorandum of understanding to the deal, but the seller undertakes to clean up the company before we finally come in,” Ang said.

Asked recently when the Extelcom sale is going to take place, Recto said no decision has been made.

SMC, also through Vega, earlier acquired a controlling stake in Bell Telecommunication Philippines Inc. to beef up its telco investments with a cellular network service.

Vega subscribed to new shares of stock of Two Cassandra-CCI Conglomerates, Inc. (TCCI), Perchpoint Holdings Corp. (PHC) and Power Smart Capital Limited (PSCL). Through these subscriptions, Vega shall own up to 75% of the outstanding capital stock of the said corporations. TCCI, PHC and PSCL collectively own 100% of the outstanding capital stock of BellTel.

Earlier, Ang told The STAR that SMC wants to position itself as a very strong player in the local telecommunications industry in a bid to further improve telco services in the country and bring down rates to more affordable levels.

SMC’s acquisition of a stake in Liberty allowed it to go into wireless broadband given its frequencies, but the acquisition of Extelcom would allow it to get a cellular license. Eastern, meanwhile, will provide the backbone.

He explained that there is room for a significant fourth player in the telecommunications industry and the cellular mobile telephone system (CMTS) business, as well as for improved telecommunications services and rate.