corpfin report

7/18/2019 Corpfin Report

http://slidepdf.com/reader/full/corpfin-report 1/18



FACTS:

On March 29, 2011, PLDT, JG Summit Holdings, Inc.

("JGS"), Express Holdings, Inc., Solid Finance (Holdings), Limitedand Mrs. Elizabeth Yu Gokongwei entered into a Sale andPurchase Agreement under which PLDT agreed to purchase3,277,136,882 shares of common stock of Digitel, representingapproximately 61.65% of the issued and outstanding capital stockof Digitel. Apart from the Digitel shares, PLDT purchased the

following assets:a) Convertible Bonds which, at the option of the holders,are convertible or exchangeable into common shares in thecapital stock of Digitel at the per value of P 1.00 per share;and

b) Advances made by JGS to Digitel, amounting to PhP34,118,544,087.00 including accrued interest as of December31,2010.

In payment of the total consideration of PhP69, 198,024,410.00,PLDT agreed to issue 27,679,210 new shares of common stock atthe issue price of PhP2, 600 per share.



STRUCTURAL

and

STRATEGIC

BARRIER



Barriers are necessary to consider

when assessing dominance, whendetermining whether unilateral

conduct might deter new firms from

participating in a market, and whenanalysing the likely competitiveeffects of mergers, to name a few

examples.



Entry barriers can retard, diminish, orentirely prevent the market’s usual

mechanism for checking marketpower: the attraction and arrival of

new competitors.



Structural barriers

●Structural barriers have more to do with basic industryconditions such as cost and demand than with tactical actions

taken by incumbent firms.

Structural barriers may exist due to conditions suchas economies of scale and network effects. Sometimes it is

possible to quantify these kinds of barriers because it isknown in advance how much it will cost to build an efficient

plant or to purchase necessary inputs.



Sec. 19, Article XII of the 1987 Constitution states:"The State shall regulate or prohibit monopolies when the

public interest so requires. No combinations in restraint of tradeor unfair competition shall be allowed.“

Article 186 of the Revised Penal Code :"Monopolies and Combination of Trade", states that penalties shall

be imposed upon:

1. Any person who shall enter into any contract or agreement orshall take a part in any conspiracy or combination in the form ofa trust or otherwise, in restraint of trade or commerce or toprevent by artificial means free competition in the market;

2. Any person who shall monopolize any merchandise or object oftrade or commerce, or shall combine with any other person orpersons to monopolize said merchandise or object in order toalter the price thereof by spreading false rumors or making useof any other artifice to restrain free competition in the market;xxxxxxxxxx



Strategic barriers

Strategic barriers are intentionally created

or enhanced byincumbent firms inthe market, possibly for the purpose of

deterring entry .



Predatory acquisition

This involves taking over a potential

rival by purchasing sufficient shares to

gain a controlling interest, or by a

complete buy-out.



ABS CBN Mobile's

Network-sharingagreement with Globe

Telecom



ABS CBN Mobile

●

it is the mobile telephone brand of ABS-CBNConvergence, a telecommunications arm of ABS-CBNCorporation, operating as a mobile virtual networkoperator through the network infrastructure of GlobeTelecom. Its services includes SMS, voice, and mobileinternet along with the exclusive access to ABS-CBNcontents through the IWanTV! app. It was launchedon November 16, 2013 at the Smart Araneta Coliseum, with the initial 100,000 sim cards given for free to the

survivors of Typhoon Haiyan that hit the country. Asof 2014, ABS-CBNmobile has 537,000 subscribers



●

It is said the partnership with Globe, which is thefirst of its kind in the Philippines would give ABS-CBN an important foothold in the mobile mediasector. This would be important once digital TV

services are launched by local media networks.

● Users with digital TV-enabled devices will be ableto receive free TV signals on their smartphones or

tablets that uses ABS-CBNmobile services



● The partnership will see ABS-CBNcapitalize on its strength in creating and

delivering content, while riding on theGlobe Telecom backbone. This enablesboth firms to reach new markets and have a

wider audience base.



● The partnership will see ABS-CBN capitalize on

its strength in creating and delivering content,

while riding on the Globe Telecom backbone.

This enables both firms to reach new marketsand have a wider audience base.



Eastern Communications



● Eastern Communications

●

Eastern Communications was establishedmore than 130 years ago when the SpanishGovernment commissioned EasternExtension to provide the country’s first

telegraphic services.● Today, Eastern Communications has evolved

into a full service provider of world-classtelecommunication services of Internet,

Data, full-service Telephony and business-enabling solutions.



Structural Barriers● Before Eastern Telecommunications was

able to provide its services to the general

public. They are required by law to securea “Certificate of Public Convenienceand Necessity(CPCN)” issued by theNational Telecommunications (NTC).

● It is a type of regulatory compliancecertification for public service industries.



Sources

● http://www.oecd.org/competition/merge

rs/37921908.pdf● http://www.economicsonline.co.uk/Busin

ess_economics/Barriers_to_entry.html

● http://www.abs-cbnnews.com/business/05/28/13/abs-

cbn-globe-ink-sharing-agreement

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