If you find it hard to compete against a rival, then buy it.
Philippine Long Distance Telephone Company (PLDT) [PSE symbol: TEL] offered to but a total stake of 3.28 billion shares, or 51.55 percent, of Digital Telecommunications Philippines Inc. (DIGITEL) [PSE symbol: DGTL] valued at P74.1 billion. It represents the stake of JG Summit Holdings Inc. (JGS) and other parties who agreed to sell. PLDT also plans to buy the rest of Digitel.
PLDT plans to issue new shares at P2,500 each to raise money for the purchase. The purchase includes zero-coupon convertible bonds representing 18.6 billion Digitel shares by June 30 that JGS bought.
In 2004, Digitel triggered competition and eroded margins at PLDT and Globe Telecom Inc. (Globe) when it offered plans with unlimited calls and text messages. Its profit surged 65 percent, outpacing PLDT's 1.1 percent and Globe's 23 percent drop in net income.
Source
Bloomberg, with Jeremiah De Guzman: "PLDT to buy Digitel for P74b," Manila Standard Today 30 March 2011
Source
Bloomberg, with Jeremiah De Guzman: "PLDT to buy Digitel for P74b," Manila Standard Today 30 March 2011
