Jan. 26 (Bloomberg) -- Philippine Long Distance Telephone Co., the biggest company by weighting in the benchmark stock index, sank the most in five months before issuing new shares to fund a stake in Digital Telecommunications Philippines Inc.
PLDT fell 4.5 percent to 2,652 pesos, the steepest drop since Aug. 9 and the biggest drag on the Philippine Stock Exchange Index, which lost 1.3 percent. The stock rose to 2,868 pesos on Jan. 20, the highest level since March 2008, surpassing 12 of 13 analyst share-price estimates compiled by Bloomberg.
Manila-based PLDT acquired Digital Telecom in October in a bid to counter competition from Globe Telecom Inc., a venture of Singapore Telecommunications Ltd. Earnings in the three months ended Sept. 30 dropped the most in three quarters as a stronger Philippine peso hurt sales. The purchase of Digital, initially opposed by Globe, left the nation’s mobile-phone industry industry under the control of the two groups.
“There’s anticipation that some of those who get PLDT shares will sell part of what they will receive to book profit,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc.
The company is scheduled to settle tomorrow the purchase of an additional 2.89 billion Digital shares. It will pay 600 million pesos ($14 million) in cash and issue 1.6 million common shares for the stake, according to a Jan. 19 stock-exchange filing. PLDT swapped one common share for 1,559.28 Digital shares at a value of 2,500 pesos a share.
PLDT bought a 52 percent stake in Digital in October, and will own 98 percent after tomorrow’s purchase.
PLDT Chairman Manuel Pangilinan said on Oct. 27 the purchase “will have a modest, favorable impact on the overall bottom line.”
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