July 20, 2014

TEL eyeing European internet acquisition

PLDT (TEL) is reportedly in the midst of negotiations to acquire an internet company based in Europe. A Philippine Daily Inquirer today quoted an unnamed source as saying the potential acquisition is part of the company’s thrust for global investments after failing to acquire GMA Networks Inc (GMA7, GMAP, Not rated) and will enable TEL to grow its e-commerce business.

Our take: Given the limited growth in the local telephony business, TEL cannot rely solely on its rapidly expanding broadband business for growth as basic businesses still account for the bulk of the company’s revenues. Thus, seeking growth from potential investments elsewhere appears to be a logical move for the company.

Barring any issues on valuations, any acquisition of a growth driver should provide additional attraction (on top of the company’s high dividend yield) to investors and this should subsequently lend support to its share price. – WealthSec