PLDT may challenge new foreign investment rules

Posted at 11/15/12 1:30 PM

MANILA, Philippines - Philippine Long Distance Telephone Co. (PLDT) is hoping the Securities and Exchange Commission (SEC) will tone down its new draft rules on foreign ownership limit of companies engaged in foreign utilities. 

The Constitution bars foreigners from controlling over 40% of a utility firm. The SEC's new draft rules would force PLDT and other companies to sell more common shares to Filipinos.

The companies and the stock exchange say the local market may not be big enough to absorb the shares without forcing prices down. 

In an interview on ANC's Inside Business, PLDT director Ray Espinosa says uncertainty will reign until the SEC finalizes the rules, which affects companies like PLDT.

"It's gonna a mood of uncertainty. I think they will be very cautious. It's very difficult to make investments when you don't know whether the shares you're picking up will actually precluded or okay because the rules are at a point where it would change," Espinosa said.  

He added PLDT is prepared to challenge the rules in court if they are not relaxed.

PLDT is a major unit of Hong Kong-based First Pacific. 

"If the rule is enacted as it looked like in the draft, I think we would have no recourse but to bring this rule to court because it puts to question whether PLDT has complied with the Gamboa decision, which in our view, we have. We would have to test the constitutionality of that rule," Espinosa said.  - ANC