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Duterte’s third telco push sparks buying frenzy for PH penny stocks

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By CECILIA YAP and IAN SAYSON
(Bloomberg)

There’s a gold rush in Philippine telecom minnows and everybody’s invited. For now.

President Rodrigo Duterte’s decision to award a new telecommunications license has sparked a frenzy as speculators bid up the prices of once-forgotten penny stocks which may benefit from the shakeup of the sector’s current duopoly of PLDT, Inc. and Globe Telecom, Inc.

NOW Corp.’s market value has surged almost 400 percent so far this year on wagers the broadband service provider will be part of a new consortium to challenge the incumbents. Its market value of about R21 billion ($403 million) is 8,400 times the R2.5 million in net income it posted in 2016. Earlier this month, it became more valuable than GMA Network, Inc., the nation’s second-largest broadcaster, which earned R3.6 billion during the same period.

EasyCall Communications Philippines, Inc., a former 1990s provider of paging services that’s seeking to build a wireless broadband network, has risen over 900 percent since the end of November. Transpacific Broadband Group International, Inc., a satellite station operator, is up more than 170 percent over the same period. The benchmark Philippine Stock Exchange index has eked out a miserly 4 percent gain in comparison.

The Philippines will bid out a new telecom license in the first half of 2018, a process set in motion by Duterte’s invitation in November to Premier Li Keqiang for a Chinese company to invest in the sector and improve services. The bidding was moved to May from an original plan of March upon the request of contenders, said Eliseo Rio, acting head at the Department of Information and Communications Technology.

The proposal sparked investor interest in potential domestic partners for any Chinese bidders, and NOW, EasyCall and Transpacific Broadband are among the 10 biggest gainers this year in the all-share index. Bets that they can leverage their franchises, existing operations and listed status to potential overseas bidders will likely continue until the bidding, according to  Jonathan Ravelas, chief market strategist at BDO Unibank, Inc.

“This gives hope to small, listed telecommunication companies that they could be the third major player,” Ravelas said. “The government probably wants a company that can be up and running immediately.”

The speculation has even spread even to some real estate shares, according to market participants.

Golden Haven, Inc., a builder of memorial parks that expanded into mass housing, has seen its shares surge over 1,300 percent this year on speculation its billionaire owner Manuel Villar will use the company to list his telecom venture that will bid for the frequencies the government will sell. Even Villar’s Starmalls, Inc., a shopping mall builder, has risen over 170 percent in 2018 on the same speculation.

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