Hong Kong conglomerate First Pacific yesterday said it had paid US$750 million for a 17.2 per cent stake in the Philippines' dominant telecommunications player, Philippine Long Distance Telephone (PLDT). The long-awaited takeover translates to a 27.4 per cent voting interest in PLDT, enough to give First Pacific a controlling interest its managing director Manuel Pangilinan said. Mr Pangilinan has long been trying to raise First Pacific's presence in the Philippines. Last year, the company lost a high-profile fight to wrest control of food and beverage company San Miguel Corp from the Cojuangco family. The PLDT deal makes First Pacific the dominant player in Philippine telecoms by far. First Pacific's Smart Communications is the country's largest cellular phone company, with a 54 per cent market share. PLDT subsidiary Piltel has 21 per cent. PLDT is the leading long-distance telephone company and has a 68 per cent share of the fixed-line telephone market. Smart has 3 per cent of the fixed-line market. Philippine telecoms was likely to be the biggest contributor to First Pacific's bottom-line, Mr Pangilinan said. Separately, First Pacific said it planned to inject Smart into PLDT at some stage in exchange for more PLDT shares. First Pacific had also signed an understanding with Smart partner Nippon Telephone & Telegraph for the Japanese firm to increase its Smart stake from 15 per cent to 40 per cent. The PLDT board named Mr Pangilinan president, chief executive and an executive director 'with immediate effect'. The purchase, which took three months to finalise, was made in two moves. First Pacific had, since September, acquired a 5.9 per cent direct stake in PLDT for $197 million. The deal announced yesterday was for a 52.7 per cent stake in Philippine Telecommunications Investment Corp - which, in turn, owns 21.5 per cent of PLDT - for $552 million. Together, First Pacific effectively now has a 27.4 per cent voting interest in PLDT, for an average 1,420 pesos (about HK$276.33) per share, a 31 per cent premium over the last traded price on Monday. About $550 million of the purchase was paid for in cash and $200 million by borrowings. The firm said it had about $150 million cash remaining and $500 million in debts. Analysts familiar with PLDT warned there could be rough times ahead for First Pacific as it repositioned PLDT for the future. Problems to be dealt with included incompatibility of Smart and Piltel's cellular networks, PLDT's high level of gearing and indebtedness, the faltering Philippine economy and disposals of redundant and non-core assets such as Smart's own long-distance gateway and 400 parcels of property owned by PLDT that had little to do with running a telephone company. PLDT's profit stream in coming years could also be questionable as it modernised its accounting practices. Analysts said the company depreciated fixed assets over a 16-year period, on average, at present. It has been on a programme to cut that to 10 years. If First Pacific decided to accelerate that move - and analysts said there was a good chance it might - then profits in coming years could disappear. Mr Pangilinan conceded a detailed due diligence of PLDT had not yet been possible, since PLDT was a public company. 'There are a number of issues that remain ahead that we will have to work out,' Mr Pangilinan said. He believed PLDT could become the region's leading telecoms firm. First Pacific's exposure in the Philippines had been substantially increased, he said: 'Around four-fifths of our net asset value is invested in this country . . . we are heavily exposed now in the Philippines.' But he said it was still First Pacific's intention 'to keep a balanced portfolio in a number of countries in the region'.