Philippine Long Distance Telephone (PLDT), the country’s leading telecoms operator, has announced that it will invest 333-million euros (US$445-million) for a 10% stake in the Berlin-based Rocket Internet AG (Rocket).
With the investment, PLDT and Rocket will jointly develop mobile and online payment technologies and services for the “unbanked, uncarded and unconnected” population in emerging markets.
With more than 20,000 employees in its network of companies which operate across over 100 countries, Rocket offers a platform for the rapid creation and scaling of consumer Internet businesses outside the US and China.
The company’s most prominent brands include leading Southeast Asian e-commerce businesses Zalora and Lazada, as well as fast growing brands such as Dafiti, Linio, Jumia, Namshi, Lamoda, Jabong, Westwing, Home24 and HelloFresh, in Latin America, Africa, Middle East, Russia, India and Europe.
Rocket is focused on online business models across three sectors namely e-Commerce, marketplaces and financial technology and payments, with the third sector anticipated to bring numerous and significant growth opportunities for the company.
On the other hand, PLDT’s wireless subsidiary Smart Communications, Inc., a global pioneer in mobile banking and mobile wallet services, has introduced several world-class first mobile payment innovations in both domestic and global markets, including markets where up to four out of five people are “unbanked.”
With transactions valued at approximately 3.4-billion euros (US$4.51-billion) in 2013, Smart’s mobile money system offers online money transfers, payments, disbursement, banking and security.
Smart’s mobile money subsidiary, Smart eMoney, co-developed and operates a global mobile payments platform of MasterCard. Currently working with Citibank and VISA to develop new innovative financial services, Smart eMoney’s mobile banking platform is also being deployed by the country’s top three banks. Its mobile money services have also been utilized by United Nations and Philippine government agencies for widespread and efficient cash distribution and other relief and rehabilitation efforts in areas affected by recent natural disasters.
Online and mobile payment solutions for emerging markets
“The strategic partnership will allow us to leverage our combined strengths in developing online and mobile payment solutions in emerging markets,” said Napoleon L. Nazareno, President and CEO of PLDT. “Rocket has developed a unique platform for establishing new Internet companies and a proven track record in successfully rolling out these businesses in fast growing markets. We expect the partnership to have a pronounced positive impact on our organization.”
According to Oliver Samwer, Founder and CEO of Rocket Internet, Rocket and PLDT share a vision for the growth opportunity of Internet and mobile business models in emerging markets. “We believe in our ability to create significant value together, leveraging the Rocket platform and PLDT’s expertise.”
The investment of PLDT, which will be in new shares issued by Rocket Internet, is of the same class and bears the same rights as shares held by current investors. PLDT joins investment AB Kinnevik and Access Industries as the third external investor in Rocket, in addition to Global Founders GmbH (formerly European Founders Fund GmbH).
PLDT will fund the investment from available cash and new debt, with no significant impact on PLDT’s leverage ratios and funding costs. As part of the investment, PLDT will hold the right to appoint one member of Rocket’s nine-person Supervisory Board.
“This new partnership marks a major step forward in the pursuit of our Love Digital! Vision, bringing us closer to our clients and enhancing PLDT’s innovation capabilities in the digital economy,” commented Manuel V. Pangilinan, Chairman of PLDT.