Interactive gaming and content distributor IP E-Game Ventures, Inc. (EG) is getting out of the internet cafe business by divesting its shares in Netopia operator Digital Paradise, Inc. (DPI).
EG said it assigned its 62.928 million shares of stock in DPI to Y-Fi Business Solutions, Inc., which is also led by technology entrepreneur Jaime Enrique Y. Gonzalez, for P62.928 million at a par value of P1 per share.
In a disclosure to the Philippine Stock Exchange, EG said the Internet cafe business has been “in a state of steady decline” because of the proliferation of portable gaming devices, increasing number of free Wi-Fi hotspots and the shift in consumer use to mobile devices.
“All this has caused a significant reduction in the demand for internet cafes, and a downward trend in DPI’s sales, transactions per store and number of stores – all of which justify the Issuer’s exit from this industry,” the company said.
At the peak of the internet cafe business in 2006, EG said DPI operated almost 180 internet cafes in the Philippines. By the fourth quarter of 2018, the number of outlets was down to only 14 internet cafes.
DPI’s total comprehensive losses also increased sharply to P43 million in 2017 from P4 million in 2016.
The basis for the sale price was the par value because there no other buyers willing to acquire the shares at a higher value given DPI’s dismal financial performance over the last three years. (Ventures Cebu)