Massive industries Philippine Long Distance Telephone Co.
(PLDT) and Globe Telecom will mutually buy out the telecommunications assets of
conglomerate San Miguel Corp. in an arrangement to cement their duopolistic
hold on the local market in the midst of the growing clamor for better Internet
services.
The plan is to launch a rival service this year to compete
in the industry’s hottest segment—mobile high-speed internet—was made to face
obstacles on all fronts in its offer to become a viable third telco player.
Inquirer sources with information of the arrangement said
that PLDT, Globe and SMC have concurred in principle to what was required to be
an exchange worth a little more than $1 billion. An agreement is scheduled to
be signed between the transacting parties.
It is expected to be the greatest arrangement of its kind
since PLDT reestablished the telco duopoly in 2011, when it obtained the
Gokongwei family's Digital Telecommunications Philippines Inc. (Digitel), which
works Sun Cellular. Digitel was the first to launch industry-changing unlimited
texting and calling plans that influenced the bottom line of Globe and Smart. Send load to the Philippines thru TopupPH.
Officials from the companies did not immediately respond to
requests for comment.
Transactions between buyers Globe and PLDT and the seller
SMC started not long after the last's foreign telecommunications partner
Telstra Corp. Ltd. of Australia backed out of a proposed partnership in the
midst of the opposition from local rivals as well as skeptics in Australia.
Without a foreign partner, SMC would be unable to raise the debt component of
the estimated $2-billion investment necessary for a startup telecommunications
venture. This was because of the fact that banks that were part of the lending
syndicate required the conglomerate to have a foreign technical partner as a
precondition for the loan.
SMC's telco ventures were made years ago and are mostly held
under unlisted Vega Telecom Inc., its yearly report appeared. Vega is the
holding company for publicly traded Liberty Telecoms Holdings Inc., which holds
a large portion of the 700MHz alongside High Frequency Telecommunications Inc.,
as well as Bell Telecommunication Philippines Inc. and Eastern
Telecommunications Philippines Inc.
SMC's prized assets include its high-band frequencies
important to address capacity and its coveted 700 Megahertz range, a type of
low-band frequency noted for its capacity to cover wide spaces and penetrate
walls at lower costs. It also owns physical assets like cell sites, which PLDT
and Globe said remained hard to construct in view of bureaucratic red tape.
SMC claims the majority of the 700 MHz range (694 MHz to 790
MHz), before assigned for analog TV broadcasting before it was moved for
telecommunications use as television moved to digital. SMC would have utilized
this to cover the nation with a "better and cheaper" mobile Internet
service.
So desired was the advantage that both PLDT and Globe a year
ago launched a full-scale advertising effort asking the government to give them
their fair share of the 700MHz. At the point when that did not work, both
telcos in recent months floated the possibility of partnering with SMC.
With smartphone costs falling, clients are requesting more
services and content that required data like movie and music streaming, instant
texting and social media. Network upgrades have neglected to keep pace and PLDT
and Globe have been evading overwhelming feedback for "slow and
expensive" Internet services compared to the country’s regional peers.
With the impending transaction, PLDT and Globe, individually
sponsored by Japan's NTT DoCoMo and Singapore Telecommunications, now have the
necessary advantages for enhance and lower the assets of Internet in the
Philippines and will no longer have a reason for their poor service, which has
been subject of congressional inquiries.
The components that led to this event, underscored how
troublesome it was for new players to enter the nation's telco sector. The
Fitch Gathering's BMI Research said in a report a month ago that weak control
in the country was a powerful disincentive for huge foreign player looking to
compete here. In particular, BMI said both PLDT and Globe "used their
market dominance and the ineffective regulatory regime to comprehensively block
all avenues for the proposed joint venture (between SMC and Telstra of
Australia), highlighting the risk of doing business in the Philippines’
telecoms market."
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