TV5's Chairman and Chief Executive Officer, Manuel V. Pangilinan disclosed on Tuesday that Philippine Long Distance Telephone Co. (PLDT) is buying a majority stake in the Gokongwei-owned Digitel Telecommunications Philippines Inc — operator of Sun Cellular. PLDT Group which owns Media Quest, the parent firm of TV5, will now be merging the brands Sun Cellular, Smart, Talk N Text and Red Mobile under the country's largest and dominant conglomerate.
The telecommunications giant will buy a 51.5% stake in Digitel Telecommunications for P69.2 billion, the payment of which will be done under a mandatory offering of PLDT shares at P2,500 a piece under the name JG Summit Holdings Inc.
Following the acquisition, James L. Go, chairman and CEO of JG Summit Holdings, will occupy a board seat in PLDT, and will then hold around 12% of the shares of the whole PLDT Group after the transaction iscompleted.
Combined, the two telcos will account for about 67 % of the local market in revenue terms, with Ayala Group's Globe Telecom taking the majority of the remaining 33%.
Good or bad for Consumers?
Following the mereger, PLDT Group chairman Manuel V. Pangilinan said "The brand equity of Sun Cellular will enhance our mobile offerings, so we wish to preserve this moving forward," "We will also retain the unlimited products and services of the group, so that consumers are able to continue benefitting from them."
Plans for Digitel
But consumers are wary of this development specially that JG Summit's entrance in the Telecom industry almost decade ago introduced the unlimited offerings that the consumers of all telecom players are now enjoying.
Considering the saturation in the Telecommunications Industry, it is compelling to anticipate a reduction in the unlimitted packages as PLDT struggles to push more growth in the text messaging and voice call revenues. The Duopoly that resulted from this mereger might bring the unlimitted offerings to its end as the combined subscriber held by PLDT after this transaction will stand around 70%!
However, PLDT made it clear that it intends to keep Digitel's mobile operations — Sun Cellular — separate and intact.
PLDT said it hopes to make available to Digitel subscribers the depth and breadth of PLDT service offerings, specifically 3G — or third generation cellular technology — and broadband Internet.
For its part, Digitel is bringing into the alliance with PLDT some 450,000 subscribers to PLDT’s 1.8 million subscriber base in fixed line operations. Sun Cellular’s number of mobile subscribers is currently pegged at around 14 million.
Is MVP BUYING everything?
PLDT has recently engaged in large scale buyouts as it expands from its mobile operation business to Infrastructure, Power Distribution and Media. It acquired significant shares in Meralco, Business World, Cignal DTV, First Pacific Tollways Corporation, ABC/TV5 and now JG Summit's DIGITEL. Other providers in the market, like the Lopez-owned SkyCable Corp., are providing new and compelling services that drive competition in the market. But there also news that the Lopez Group, the Parent firm of ABS-CBN Corp., is considering selling one of its affiliates to PLDT Group to fund its expansion for its Power Generation Business.
The buy-in effectively leaves two major players in the local mobile telecommunications market: PLDT and Globe Telecom.
For its part, Globe issued a press statement just hours after the announcement of the buy-in, saying it remains "focused" on its current strategies and will "build on the momentum that has been created [by the company] since the second half of 2010."
"The Digitel and PLDT merger will not fundamentally change our strategy. We stand ready to compete, and to defend and grow our market share," said Ernest L. Cu, Globe president and CEO in the statement.
"This industry has always been intensely competitive, and we have been a strong challenger to a dominant incumbent all this time. We will continue to focus on delivering relevant products to our retail and corporate customers, providing differentiated customer service, and enhancing our network to deliver the best experience possible to our subscribers," Cu added.
Globe registered a mobile subscriber base of 26.5 million in 2010, up 14 percent from 2009. The company also reported a 1.1-million combined wired and wireless broadband subscribers, up 50 percent in teh same comparable period.
From this major Development, do you think this will be of best benefit for the consumers?... investors?...and the market?