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Globe, PLDT and San Miguel, sitting on a tree
Shared/Posted: Jun 07, 2016 at 08:10am
In an ironic twist of events, Globe and PLDT announced last week that they have jointly acquired the telco business of San Miguel.
The entire portfolio is valued at over P52 billion and includes the hotly-contested 700MHz frequency that is exclusive to San Miguel.
Telco #3 not meant to be
It’s a huge surprise since just two months ago, San Miguel was already in talks with Telstra for a possible partnership in the Philippines. While Telstra eventually backed out of the joint venture, San Miguel’s Ramon Ang was adamant that they will continue with the venture to become the third major telco player even if they don’t have any partners or investors.
What happened in the last two months prior to the acquisition deal remains a mystery and the general public isn’t buying the official press release and continue to be skeptic.
As usual, there are always two sides of the story so we break them down in bite-size chunks:
• San Miguel has been sitting on the 700MHz frequency for the longest time and isn’t using it. PLDT and Globe wanted the frequency to be redistributed so they the current players can use it to help decongest their network.
• Globe and PLDT promised that mobile Internet speeds will significantly improve once they use parts of the 700MHz band. PLDT’s MVP committed to results in six months while Globe’s Ernest Cu states they would be able to roll it out in three to four months.
• The issue with lack of cellsites and the bureaucracy with getting all the proper permits just to install a new tower becomes less of a problem since existing ones can now have wider coverage under the 700MHz frequency. Globe shared that installing a new tower requires dozens of signatures and permits that could take an average of eight months to secure.
• Globe and PLDT didn’t take all of the 700MHz that they got from SMC. Each only retained 35MHz band to use while the remaining 20MHz will be returned to the government (NTC) along with several other frequencies covering 2G, 3G and 4G. This will allow a possible third player to come in later and use these frequencies.
However, subscribers are buying into these claiming that the move is just to strengthen the existing duopoly.
• The acquisition was the last resort for San Miguel since Globe and PLDT has already filed a complaint with the NTC to redistribute the 700MHz frequency. This could be one of the reasons that spooked Telstra and possibly closed all other hopes of an investor/partner.
• Globe and PLDT took the most useful frequencies and gave back the ones they don’t need to the government. When a potential third player comes in, they’ll be left with remnant frequencies that are not enough to mount a major competition.
• Both telcos colluded into buying telco assets of San Miguel just to make sure that threat of a third player is diminished, at least in the near future. This is the first time that both competitors agree on something as huge as this acquisition and in record speed of just two months.
The whole saga between Globe, PLDT and San Miguel could very well be one tense episode of “Suits.” What we know is that all that excitement of a third major player has gone down the drain.
At some point, I even had this feeling that Ramon Ang was just bluffing all these time, trying to inflate the value of his telco assets then just dump it all to make a huge profit. Besides, this isn’t the first time he did something of this sort.
While the entry of third player is no guarantee that Internet speeds will improve, so is the deployment of the 700MHz which both telcos are confidently claiming. Nevertheless, they’ve made that promise and we can only hope that the improvements will really be felt in the next six months.
Kindly refer to the origin of this news.
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