MERGED: Smart buys Digitel (Sun Cellular)

[ong76win2]

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Delays in PLDT-Digitel deal worry investors
By Lenie Lectura, BusinessMirror
Posted at 08/29/2011 7:45 AM | Updated as of 08/29/2011 10:00 AM

MANILA, Philippines - The long delay for the government approval being sought by phone giant Philippine Long Distance Telephone Co. (PLDT) and third-ranked Digital Telecommunications Philippines Inc. (Digitel) is sending bad vibes to investors.

“The turtle-paced action of the government in approving the merger will send a bad signal to the business community. It could also put into question the government’s ability to partner with the private sector in other businesses,” said Astro del Castillo, managing director at local fund management firm First Grade Holdings.

The Pangilinan-led PLDT failed to meet the August 26 deadline it imposed upon itself in closing the transaction it entered into with Digitel because the National Telecommunications Commission (NTC) has yet to decided whether to approve the deal.

PLDT and JG Summit Holdings Inc., the parent firm of Digitel, have already extended for the second time the target closing date of their deal. The deal, which will allow PLDT to buy a majority stake in listed phone firm Digitel, was originally targeted for closing on June 30 but this was moved to July 30 and again to August 26.

But the NTC said on Friday it was still studying the matter. Besides, NTC Commissioner Gamaliel Cordoba said, the ongoing review on the deal was still within the first month of the 90-day period within which the commission is required by law to evaluate and decide petitions submitted for resolution.

Pangilinan earlier threatened to junk the deal with Digitel if his company, PLDT, did not get regulatory approvals by August 26. On Friday PLDT said in a statement that it was in consultation with JG Summit on whether to further extend the closing date of the transaction.

“In view of the ongoing deliberations by the government in respect of the Digitel transaction, PLDT and JG Summit are in joint consultation as to whether the date for the finalization of the transaction shall be extended further. The two parties shall consult their respective boards of directors and make a formal announcement as soon as practicable,” PLDT said.

The fate of the telco deal, touted as the largest in the corporate history, now lies with Malacañang. Further delays are expected since President Aquino is scheduled to visit China from August 30 to September 3.

Source: Delays in PLDT-Digitel deal worry investors | ABS-CBN News | Latest Philippine Headlines, Breaking News, Video, Analysis, Features

[ong76win2]

Digitel may resume price war 'onslaught' if PLDT buyout fails
By Coco Alcuaz, ANC
Posted at 08/26/2011 11:43 AM | Updated as of 08/26/2011 5:25 PM

MANILA, Philippines - There may be good news for cell phone users if Philippine Long Distance Telephone Co.'s bid for John Gokongwei's Sun Cellular is scuttled as early as today: lower cell phone charges.

Sun, which Gokongwei controls through Digital Telecommunications Philippines Inc., entered the market in 2003 and ramped up the price wars, forcing PLDT and Globe Telecom Inc. to match its packages, capping all their profits. In March, PLDT and the Gokongwei group announced PLDT would buy Digitel in a P69.2 billion deal. While PLDT said it wouldn't cancel Sun's packages, most observers predicted competition would cool off.

But today is their third deadline for closing the deal. They haven't been able to close because the National Telecommunications Commission hasn't approved the deal, in part due to objections from Globe Telecom Inc. Presidential spokesman Edwin Lacierda on Thursday said the government has not yet finalized its own position on it. PLDT Chairman Manuel Pangilinan reiterated on Thursday there would be no more extensions.

"Digitel may want to begin its onslaught on margins again but honestly there's a limit to how low one can go,'' said Rico Gomez, a fund manager at Rizal Commercial Banking Corp.

"Assuming the merger is off, then Digitel reverts to cut-throat competition,'' said a stock broker who declined to be identified, adding that Globe will probably not try again to buy Digitel -- information which emerged during hearings on the transaction -- but that a company like San Miguel Corp. might. The food and beverage giant is diversifying by buying oil refiner Petron, state power assets, and it also invested in infrastructure projects and and smaller telecommunications companies.

"I don’t think Globe will want to step in, having seen the premium PLDT offered,'' the broker said. "Maybe someone like San Miguel might be interested in Digitel as San Miguel still has telco ambitions.''

JG Summit executives declined to comment. PLDT officials didn't immediately reply to messages seeking their comment.

Winners and losers

A scuttling may favor Globe, the No. 2 player, more than PLDT, already the industry leader.

"I think, ultimately, it’s a major positive for Globe, because of the favorable implications on the long-term competitive landscape,'' said Jun Tarrobago, a fund manager at ATR-KimEng Asset Management Group. "It’s more status quo for PLDT.''

An analyst at a foreign-owned brokerage said none of the players will benefit if the deal, which was perceived to reduce the intensity of competition, isn't completed.

It will be "negative for all,'' according to the analyst. This includes JG Summit Holdings Inc., through which the Gokongwei group controls Digitel.

"Investors' perception is that this is a great deal for JG Summit and Digitel,'' the analyst said. "JG Summit 'unlocked' value for Digitel via the transaction, converting shares in Digitel, an illiquid stock to PLDT, which is liquid and has a high dividend yield, at above market price valuations. The transaction also meant JG Summit would no longer have to bear the capex burden associated with Digitel.''

"The removal of the No. 3 player (Digitel) was seen to be the catalyst for more rational pricing in the industry and an eventual return to growth. No transaction means none of the above happens. I'm not sure though how much of the above factors have been priced in by investors.''

The research head of a local brokerage said PLDT and Digitel shares may take a short-term hit.

"Short-term downsides might initially be felt by PLDT and Digitel as those expecting for the merged entity might express their disappointment,'' the research head said. "After this, both might retain their status quo since Sun, for one, is known as the low-cost provider for both prepaid and postpaid categories. Some funds might favor Globe.''

Source: Digitel may resume price war 'onslaught' if PLDT buyout fails | ABS-CBN News | Latest Philippine Headlines, Breaking News, Video, Analysis, Features

[icon_king]

im not surprised Manny V Pangilinan acquired another giant cellular company. It seems that he has everything... from maynilad water co. to merlaco to Tnt. Araneta coliseum is now renamed smart araneta. Grabe!!~!!

[g0dmenuelz]

What's next pra sa consumers?

[Leinra Yacgnat]

Sus Pro sun user raba gyud ko maayo unta ila na tarongon ang signal basin nasad mo mahal na nuon ang mga load promo like unli, combos etc...

[techguys]

Noy hems, haws on PLDT-Digitel deal

‘Solomonic’ decision up?

Government will ensure that no monopoly will result and that public interest will be protected in deciding on whether to allow Philippine Long Distance Co. to buy Digital Communications Philippines Inc. (Digitel), President Aquino said yesterday.

In a prerecorded interview aired before his departure for a four-day visit to China today, Aquino said the Philippines has irrevocably turned its back to monopolistic practices and is determined to keep a level playing field for all industry participants.

He acknowledged, however, that PLDT chairman Manuel V. Pangilinan has committed to keep the unlimited talk and text offerings of Digitel through its brand Sun Cellular.

He hinted that the government, through the National Telecommunications Commission, is likely to approve the PLDT-Digitel deal, but with a corresponding re-assignment of frequencies among industry players.

PLDT, through subsidiary Smart Communications, is the No.1 player in the cellular telephone business, while Sun Cellular is a distant No.3 after Globe Telecommunications. The acquisition will lead to a 70 percent market share between PLDT and Sun Cellular.

Pangilinan earlier said he might scuttle the P74.1 billion deal with Digitel’s majority owner, JG Summit Holdings, if regulatory approval would not be secured by August 26. That day passed with the NTC saying it was still studying the case.

PLDT struck the deal with JG Summit in March and the original closing date was set for June 30. The closing date was later moved to July 31 and then to the last working day of August.

In the interview aired by Radio Mindanao Network, Aquino said: "Ang interes natin ay walang maging isang monopoly na wala nang makapag-compete. Kung hindi, balik na naman tayo sa sitwasyon na nakatali tayo sa kakayahan ng kung sinuman ang manatili. So ang hinahabol natin dito, pinangako sa buong business community ay level playing field."

He added that keeping text messages and voice calls affordable is only possible if there is healthy competition among the telephone and telecommunication companies.

"So pinagsusubukan natin na magkasundo ang lahat. Ang daming frequencies noon. Medyo maraming technical na complication pero at the end of the day, ang interes ng estado ay manigurado na nandiyan iyung mga serbisyong kakailangan natin, not only for voice and text but, more important, iyung sa warning kung babaha na, warning kung guguho ang lupa at tele-medicine, baka later on pati education kasama na rin diyan," he said.

Aquino said flood and tsunami warnings, landslides and even volcano eruption advisories could be sent to the public using mobile and internet services.

He said this service could also be tapped in the implementation of the Conditional Cash Transfer program and even the mobile educational programs especially in remote areas.

"Nasa 85 million cell phones na raw tayo sa Pilipinas. Ngayon iyung cell phone napaka-importante sa atin," he said.

Aquino’s reference to the numerous frequencies available echoes oppositor Globe Telecommunications’ stand that if ever the PLDT-Digitel deal is approved, the NTC should redistribute assigned frequencies.

Globe lawyer Rudy Salalima earlier said a PLDT-Digitel combine would have an overwhelming superiority versus Globe in terms of radio frequency, which is measured in terms of megahertz (MHz). Globe is particularly concerned about the frequencies used for 3G, where the ratio would be 1:4.5 in favor of PLDT.

Smart has a total of 113 MHz of radio spectrum; Globe has 90 MHz, and Sun 42.5 MHz.

Salalima said to level the playing field, 22 MHz of frequencies of PLDT should be reassigned to Globe.

[Eve's Apple Project]

just saw the news earlier sa CNN.. di man pareho sa topic but the same ra og issue. maayo pa ang US, makablock pa og merger deals between competitors to protect the interest of the public..ato tawn, wa. asa man tawn ang political will ani oi.


U.S. Files to Block AT&T, T-Mobile Merger - Bloomberg

[ong76win2]

just saw the news earlier sa CNN.. di man pareho sa topic but the same ra og issue. maayo pa ang US, makablock pa og merger deals between competitors to protect the interest of the public..ato tawn, wa. asa man tawn ang political will ani oi.


U.S. Files to Block AT&T, T-Mobile Merger - Bloomberg

True. I agree with you on this. Maayu pa naka block ang US ani. I also just read this from the net.

[Eve's Apple Project]

^^ mao lagi bai..unsaon man pud nato ani, nga ang mga politico nato ani kay wa ta kabalo, naa diay toy share sad..ang-ang man pud og ilang babagan..paita..

[ong76win2]

^^ mao lagi bai..unsaon man pud nato ani, nga ang mga politico nato ani kay wa ta kabalo, naa diay toy share sad..ang-ang man pud og ilang babagan..paita..

Daghan baya oppose to the PLDT Sun Cellular deal. If the politicians would make the wrong move, they would bear the brunt of the people.