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March 30, 2011

Merging Smart & Sun not good for consumers?

PLDT now has an overwhelming majority of the telco business in the Philippines — it owns Smart, Talk ‘N Text, Red Mobile and now Sun Cellular representing more than 70% of the subscriber base combined {see earlier story here}.

PLDT’s investment in Digitel (and effectively owning Sun Cellular) does not seem to make sense in terms of positioning. PLDT already has Smart as the premium network while Talk & Text is positioned at the other end of the prepaid spectrum (sachet economy). And then there’s Red Mobile which has only recently found a niche in the “unli” segment — obviously to counter Sun Cellular encroaching into its low-end subscriber base.

It is possible that despite PLDT’s heavy investment in Red Mobile, it still failed to prevent Sun from becoming a strong alternative (either as a secondary subscription or an “unli” vertical). This was evident when Sun was the first telco to actually hit the 1 million postpaid subscriber mark, way ahead of Globe and Smart. Granted, the ARPU with Sun Postpaid is way lower than Smart Postpaid subscriber, the fact still remains that on the low-end segment, Sun is growing very fast.

Here’s a rough breakdown of subscribers* by brand in 2010:

Globe Telecom – 14.4 million (up from 13.8 million in 2009)
Touch Mobile – 11.8 million (up from 9.3 million in 2009)

Sun Cellular – 16 million (up from 10 million in 2009)

Smart – 25.7 million (up from 24.2 million in 2009)
Talk ‘N Text – 19 million (up from 17 million in 2009)
Red Mobile – 950,000

The new combined subs of PLDT, if we are to include Sun Cellular, is now 61.7 million or 70% of the 87.9 million total (active SIMs, not unique subscribers). That’s not counting the over 400,000 Digitel broadband subscribers that will be added to PLDT’s 2 million subs.

In my recent discussion with a Sun Cellular executive, I mentioned that their role in the 3-way contest (Smart, Globe & Sun) is very crucial to the market and despite some of their shortcomings, consumers are happy Sun is doing a good job in competing with the big guys. They’re essentially the equalizer and a disruptor at the same time — making sure that rivals Smart and Globe are not locked into a perpetual stalemate.

I must admit that PLDT’s move to buy majority share of Digitel is a really smart one (no pun intended). First, if Sun continues to woo in the low-end market away from Smart/TNT/Red/Globe/TM, PLDT still wins. Second, Smart can learn a lot from the subscriber data that Sun has and could use it to strengthen its offers to postpaid subscribers. Third, PLDT can now utilize the additional frequency and the network that Digitel has rolled out across the country (Sun Cellular’s 3G network has nationwide roll-out already). Fourth, this will put Globe Telecom at a very odd position on just so many levels (so who’s gonna be the undisputed No. 1 on postpaid now?).

The only disadvantage I can see here is that Red Mobile can no longer throw punches at Sun Cellular with those hard-hitting TV commercials.

However, I don’t think there will be a consolidation of subscribers (merging Sun & Smart in the process). Sun will remain Sun, just like how PLDT separated Red Mobile and Talk ‘N Text for segmentation. The move is more like neutralizing the competition before it becomes more rabid.

So how does Smart and Sun Cellular becoming sister-companies be detrimental to the consumers at large? Well, here are some possible scenarios:

  • Say goodbye to the price wars (though not really entirely gone). From being a 3-way contest, it’s now down to 2 — PLDT vs. Globe. Smart, TNT, Red Mobile and Sun Cellular will hold an overwhelming 70% share while Globe is reduced to the remaining 30%.
  • Switchers no more. Subscribers who switched from Smart to Sun Cellular might feel slighted because they’re now technically back to the Smart network they left behind.
  • Smart’s weakness is now Sun’s disability. By association, whatever reason people didn’t like with the Smart network will infect the reputation of Sun’s network.
  • One less choice to make. That’s pretty much self-explanatory.

On the other hand, there are also benefits to this merger in some form or another.

  • Wider network coverage for existing Sun subscribers, especially with 3G mobile internet.
  • Smart can increase its network capacity if it is able to use Sun’s assigned frequency (same way Smart expanded with the purchase of CURE’s 3G frequency). That could translate to a less congested network and improved wireless connectivity (I hope).

Here’s a thought though — with the very saturated mobile market in the Philippines, I noticed that growth in subscriber base for Smart and Globe have slowed down significantly in the past couple of years except for Sun Cellular which posted an unprecedented growth of about 60%.

The only other way to get new subs is to poach them from other networks so the saying that “if you can’t beat them, buy them” makes perfect sense here. This move will effectively pad PLDT’s over-all growth by year’s end and that’s going to do wonders with the stock prices (and making their shareholders happy).

Update: PLDT and Digitel stock prices both went up today.

*ARPU – average revenue per user
*Subscribers = active SIM cards

PLDT buys majority stake of Sun Cellular
NTC hearing on PLDT-Digitel deal on May 23
Casino charges NTC under telco's payroll

121 Responses to “Merging Smart & Sun not good for consumers?”

  1. deuts
    Twitter: deuts
    says:

    Obviously, inunahan na ng Smart ang Globe from acquiring Sun, following the acquisition of T-Mobile by AT&T in the US.

  2. Abram John Limpin
    Twitter: eibhrum
    says:

    Monopoly in the making? Hope not.

  3. csseyah
    Twitter: goodfilipino
    says:

    Not Enough energy… need more SUN..

  4. kyoujin says:

    This is indeed a monopoly. I have a friend that once a subdealer of smart and then it goes to a one person in the end. Smaller business combined as one is equals to monopoly. Smart is an evil telecoms that I can really prove. They does not include subscriber’s interest (although they claimed it publicly) but their interest is only monopoly and handling people as their slaves. I don’t patronize smart. For all smart users, don’t be fool for many contacts using their network. You know it’s about quality of service.

    Now we have no Sun, we only have one good telecom, that is, Globe. From phone to internet service Smart is just like waste of money, time, energy but in globe you felt like you are important (not saying that globe is perfect) and treated like a customer as I am comparing to smart that they treated me as cash-cow in their scam-like internet service. To all Smart users, you will be the same as me if you suffered the same hell experience with Smart “Stupid”, I called their service Smartbro as Stupidbro ’cause I cannot see the sense of saying they’re smart.

    • Jayson Moy says:

      Smart’s service is very good. I am enjoying the use of their Talk ‘N Text brand. I am a retailer since Smart started. Earnings from SmartLoad helped me financially to finish College and help my parents. They don’t handle people as slaves – they were giving up to 22 months (as far as I know) salary for regular employees. Maybe what you’re saying is the “outsourcing” which is the current trend. I believe it’s too harsh to call Smart an ‘EVIL’ telecommunications company.

      When you’re using their service, you need to pay of course. They also offered products and services that is good for consumers.

      Their broadband service, although not the best but better compared to Sun and Globe (in our respective location). Downloading in Sun is 5kbps while in Smart it’s better at 45kbps.

      Calls in Smart is not choppy, it’s crystal clear with a very good coverage.

      Smart started the retailing of load that gave about a million retailers alternative income opportunities.

      Sun is good. I am enjoying it too.

      I am using Globe for my broadband since it’s the fastest in our area while for others, Sun is faster in their location compared to other telcos.

      What’s the problem with their internet service? You should file a complaint if you think you’re unjustly treated.

      By the way, in Globe – it’s very hard to register in their promos…and that’s false advertising.

    • kyoujin says:

      That’s for your case. I cannot blame you praising their name here. But you cannot blame me why I called them “evil” ’cause they deserves it. I have many reasons. They just make us as malfunctioned ATM machine. What does it mean? They just randomly stole our precious loads. You just said that smart is good, just in your place. I am a traveler and working from place to place and I can see that smartbro sucks, you cannot expect they will give you 3G/HSDPA signal while Sun and Globe has on most area I have been. How about saying you that I have 0-1kbps downloading speed? While Sun has 30kbps and globe has 145kbps? Now tell me which service is better. This is NOT only in one place. I traveled and stayed on many places and worked from apartment to apartment and seen that smartbro sucks everywhere. Even you have full signal for their 3G/HSDPA their speed is lying, giving you slower than dial-up speed, worse it was not stable! I am paying them 1500/month (2 years lock-in period) for this kind of crappy thing but give me dial-up speed most of the time. Now tell me if you can still praise them if you are me. For more than a year now I have 0 of 10 ratings, if there is a negative I will rate them -10, why? cause they just gave me headache struggling with their service PLUS 1500/month is a big for this crappy smartbro.

      Yes of course I will pay for what it takes but will I be paying them IF they gave me what I needed? (“upto 2MBPS” but gave us 30kbps? I believe there is a great difference there as you can see) but they just wasted my hard-earned money. I know globe is not perfect just as I said but are you convince they are faster than stupidbro? But when you need their great service they will give you what you wanted considering some factors that you can register to their service during peak hours, try early in the morning.. Smartbro is always dial-up speed. This is NOT what I am paying for and the contract we signed for!

      Finally, when filing complaint makes me rich I am very rich now, I complaint a thousand times (just a figure of speech for many many times) but guess what? They just leave my complaint pending and not informing me about the current status. If I will not emailed them, they will just forget you as a smoke. I have full of complaint but no action so far for more than a year now. Their Wireless Center is as useless as their call representatives, they are just recorded audio talking more and more the same thing but no action to resolve the problem.

      Now tell me if you can question me why I called them “Evil”. I respect your case but in the community of my friends they are just like “Evil” getting our hard-earned money but does not giving us what they supposed to give us. Their contract is obviously one-sided. Being a smartbro subscriber is the most regrettable moment of my decision. Smart simply sucks!!!

    • Jayson Moy says:

      That’s your experience. Iba-iba tayo ng experience with SMART :-)

      But on my experience, SMART immediately responded to my concerns on slow broadband via *1888. I have 1 mbps connections at night while more than 600kbps acceptable browsing during the day. Download speeds are acceptable at 45kbps to 125 at night. While on call, the technical support representative can determine what causes speed problems – if congested or not. If you’re using the USB modem, maybe it is not configured properly or malfunctioning. I was able to get considerable speeds using SMART in Mandaluyong, Makati, and Novaliches after TWEAKING my modem.

      SMART has WCDMA 1900/2100 (observed as so slow) and 850mhz (that’s so fast). I just checked my modem settings and suprised that it was set to WCDMA1900. I tried to switch it to 850 – I have 3.5G HSDPA signal, until now, it’s faster.

      Have you checked your PC? Were you able to exhaust all your effort to improve the connection? I reformatted my PC and saw great improvements. I also bought a USB modem extension.

      Torrent in Sun (5 bars)- no speed to 5kbps
      (Fair Usage Policy)

      Torrent in Smart (3 bars) – 45kbps up
      Torrent in Globe – (2 bars) 45kbps up

      For Sun, I cancelled my postpaid plan since it’s so slow (in our location) but decided to retain a prepaid broadband SIM in my grandma’s home since SUN is the only network that offers 3.5G in their area that’s FAST. I also openlined the Sun modem and placed SMART instead or SUN when needed.

      For Globe, their broadband network sucks for about a year, connection switching from HSDPA to WCDMA and a page never loaded at all…until last November, the coverage improved and that’s great. Now I’m using Globe.

      We never experienced VANISHING LOADs in our four SMART SIMs. Since we are not REPLYING to those push promotions. Their instructions are clear on how to turn those things OFF. There’s no such thing as AUTOMATIC REGISTRATION. Our customers usually seek my help just to turn those registrations off in an instant! When we inquire, they replied to those messages to get the INITIAL FREE content without reading the terms and condition then forget about it in week 1, week 2, and week 3.

      Kasi bilang retailer, nakakainis din minsan yung mga nagpapaload, naloadan mo naman ng 15 tapos sasabihin, hindi dumating yung load. Paano, nakaregister pala sila sa RINGTONE, LOGO…tapos pag tinanong mo, nagreply sila, nakuha yung content, tapos nakalimutan na nila na may terms and conditions…so weekly kakaltasan na kasi subscribed na…so kami naman ginagawan namin ng paraan to help them how to turn those things off as advised by SMART Customer Care.

    • kyoujin says:

      Smart call? Crystal clear? but you near to impossible to connect when registering to their unlicalls. And that is not PURELY unlimited ’cause there is only a specific time you can use their term “unlicall”.

      Giving retailers an alternative income? But why they disconnect my friend’s subdealer business sim (and his other companion) and gave to one person? Is that a fair treatment and giving many individuals to have their own small business just like the thing they done to Sun? A smaller company and then merging into one. Didn’t you seen their business strategy? Healthy competition makes a good business but they don’t like competition they wanted to dominate the market and that is close to monopoly… But it’s good there is still Globe that gives people an option.

      Remember what happened to PLDT when globelines/islacom takes place? The very very expensive international call of PLDT was broken by the competition of globelines to them. Now, they are oblige to exercise a healthy competition NOT monopolizing the market of telephone.

    • Jayson Moy says:

      Sa aking palagay

      We are happy with the UnliCalls of SMART…I admit sometimes it’s hard to connect. You have to dial more than 5 times. But the SMART network was not designed to be an ‘UNLIMITED’ network just the way Sun configured their network. Remember SUN during their early years —> as the king of dropped calls, unsuccessful calls, choppy calls, and alike, but now, they’re better.

      According to Globe, they need to invest more to make their network a truly UNLIMITED network. SUN’s UNLI is embedded on their plans, they designed their network for such services. For SMART and GLOBE, not originally designed as such since they were the pioneer telcos with older infrastructure. SUN was able to get it at lower cost since a latecomer.

      Ang nakakainis sa Globe, may unli nga, hindi ka naman makaregister so mapipilitan kang tumawag gamit ang tawag 236! — 20 minute one time call for only 20 pesos. PERO kapag naputol ang tawag (empty batt, nagdrop ang signal), the remaining minutes will be GONE! Sa SMART, consumable!

      Maybe SMART will utilize the ‘ESTABLISHED’ unlimited network of SUN that can handle simultaneous calls without putting up a new one.

      Their other CALL PROMOS are with ACCEPTABLE QUALITY.

      Regarding SUB-DEALER. May quota sila. Baka hindi nila na-reach ang quota kaya tinanggalan sila ng subdealership rights. (I don’t know) or maybe may bagong policy ang SMART na kung kunyari Caloocan ka, you need to load Caloocan retailers only, bawal mag-load sa mga Quezon City retailers dahil ibang subdealers ang may hawak sa kanila.

      Nauna rito ang GLOBE —- kung saan ka bumili ng SIM, dun ka lang puwedeng magpaload ng pambenta.

      GLOBE is here to stay and PLDT cannot make their call rates too high kasi WISE na ang subscribers ngayon. Marami ng mapagpipilian. Kalaban pa nila ang Facebook at Twitter ngayon.

      By the way, I am not an employee of SMART or pakawala ng SMART…I’m just sharing my experiences maganda at hindi maganda. I’m glad kasi nasasabi natin ang ating mga opinyon sa space na ito. Thanks sa Yugatech.

    • kyoujin says:

      I am not interested in whatever unlimited they offer especially call. Don’t use it ’cause I don’t patronize telecoms that sucks. I am only interested in internet, if there is no internet issue then keep that issue safe ’cause I am not unto it.

      I am not a fun of globe and sun but I am smart-hater so I wanted to choose other telecoms than smart/pldt. In your experience is applicable on case to case scenario but in overall? You cannot expect people will say the same to you. There is no good telecoms here on Philippines. All of them are almost the same, there is a saying “If you have no choice left, choose the lesser evil”, so for me smart is the most evil and I choose the lesser evil.

      You are saying that you are not a smart employee but you are more than an employee you are their endorser. We will not agree to the same thing. You use smart whatever you like, endorse it but we will always here saying that product sucks. Honest to goodness they really are sucks, you will not admit it here.. I hope you will not say these words (not actual word same-like) in the future “it sucks” “wasted” “makes me a cash-cow”, etc. One day, you will come to a point of realizing what kind of telecom you are patronizing with. Good luck! It’s you and this is me.

    • hopya monngo says:

      i agree with kyoujin in the arguments presented… well i guess it depends on the location on how we rate the telcos. in my case smart and sun has poor Bro services and pldt landline bundle with myD often are not connected kahit may technical support ng pumupunta sa bahay namin. so far i am happy with globe’s services like iphone plan, tattoo (which has great signal from our place); wimax that can reach even the mountainous area of my parents. with these i can say that Globe Tel. really is my way. dati globe landline long longdistance na agad siya kahit neighbor mo lang yung pldt landline pero ngayon area code base na din sila so 2 phone lines kami ngayon

    • Steph says:

      I was a Smart subscriber before, but I really hated the service. It took me forever to get my needs addressed. Was super pissed, so I moved to Globe. Though Globe’s not perfect, their services are better than Smart’s.

    • dane says:

      my primay phone – SUN
      my secondary phone – globe dati, kaso nagnanakaw ng load kaya lipat ako s smart.
      my secondary phone today – SMART

      that’s all guyzzzz!!!!

  5. Jayson Moy says:

    Sun will remain as is.
    Globe and Smart has both 900mhz and 1800mhz for their 2G services while Sun has only 1800mhz that covering a smaller area making it’s calls choppy. So I hope Smart will share to Sun its 1800mhz frequency (the same thing they did to Cure – they shared the 900mhz) giving Red Mobile a nationwide coverage.

    My projection is that Smart will keep itself as the “PREMIUM” network while it will boost SUN as GLOBE’s competitor by offering more attractive plans where SUN is very successful. SUN was the first telco to reach 1 million postpaid subscriptions. If they change SUN’s business model, it may take away existing and potential subscribers and SMART Group cannot afford to let them switch to GLOBE with their competitive postpaid plans.

    Remember, Sun was the very first telco to offer 1-day unlimited broadband for only 50 pesos. It was followed by SMART with 200 (one-time) valid for 5 days and eventually GLOBE followed with SUPERSURF50.

    Ang sabi, they will continue the offers of SUN. Nakapagtataka kasing napakabilis nakapag-deploy ng nationwide broadband ng SUN. Meaning, tipid ang ginagamit nilang technology from Huawei ng China. So maybe nakita nilang FUTURE-PROOF ang network ng SUN and they will capitalize on it.

    • Jayson Moy says:

      Correction: *have both 900mhz…

    • supernaut says:

      SUN/Digitel is the first big client of Huawei pero ngayon madami na ring project ang HUAWEI sa smart,globe,pldt and bayantel.

    • supernaut says:

      SUN/Digitel is the first big project of Huawei sa Pinas at ngayon madami na ring project sa smart,globe,pldt and bayantel.

    • Abram John Limpin
      Twitter: eibhrum
      says:

      I guess my take on this one is that Smart would focus more in the ‘broadband side’ rather than being ‘competitive’ in terms of unlimited calls, postpaid plans, etc.

    • dane says:

      i think you are an engineer!!!!

      the way you address your opinion are more on technical point of view. SUN needs the 900 MHz band in coverage area but for capacity it is 1800 MHz. Sana i-share ni smart itong 900 MHz para s ganun wala n ung magsasabi ng “mahina ang signal ng sun”. As fas as I know ang mangyayari dito is they will share towers meaning kung saan wala pang signal si sun colocate n lng s tower ni smart at vice versa but for existing so be it. BTW the ratio of one 900MHz cellsite is equivalent to four 1800Mhz cellsites. In here, we can conclude that SUN cellular have hard time catching the two giant network thats why selected areas lang ang may coverage. With the help of SMART hopefully this will change. This is not a burden to SUN subscriber but a blessing to consider.

  6. Jonaflormicfren
    Twitter: daniojr
    says:

    That shows that SMART was very smart, although I don’t go for SMART. http://learner-spot.blogspot.com/

    • kyoujin says:

      I think the right term for smart is not smart. They’re clever or cunning.. pwede na rin deceit.

  7. ralph says:

    sana may unli calls na rin from smart to sun and vice versa

  8. poche says:

    malabo alisin yun ilang services or competitive pricing ng sun kasi nga uupo as board of director pa din ang jgsummit(digitel/sun) at take note may 12.8% shares na sila sa buong pldt group so may say or power pa din sila.

    although technically e parang binili ng pldt ang digitel e parang merger or nagpaabsorb lang sila since walang kahit ni singkong duling ang ginastos ng pldt para dito.

  9. frozenpyro says:

    Let’s see what will happen to SUN in a year or 2, then I will decide kung papaputol ko na ang 6 years postpaid plan ko sa kanila…

  10. arj says:

    what will be the best network to use if it will be smart, tnt, red and sun vs globe and tm? halos dominated na ng smart ang lahat ng telcos

    • supernaut says:

      Products and services pati customer services mas maganda at quality ang Globe. Lalo na sa post paid, maayos pa ang billing.

    • arj says:

      i have globe yet still observing it’s performance. dati akong globe user pero sa dami ng smart contacts ko e napilitan ako magswitch. may mga areas pa kasi na mahina ang signal ang globe lalo na ang sun

  11. adam says:

    Meron din naman advantage pag nag merge ang Sun and Smart and that is ang SUN can now provide a better service like mas madami cellsite and mas malinaw ang calls. Pero tingin ko yun lang ang advantage ng makukuha ng sun.

    • arj says:

      although the news says, sun will still continue their services. perhaps signal will be one of an advantage. it’s the call and text that will be altered sooner or later

  12. Name: says:

    Bad for consumers and employees! Look what happened to those companies bought by Mr. Pangilinan.

    BTW:
    Abe Olandres – Defender of Willie Revillame? http://goo.gl/mP0ja
    Yugatech fans: What’s your take?

  13. David Z says:

    Update from Smart mismo:

    http://www.pldt.com.ph/media/Pages/PLDT%20to%20maintain%20Sun%20Cellular%20unli%20services.aspx

    Some quarters had raised concerns that PLDT’s investment into Digitel would lead to the end of Sun’s unli offers.

    “That’s not going to happen. There is a market for unli services and we intend to be the best in serving that market,” Nazareno said.

    So…I guess we can put this to rest?

  14. David Z says:

    And as been said before, this isn’t a monopoly…yet. It feels like one, but it’s not…yet.

    And correction from earlier: update from PLDT yan, hindi Smart. Anyway, you get the idea.

  15. erickjohncuevas
    Twitter: erickjohncuevas
    says:

    SUN is getting SMARTER or SMART is getting SUNNIER?

  16. justme says:

    Sana sa merge nilang yan, maging 3G na ang buong pilipinas para broadband kahit saan. di kasi magamit yong plug it eh lalo na dito sa province. andaming bumili pero di naman magamit kasi GPRS lang ang signal. Para NATIONWIDEST coverage talaga. Naku, dito sa davao, kahit main city or capital city of mindanao, parang isang baryo lang ang 3g area. Hehe

  17. Fritz says:

    well apparently kaya binenta ng mga gokongwei ang digitel is because of low market value meaning sa stocks puro negative ang shares nila. smart, sun and globe coz of the unlimited wars. but the time they sold it bigla tumaas ung value nila sa stocks! and ang laki ng utang ng mga gokongwei. and right now. wi-tribe which is owned by san miguel corp. is planning to enter the market as well.

  18. watusi says:

    bayantel pwede bang maging cellular provider?

  19. Jericho
    Twitter: JerikoDignadice
    says:

    We use those services to our leisure activities, to know what is happening in the world, to communicate with our friends, and especially to call our families abroad. We cannot afford to have a no-choice or locked in on a limited set of service products.

  20. mike says:

    this is a good move to both companies just hope that the unli services would not be cut out as we all now how the smart does it dirty tactics on us…and for globe i suggest do the things that made sun become popular make the unli services lik the SUN not compete toe to toe against smart if you want to make it..in the end people wil realize where they can save more!…

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Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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