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Globe, PLDT acquisition of SMC: Questions answered!




Globe and PLDT announced yesterday that they have reached an agreement to jointly acquire all telco-related assets of San Miguel Corporation.

In separate media briefings, both PLDT and Globe answered questions from the media regarding the joint acquisition. Here are some of the more interesting topics discussed during the briefing.

What exactly did Globe and Smart buy from San Miguel?

Globe and PLDT are buying the entire cluster of companies/subsidiaries of SMC and with it, all the assets and interests that it holds. This includes New Century, eTelco, Vega Telecom, Bow Arken Holdings, Brightshare Holdings. Aside from the huge chunk of the 700MHz frequency, there are also supplementary frequencies in the 900MHz and 1800MHz included in the deal.

Vega Telecom owns Liberty Telecom Holdings, Bell Telecommunication, Eastern Telecom (ETPI), Express Telecom, Cobaltpoint Telecommunication (formerly Extelcom), and Tori Spectrum Telecommunication (formerly Wi-Tribe) and Hi-Frequency Telecommunication.

There are about 400 or so cell sites already deployed across the Philippines that’s included in the deal.

That’s a lot of holdings and subsidiaries.

But, SMC cannot sell the 700MHz band since it’s owned by the government, right?

While this is true, Globe/PLDT did not buy the frequency, per se, but the group of companies that licensed the frequency. With the acquisition, both telco now has operating control of the subsidiaries as well as the frequencies they hold.

Is it true that Globe and PLDT are returning certain frequencies back to government (NTC)?

Yes. A significant amount of 2G, 3G, 4G and (potentially) 5G spectrum will be voluntarily returned to the NTC which can later on be assigned to other interested players. This includes some parts of the 700MHz, 850MHz, 2500MHz and 3500MHz bands.

MVP shared that they had the same issue back then when they bought Sun Cellular — that the 3G spectrum should be returned. So this time, they’re already making the gesture beforehand.

Is the government allowing this sale?

Technically, it’s a done deal. They already have the clearance from the SEC, PSE, NTC and PCC (Philippine Competition Commission).

Under the Competition Law, there isn’t any existing competition since SMC does not have any subscribers yet.

Exactly how much was the deal worth?

The entire portfolio is worth Php69.1 billion but since there are liabilities amounting to Php17.02 billion, the net value is just Php52.08 billion. Globe and PLDT will pay Php26.04 billion each.

Payment is made in cash with 50% outright upon closing of contract and another 25% after 6 month and the remaining 25% on the 12th month.

For Globe’s part, Rizza Maniego-Eala (CFO) states that they are borrowing 98% of the amount from banks and paying the remaining 2% in cash.

As for PLDT, funds will come from partial sale of company’s interest in Meralco held through Beacon Electric. That’s about Php17 billion with the remaining to come from new debts and the company’s balance sheet cash.

How will PLDT and Globe split the assets?

The contract was signed and the sale became effective on 11:01am of May 30, 2016. Both companies still don’t have an exact idea how they will split and operate the subsidiaries.

As for the 700MHz frequency, they will seek guidance from the NTC on who gets which band to use.

How many people are affected?

Eastern Telecoms has about 400 employees and another 400 or so from the other subsidiaries are affected by the sale. The manpower will be eventually audited and critical roles will be retained while others many be let go due to “redundancies”.

What services will be affected (improved) with the use of the 700MHz frequency?

Globe LTE and Smart LTE services will primarily be the beneficiary of the additional frequency. This means more bandwidth available allowing for faster connections.

The 700MHz frequency has wider coverage and the signal can pass thru structures efficiently (better in-door signal in buildings). Wider coverage also means there’s less need for additional cell towers especially in areas that used to have low signal coverage.

However, there are currently a limited number of handsets/devices that support the 700MHz (Snapdragon 810, 820 are supported while Mediatek Helio and Atom-powered devices do not support the frequency) so the effect will not be immediately felt by all subscribers at the same time.

How soon can subscribers feel the improvements?

MVP promises that in 6 months, there will be noticeable improvements in the network. For Globe’s part, Ernest Cu promises the same in 3 to 4 months time.



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

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28 Responses

  1. roiji says:

    How will the assets benefit the two companies Kung hindi pa nila alam kung paano pa nila hahatiin yung assets?

    Probably mga office spaces, vehicles, cell towers, fiber lines?

    May transition team din ba sila? Haha

  2. Faye says:

    Yun naman pala eh. Sana nga talaga maramdaman natin ang pagbabago. Let’s look forward to better internet!

  3. wtf says:

    how can other players compete if the telecom industry is being dictated by the 2 players, one controlled by the indonesians and the other controlled by spanish conquistadors? the 2 players are collaborating together to ensure nobody can come in. they want to continue charging ridiculous rates for the lousy service with limited coverage.

    you want them to behave properly? 1st, make sure that all income generated by their telecom operations should be invested back to telecom operations – di yung bili ng bili ng ibang kumpanya walang connection sa telecoms.

    2nd, minimum internet speed for 2-016 should be set at 2 mbps and should increase by 1mbps every 2 years.

    3rd, ensure that every local government unit has access to internet service by installing their cellsites at every barangay and city/municipal halls. and that by 2018, there should 100% coverage already. cell sites should be provided taxfree and rent free since they are located to government lands.

    4th, pricing should be based at cost with at least 7% guaranteed profit margin to all players. local call rates should be fixed at php 3.00 per minute while local text rates should be fixed at php 0.25 per 160 character-message.

    • Abe Olandres says:

      there’s some restrictions under the law which makes the status quo hard to break — one is you have to have a franchise that needs congressional approval and 2nd you have to be at least 60% Filipino-owned.

    • FTW says:

      This is why due process is sometimes detrimental.

    • Fox Hunter says:

      Socialism does not work, just look at Venezuela, we need a free market system, let foreign companies freely compete against the locals. Govt should not dictate prices or profit margins or placement of cell sites, all your ideas belong in a socialist country like Venezuela. We don’t need business killing ideas.

  4. TATSULOK says:

    Our government (RP) should buy Telco shares from all foreign investors, nakakalungkot isipin na ang pera natin iba ang nakikinabang. Kakarampot na buwis ang kinikita ng gobyerno tapos ibubulsa pa ng ibang pulpolitiko.

    • Fox Hunter says:

      Our taxes are too high, higher than many countries like Russia. Our govt spends too much, kahit gaano kalaki ang revenue or taxes, kulang pa rin. Govt should cut spending by more than 50%.

  5. enjay72 says:

    I wonder what LTE band of the 700MHz spectrum will SMART and GLOBE use? From GSMARENA’s phone finder, I see LTE bands 12, 13, 14, 17 for 700MHz.

  6. Fritz says:

    Who will dictate the frequency distribution bet Globe and PLDT?

  7. curio says:

    Will this also eventually increase speeds of hard lines like DSL? (will speed increase without price increase) I think that’s the general impression of the people about this deal as it promises “better internet”.

  8. wtf says:

    sir abe, its open secret that metro pacific is just a shell company of first pacific – controlled by the salim family…with regards to the ayalas, they are purebred spaniards who don’t even study in the philippines and speak filipino…glamor lang…there are laws that only allow filipino companies to operate in the philippines but ways to circumvent these has been done for quite some time…

    point is that the telecom companies does not do anything to improve internet service in the philippines – resulting to 2nd to the last (which is afghanistan) ranking in asia.

    profits before service…

  9. Des says:

    kahit anong frequency gamitin nila, we can’t deny the fact that the real problem is in the uplink bandwidth of the cellsite.. kahit anong frequency naman gamitin nila it will never improve unless na taasan nila ung bandwidth ng mga uplink nila.. wala naman problema sa frequency gamit nila.. ang problema e ang pag titipid nila ng bandwidth sa mga international gateway submarine lines nila..

    isa lang palusot ang pag acquire ng 700mhz para sabihin gaganda ang internet, well pwede nila sabihin gaganda ang signal reception, at makakatipid sila sa expenses ng tower pero yung sasabihin mag iimprove and internet experience is just a chocolate covered LIE! this will just ensure this two companies the problem of competition since halos lahat ng frequencies e meron sila.. so wala ng maooffer na unique ang new players to boost from competition, at dahil lahat ng frequencies ay meron na tong dalawa na to madali nila masasabayan ang incoming telco if meron at madali nila ito makakatay…

    hindi better internet for us ang goal sa pag acquire ng 700mhz, ang totoo talaga dyan e controlling the competition and making sure they have all the arms they get to stow away… wala ng papasok na new competitor since wala na silang magiging alas para panlaban sa 2 well established company..

    mag tatayo ka pa ba ng tindahan kung ang katabi mo e mall na nandun na lahat..

    also if you look at the stock market ang laki ng luge ng SMC pababa ng pababa ang stocks nila, isa itong rason bakit, then si DUTERTE na ang naging president, at maagang nagparamdam si duterte about internet, since mukhang alanganin sila na mahihirapan sila magpalago if itutuloy nila ang telecom sa takot sa revisions about internet policies

  10. Jose says:

    Will there be any improvements with voice calls? Globes voice calls are horrible for dropped and choppy calls. My favorite line “Hello, can you hear me?”

  11. object404 says:

    Wrong. They do not have clearance yet from the Philippine Competition Commission.

    http://phcc.gov.ph/pcc-statement-globe-pldt-purchase-smcs-telecoms-business/

  12. Jasper Mangubat says:

    Nothing will change…before there is one Telco company promised to give better services to the country because of the two existing giant telcos are not performing very well….expensive but poor services…Now they bought SMC Telco , the poor and expensive services continues.

  13. Easy E says:

    Hindi naman nakakarating mga usapang ganito sa kinauukulan. Makarating man dedma lang. Sayang lang dada natin.

  14. Don says:

    Is this move of Globe and PLDT has to do with Digong’s plan on faster internet with the plan of bringing in of more investors/competitors? Remember the “killing” of Telstra by big telcos as rumored. Surely, the big telcos will do literally everything in their power and with their money to monopolize and manipulate the IT industry for their own interest.

    • Scott says:

      I couldnt agree more. I think this is a very carefully cultivated plans between the two teleco’s to place as big a hurdle to either foreign or 3rd party competition while being able to publicly say they are working to improve the situation. Remember how quick they were to both come out and publicly respond to Duterte’s threat that he would remove obstacles like the 60% Filipino control requirements to bring competition to the market. Now days later two arch enemies that can’t stand each other bury the hatchet, make SMC an offer they can’t refuse to buy their spectrum, assets and everything lock stock and barrel and in one clean swipe make it infinitely much less attractive for any foreign or new company to enter the market. This was a brilliant move for their business but a terrible one for consumers and consumer choice. Do not expect those miraculous performance improvements to come in 6 or even 12 months. Their business model has not changed with this acquisition – I suggest it was done simply to prevent anyone else getting it.

  15. boche says:

    iphone 6s is supported with 700mhz right? http://www.apple.com/iphone/LTE/

  16. Archon says:

    May bagong band nga, kamusta naman yung data caps? For sure, ii-insist na naman nila yung mga data caps nila. #KumpetisyonAngSolusyon

  17. 20632 says:

    On the contrary Sir, SMC stocks went up yesterday (May 30) by P4.40 closed at P80.30 per share from last Friday’s (May24) P75.90 per share Today May 31, SMC closed at P82 gained P1.70 per share. On the other hand both TEL and GLO stocks went up tremendously…

    • Des says:

      sorry for not indicating it as the last months stocks.. they recovered after the news of SMC are into internet and mobile thing

  18. BIKTIMA KAMI LAHAT NG SUN CELLULAR says:

    WOW !!!
    PLDT + GLOBE & SMC
    KAYO NA TALAGA…

    THE KINGS OF ALL
    MIDNIGHT DEALS !!!

    THESE TELCOS KNOWING
    THAT THIS CANNOT
    BE DONE UNDER THE
    PRESIDENT DIGONG
    ADMINISTRATION,
    NOW THEY TOOK
    ADVANTAGE OF WHAT IS
    LEFT WITH THE LAST
    DAYS OF THE STILL
    PNOY GOVERNMENT !!!

    ANG HUHUSAY NYO
    TALAGA GUMIMIK NA
    KASABWAT ANG GOBYERNO
    BASTAT PARA SA KAPERAHAN
    WALA MAKAKAUNA SA INYO

    WALANG KAKUPAS-KUPAS
    KAYO NA TALAGA !!!

    WITHOUT ANY DOUBT
    NOW FINALLY WE HAVE
    PROVEN THE STINKING
    WAYS OF THE “TUWID NA
    DAAN” OF PNOY.
    IT IS NOT SO STRAIGHT
    AFTER ALL…

    ITS ALL ABOUT SCAMMING
    THE PUBLIC THROUGH THE
    GUISE OF DEVELOPMENT
    WOW KAW NA ANG POGI !!!

    THE HOPES FOR A THIRD
    TELCO IS NOW DEAD…
    MUCH MORE NOW THAT
    THE AVAILABLE FREQUENCIES
    ARE THE LEFTOVERS & THE
    RETURNED ONES FROM PLDT
    & GLOBE… WOW HUSAY NYO !!!

    NGAYON PAPANO NA ANG
    MGA MAMAMAYANG
    PILIPINO ???
    AYAN EHHH DI… NGANGA !!!

  19. Jason Dean says:

    Just curious, sir. Which between PLDT and Globe said that SMC is not a competitor since SMC doesn’t have subscribers yet?

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