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:
On the other hand, there are also benefits to this merger in some form or another.
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
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nameless says:
The same reason why Jollibee Foods Corp bought Mang Inasal… :D
If you can’t beat the enemy, then join them…
Regnard Raquedan says:
For Sun’s shortcomings, they were what ABC 5 is to television right now– they kept the Big 2 on their toes.
I hope another telco can take the spot Sun used to have.
Glenn Ong says:
This is a great summary, Abe. I guess we’re not expecting rates to go lower any time soon, since only two giant networks are competing.
But I’d say I still go for Globe anytime of the day
arj says:
smart monopoly?
Str4nded says:
“Smart’s weakness is now Sun’s disability. By association, whatever reason people don’t like with the Smart network will infect the reputation of Sun’s network.”
– Specifically on the wireless broadband
MRU says:
This will finally give Smart access to the Ayala malls since from the start, Ayala malls have always blocked Smart from setting-up pico cell sites inside Ayala malls. But since the Gokongwei’s had their own malls, Ayala malls had to give access to Sun, so that Globe could have access to Gokongwei malls. In the end, though, the only winner here are the Gokongwei’s!
metal1369 says:
business is business, but the government specifically the NTC should be vigilant in monitoring the future moves of this 2 companies.
Raymond says:
everything is about control, but that is alright if in the end, the consumers benefit sooner and not just the pockets of the shareholders. Public Service is of paramount importance…
Jhay says:
That’s why we need tougher antitrust laws now.
Paul says:
Here’s hoping Smart/Sun starts getting the iPhone too
No use in them being the largest network if they don’t have the smartphone I want
Jon says:
What if Smart/PLDT decides to raise prices or do something customer unfriendly? Where else would people go? That’s the problem with monopolies. Consumers are always at a loss. There is not much options to choose from. Now expect things to become stagnant, if not worse.
Pressure is on Globe to improve their services and coverage. Prices even. They should see this as a chance. Though they must have a lot of funding though.
mindyq says:
There is no monopoly in the telecom industry. Some of you guys should know what that word actually means.
What Does Monopoly Mean?
A situation in which a single company or group owns all or nearly all of the market for a given type of product or service. By definition, monopoly is characterized by an absence of competition, which often results in high prices and inferior products.
http://www.investopedia.com/terms/m/monopoly.asp
With the definition above there’s no monopoly. There is still Globe. San Miguel MAY put up its own mobile phone network.
Alex says:
I’d agree. If you can’t beat them, buy them. Merger like this is inevitable as competition grows.
arj says:
then it’s a telcos domination
B says:
San Miguel already has Liberty (Wi-Tribe).
imitator101 says:
I think the biggest worry (already voiced by some here) is Sun adopting policies/promos of Smart which really suck.
As a broadband user of Sun, I’m worried that Smart’s VERY BAD policies on data throttling and data caps will be implemented on Sun’s network.
Smart Bro is THE WORST and I’d hate to see that happening to Sun.
nameless says:
I’d say, they are just all the same…
allan says:
i just hope that sun will keep & continue it’s cheap promos. they’re easy on the pocket.
i hope smart will introduce better post paid plans like globe.
globe has more post paid subs coz of their better plans compared to smart.
also, better phones.
i also hope that there will be unli text & calls between smart & sun in the future.
Classified Ads says:
So Abe, did you invest in either DGTL or TEL?
market hasnt closed but DGTL opened at 1.59 and dipped to 1.54.. currently trading at 1.56
TEL opened at 2,300.00 low of 2,500 and high of 2,380.00 trading at 2,358.00 as of 11:38am
John Carl says:
Nice move for MVP. But I still stick to Globe. I wonder why most of my friends, acquaintances, and company reps are on Globe, but Smart says it still has the most number of subscribers.
luiboowee says:
Mawawala ang unli, that’s what’s going to happen in the future.
Globe and PLDT will talk any moment to control prices. Bucket pricing will continue while totally scrapping unlimited calls/texts.
Parang ang mangyayari is babalik tayo sa pre-Sun era. Since Ramon Ang is a rival of MVP, probably RSA will take this opportunity to let SMC’s Wi-Tribe as a replacement luring the anti-Smart, anti-Globe market.
Les says:
Huwag lang nila paki-alaman ang pricing schemes ng Sun. Yun lang!
diaslag says:
It reminds me of the game, Monopoly.
Watch out for the changes, I hope it’s for the better.
JunAlquis says:
guys I read in the news that PLDT wants to keep Sun and digitel as it is to keep the competitiveness a PLDT officer himself said so. I guess it was one of their agreements for the selling of Digitel
Aria says:
Yuck, Sun will now be as dysfunctional as Smart. And vice versa. They can combine their services but they still can’t deliver. Kebs.
Globe parin. Now, more than ever.
Globe! says:
Go Globe! One month to go and im free from Smart’s poor service
Koko says:
All I can say to Digitel employees are: It’s time to update your resume.
I’ve worked for both Smart and Digitel, the diffrence of company culture between the two are as different as night and day. Heads will roll, I tell ya.
juan i. jacques says:
its sad to find out that sun was bought by PLDT. say byebye to cheap txt and call. sun was innovative a game changer, remember the days when txt was .50 to 1.00 then sun came and change the mobile industry landscape with its unli call & txt. RIP Sun Cellular
Reuben says:
Sun Cell may be merged with Smart’s signal coverage, which is good for consumers. Though unli promo’s will suffer.
mattrosuelo says:
“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.”
— Before the merger, Sun Cellular, however good or bad, is continuously operating as it is.
So what if a person switches from Smart to Sun? Would the whole SUN network cease to operate and would that mean every SUN subscriber will immediately utilize Smart network? That’s impossible.
I don’t get your argument on that, Sir Abe.
raymond says:
Hello. Hindi naman po siguro tamang sabihin na “bad for consumers” ang merger ng Sun at Smart. Ang concern lang po naming mga consumers ay makakuha ng mas magandang serbisyo sa mas mababang presyo. Kung nagbabasa po tayo ng dyaryo:
1. Hindi aalisin ang unlimited call and text ng Sun.
2. Mapapakinabangan nila ang malawak na cellular network infrastructure ng Smart.
Bilang isang Sun subscriber, natutuwa po ako sa merger na ito dahil sa wakas ay makaka call and text na ako sa iba’t ibang probinsya ng Pilipinas. Mga lugar na dating mahina ang Sun. In the future, baka magkaroon pa ng unlimited call and text ang Sun-Smart. Panalo di ba? :)
Rey says:
ok, wala nang choices. Hahahah, I agree “duopoly”.
milanaorly says:
i heard on ANC na Globe will be with San Miguel, na wi-tribe ang sakanila
ralph says:
sana pwd na mg cross connect ang sun at smart. unli ng sun makakatawag sa smart
Jayson Moy says:
Nice move by MVP and wise decision by Gokongwei group. Imagine Gokongwei instantly owning 12% of PLDT that will substantially dilute shareholdings of NTT DoCoMo and First Pacific.
Bilang prepaid retailer since electronic loading started, pansin namin ang growth ng Sun Cellular. Lumakas na ang signal. Sa bahay ng lola ko sa SJDM, Bulacan, Sun Broadband lang ang KAISA-ISANG may HSDPA 3.5G signal. Ang SMART at GLOBE ay EDGE lang.
Marami na ring nagpapaload ng Sun at mabili ang SIM card. Sulit din ang kanilang IDD call to US and Canada at 2 pesos per minute!
Ngayon ngang nangyari na ang hindi ko inaasahan, kailangang lumaban ng Globe upang hindi tuluyang mawala ang market share nito. Pero hindi ko nakikitang mawawala ang Globe dahil marami na rin naman itong suki at sana patuloy na mag-improve ang kanilang service dahil sa mga MALALAKING PAGBABAGO sa telecom industry – the “DUOPOLY” (Ooops…wag ng pag-awayan ang monopoly at duopoly – kaya hindi umuunlad ang Pilipinas…malaking apoy, pinalalaki. To correct others, you may say it POLITELY.)
I hope na hindi pabayaan ng SMART ang DIGITEL at SUN CELLULAR. Sana ay lalo pang mag-improve ang services ng Sun given the VERY STRONG parent – SMART.
Maybe SMART will use SUN to cater the so-called “PRACTICAL” segment of the market as part of their 2011 plans. Each SMART subscriber will have a SUN number as secondary number…promoting multiple SIM ownership (and consumer load usage)
vicman says:
I don’t think PLDT will eventually change the characteristics that made SUN successful. How can they be sure na mapupunta sa SMART yun mga subscribers ng SUN kapag nawala yun characteristics ng SUN? They will still keep SUN intact and eventually improve it. Pera pera lang naman usapan dyan. It’s not about the glory of PLDT.
Boy Pan desal says:
sana me unlimited call pa rin sana di mawala.alam naman natin sa ating bansa na pag customer service medyo di satisfied tayo niyan mga madlang pipol. ang hihina pa ng mga internet speed sana wala ng 384bps sana poro 1 mbps pataas na sana alisin nayang 384 kbps 512 kbps 768 kbps.misleading pa naman sa mga consumer ang mga promo nila nakakalito minsan di pa makapasok.hahays sa US walang ganyan na serbisyo satisfied lahat ng consumers dun.
someone says:
sana mawala na yung mga text scams / nag-ooffer ng kung anuano through text. (mlm invites, loans, etc)
Sonofa says:
SAAN NA SI MANONG JOHNNY??
hindi lang naman sa sun cellular yung reason… sa province mas sikat ang digitel at globelines kaysa sa pldt… at kailangan ng pldt yun para masmura na tumawag ng landine ang mga subscribers nila sa provinces…
chintoguy says:
I agree with the another reader that there should be a 3rd player. The reason why I subscribed to Sun is because they completely changed everything. Now for those who hates PLDT and switched to Sun its like they are going back to their old telecom provider. I hope that NTC could approve the license to operate a cellular network on BAYANTEL. Bayantel nalang ang nakikita kong potential telecom who will be the new 3rd player.
chintoguy says:
I hope San Miguel Corporations telecom arm LIBERTY TELECOM (who operates internet service provider Wi-Tribe)could also be the new 3rd player. As far as I know, Liberty is also applying for frequency allotments sa NTC and has plans of entering the cellular service market. We need a THIRD PLAYER. I never liked PLDT before. Thank God there is still GLOBE.
ben kisla says:
business as usual…heads will roll definitely towards the end of the year, mostly the upper management of Digitel & SUN…to effectively reach PLDT’s combined profit with Digitel, they need to streamline their OPEX….but you will see better services from both giant telcos….
YOPINTECH says:
LUGI NA KAYA SUN?
SANA UNLIMITED PA RIN
CHECK IT OUT THIS VIDEO
http://yopintech.blogspot.com/2011/03/video-review-of-imovie-for-ipad-2.html
WORLD TODAY says:
Three Filipinos Executed In China, Families In Tears
Chinese authorities have gone through with the controversial execution of three Filipinos. They had been convicted of smuggling drugs into China. Their families were devastated by the news.
http://pinoy99.blogspot.com/2011/03/three-filipinos-executed-in-china.html
Joel says:
These deal is indeed good for the industry and the companies since they found a way to stifle price wars and increase their revenues but that is absolutely NOT good for consumers. They killed one player for no other reason than to make more money.
http://joelolave.blogspot.com/2011/03/merging-of-telecom-companies-boon-or.html
agrimensor says:
“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%.”
IMO this is the main reason why Smart bought Sun since they could no longer steal away a subscriber from them and they are actually being eaten.
milanaorly says:
sana pinanindigan pa rin ng digitel/sun ung company nila para healthy ung competition..
althea says:
in the end, its still the consumers who will choose and suffer.
i speak from experience, and as of today I’d still stick with globe, although I have a sun sim as back up and our landline and dsl at home is pldt
hahahaha
MR. BOGUS says:
ONE WORD FOR ME: KARTEL!!!!!!!!!!!!!!!!
koki_motok says:
can we cancel our subscriptions as early as now without penalties? im not in favor with this.. wish i could have been loyal to globe, if not only for their poor loyalty rewards system..
deuts says:
Obviously, inunahan na ng Smart ang Globe from acquiring Sun, following the acquisition of T-Mobile by AT&T in the US.
Abram John Limpin says:
Monopoly in the making? Hope not.
csseyah says:
Not Enough energy… need more SUN..
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:
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.
Jonaflormicfren says:
That shows that SMART was very smart, although I don’t go for SMART. http://learner-spot.blogspot.com/
ralph says:
sana may unli calls na rin from smart to sun and vice versa
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.
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…
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
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.
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?
David Z says:
Update from Smart mismo:
http://www.pldt.com.ph/media/Pages/PLDT%20to%20maintain%20Sun%20Cellular%20unli%20services.aspx
So…I guess we can put this to rest?
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.
Jayson Moy says:
http://www.pldt.com.ph/investor/Documents/Digitel%20Investment%20-%20IR%20versionfinalpublic.pdf
…improve unli services for subscribers of both operations
erickjohncuevas says:
SUN is getting SMARTER or SMART is getting SUNNIER?
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
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.
watusi says:
bayantel pwede bang maging cellular provider?
Jericho 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.
chua_riwap says:
mic test
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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