NTC Approves PLDT-DIGITEL Deal
The National Telecommunications Commission (NTC), on certain conditions, already gave its approval on the share-swap deal allowing Philippine Long Distance Telephone Company (PLDT) to acquire a majority in Digital Telecommunications Philippines, Inc. (Digitel) on Wednesday, October 26.
According to PLDT’s disclosure to the Philippine Stock Exchange (PSE), the NTC had approved the joint application for regulators’ approval, filed by the formerly rival telcos, “for the sale and transfer of initially approximately 51.55 percent of the outstanding capital stock of Digitel to PLDT, pursuant to Section 20(h) of the Public Service Act.”
The disclosure listed the conditions that regulators set for approving the transaction, which PLDT Chairman Manuel V. Pangilinan once described in a policy speech as a “game-changer” in the telecommunications industry, something he said was necessary to allow the sector to compete and provide what people need amid evolving challenges locally and globally.
The conditions set are: one, for Digitel to continue the vastly popular “unlimited” offerings that it pioneered in through its Sun Cellular brand, and which have been credited with making mobile service rates very competitive; and two, that PLDT will return to NTC the 10 MHZ 3G frequency of Connectivity Unlimited Resource Enterprises (CURE), a unit of SMART.
Specifically, the disclosure quoted the details of the frequency divestment plan as approved by regulators:
a) CURE will sell its Red Mobile business to Smart Communications, Inc. (SMART), consisting of its subscriber base, brand and fixed assets;
b) SMART will sell all of its rights and interests in CURE whose remaining assets will consist of its congressional franchise, the affected frequency and related permits;
c) PLDT will have a period of nine months to effect the orderly migration of CURE’s customers and an orderly transfer of CURE’s assets to SMART with the least disruption and degradation of service to CURE’s existing customers. Such nine-month transition shall start from the date of promulgation of the NTC decision, October 26, 2011.
d) The divestment sale of the CURE frequency will be made under the supervision and control of the NTC and will be effected through competitive bidding among duly enfranchised and qualified public telcos. A minimum price will be prescribed to allow SMART to recover its investment.
e) The divestment sale will be done within six months after the transition period, provided the October 26 decision shall have become final and executory.
PLDT and Digitel also committed to regulators that both shall “continue to provide high quality service to the subscribers/users.”
The disclosure signed by PLDT corporate secretary Ma. Lourdes Rausa-Chan said that with the NTC green light, both telcos “can now proceed to complete the transaction (the full terms of which were announced and contained in our disclosure to the Exchange on March 29, 2011), and allow Digitel to have access to the expertise and resources of the PLDT Group so that Digitel can deliver even better, more extensive and affordable” services to customers.
PLDT’s announcement two weeks ago that it was open to surrendering the 3G frequency of CURE had been seen as a breakthrough in the long-drawn approval process at the NTC, where hearings had dragged for months as rival telcos, chiefly Globe Telecom, and certain consumer groups raised concerns about monopoly and risks of predatory pricing, with the feared discontinuance of Digitel’s market-changing “unlimited” service and rates.
As a result of the long hearings, the closing date for the transaction was reset twice by PLDT and Digitel: from the original June 30 to July 31, then to August 26. For a time there was talk the whole deal may simply be scuttled.
When it raised the matter of surrendering the CURE 3G frequency recently, PLDT said it “is cognizant . . . of the concerns raised by the government and certain oppositors regarding the PLDT group’s ownership of 3G frequency, and would like to assure that it is not PLDT’s intention to accumulate the said frequency. Thus, in order to pave the way for the issuance of the NTC approval and completion of the acquisition transaction given the substantial benefit it will create, PLDT is in discussion with the NTC regarding the possibility of divesting frequency.”
Globe, which had earlier courted Digitel but failed to swing a buyout because initial talks fell on price issues, had said that if the PLDT-Digitel deal goes through without at the very least, a fair divestiture of spectrum assets, “the resulting PLDT behemoth will hold lopsided majority of all available telephony frequencies. This should be cause for everybody’s grave concern.”
The PLDT, specifically regulatory and policy affairs head Ray C. Espinosa, had repeatedly assured regulators that the resulting entity from the share swap would not mean a shift to monopolistic practices, or an end to the consumer-friendly “unli” offers of Sun Cellular.
In a policy speech, Pangilinan also stressed that far from “killing” Sun Cell, as rivals were then claiming, PLDT would in fact use its modern, widespread infrastructure to expand the services of Sun, thus benefiting more people.
According to PLDT’s disclosure to the Philippine Stock Exchange (PSE), the NTC had approved the joint application for regulators’ approval, filed by the formerly rival telcos, “for the sale and transfer of initially approximately 51.55 percent of the outstanding capital stock of Digitel to PLDT, pursuant to Section 20(h) of the Public Service Act.”
The disclosure listed the conditions that regulators set for approving the transaction, which PLDT Chairman Manuel V. Pangilinan once described in a policy speech as a “game-changer” in the telecommunications industry, something he said was necessary to allow the sector to compete and provide what people need amid evolving challenges locally and globally.
The conditions set are: one, for Digitel to continue the vastly popular “unlimited” offerings that it pioneered in through its Sun Cellular brand, and which have been credited with making mobile service rates very competitive; and two, that PLDT will return to NTC the 10 MHZ 3G frequency of Connectivity Unlimited Resource Enterprises (CURE), a unit of SMART.
Specifically, the disclosure quoted the details of the frequency divestment plan as approved by regulators:
a) CURE will sell its Red Mobile business to Smart Communications, Inc. (SMART), consisting of its subscriber base, brand and fixed assets;
b) SMART will sell all of its rights and interests in CURE whose remaining assets will consist of its congressional franchise, the affected frequency and related permits;
c) PLDT will have a period of nine months to effect the orderly migration of CURE’s customers and an orderly transfer of CURE’s assets to SMART with the least disruption and degradation of service to CURE’s existing customers. Such nine-month transition shall start from the date of promulgation of the NTC decision, October 26, 2011.
d) The divestment sale of the CURE frequency will be made under the supervision and control of the NTC and will be effected through competitive bidding among duly enfranchised and qualified public telcos. A minimum price will be prescribed to allow SMART to recover its investment.
e) The divestment sale will be done within six months after the transition period, provided the October 26 decision shall have become final and executory.
PLDT and Digitel also committed to regulators that both shall “continue to provide high quality service to the subscribers/users.”
The disclosure signed by PLDT corporate secretary Ma. Lourdes Rausa-Chan said that with the NTC green light, both telcos “can now proceed to complete the transaction (the full terms of which were announced and contained in our disclosure to the Exchange on March 29, 2011), and allow Digitel to have access to the expertise and resources of the PLDT Group so that Digitel can deliver even better, more extensive and affordable” services to customers.
PLDT’s announcement two weeks ago that it was open to surrendering the 3G frequency of CURE had been seen as a breakthrough in the long-drawn approval process at the NTC, where hearings had dragged for months as rival telcos, chiefly Globe Telecom, and certain consumer groups raised concerns about monopoly and risks of predatory pricing, with the feared discontinuance of Digitel’s market-changing “unlimited” service and rates.
As a result of the long hearings, the closing date for the transaction was reset twice by PLDT and Digitel: from the original June 30 to July 31, then to August 26. For a time there was talk the whole deal may simply be scuttled.
When it raised the matter of surrendering the CURE 3G frequency recently, PLDT said it “is cognizant . . . of the concerns raised by the government and certain oppositors regarding the PLDT group’s ownership of 3G frequency, and would like to assure that it is not PLDT’s intention to accumulate the said frequency. Thus, in order to pave the way for the issuance of the NTC approval and completion of the acquisition transaction given the substantial benefit it will create, PLDT is in discussion with the NTC regarding the possibility of divesting frequency.”
Globe, which had earlier courted Digitel but failed to swing a buyout because initial talks fell on price issues, had said that if the PLDT-Digitel deal goes through without at the very least, a fair divestiture of spectrum assets, “the resulting PLDT behemoth will hold lopsided majority of all available telephony frequencies. This should be cause for everybody’s grave concern.”
The PLDT, specifically regulatory and policy affairs head Ray C. Espinosa, had repeatedly assured regulators that the resulting entity from the share swap would not mean a shift to monopolistic practices, or an end to the consumer-friendly “unli” offers of Sun Cellular.
In a policy speech, Pangilinan also stressed that far from “killing” Sun Cell, as rivals were then claiming, PLDT would in fact use its modern, widespread infrastructure to expand the services of Sun, thus benefiting more people.
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