Monday, June 6, 2016

PLDT buys San Miguel Corporation’s nascent telecom assets

With the recent news of PLDT and competitor telecom joining forces to nip a potential third major telecommunications company from emerging by buying up all of San Miguel Corporation’s nascent telecom assets, customers of both companies are waiting cautiously for what this turn of events could mean and what more could happen next.

Critics of the transaction are already crying foul on the two companies working together to nip an alternative telecom service in the bud with SMC’s Vega Telecom, Inc. and minor firms New Century Telecoms and eTelco, Inc. being sold between the two for a staggering 70-billion peso total, which is seen as a brutal maintenance of PLDT and competitor’s duopoly. San Miguel’s telecom assets were on the verge of launching a mobile high-speed internet service sometime this year, but have had trouble acquiring permits from the government in order to build up the necessary support infrastructure such as cellular sites. Now these businesses have been snapped up by the Philippines’ pair of telecom giants, who even now are struggling with the usual barrage of complaints regarding the country’s slow as molasses internet speed, the second slowest in Asia just ahead of war-torn Afghanistan.

But just as there are naysayers over the deal, there are also those who defend it, and analysts who see PLDT’s and competitor’s acquisitions from SMC as a major “win-win” for everyone involved. The fact that San Miguel’s telecom assets include their vaunted 700-megahertz spectrum means that, in the hands of both PLDT and its competitor, they’ll be likely to get a solution to the perennial slow-speed internet problem. The added capacity of the 700 MHz spectrum – only lightly tapped in SMC’s hands – would serve to boost the two telecoms’ internet performance, so taxed by the sheer number of users, with around 2,200 for every single cell site of each company (ideally a cell site should only have to handle anywhere between 500 to 800 users).

That’s only one facet of the problem however. There is still the matter of building more cell sites to service the growing number of internet users in the Philippines, something that stymied San Miguel’s own subsidiaries before they were bought out. Permits for construction and operation of cell site were gotten from the local government unit (LGU) in which the sites are to be built, but the bureaucratic hurdles have proven too much at times. It is now hoped that with the establishment of the new Department of Information and Communications Technology (DICT) can make a significant difference in the drive to expand cellular coverage for the customers of  PLDT and its competitors.

Speaking of which, PLDT President Manny V. Pangilinan has already expressed his commitment to have his company offer better services, with a stronger and wider internet to give more people access to information and greater opportunities through connectivity, something that its new assets can make a big contribution to making a reality. It’s the least that can be done for the country that is arguably the “Social Media Capital of the World”.

As for San Miguel Corporation, analysts opine that with the sale of its telecom assets the conglomerate can go back to focusing on its core businesses of food, beverage, packaging and oil.