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Merger delay slows PLDT-Sun expansion

/ 08:15 PM September 18, 2011

MANILA, Philippines—Delays in the government’s decision—either to approve or reject—Philippine Long Distance Telephone Co.’s (PLDT) acquisition of the Sun Cellular brand is affecting expansion plans of both telecommunications firms.

According to a company official, many network-related investments and other expansion expenses have been put on hold until the National Telecommunications Commission (NTC) hands down its final decision on whether or not a merger between the two firms will be allowed.

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“A lot of [capital expenditure] plans are on hold right now because we do not know what will happen,” said William Pamintuan, counsel for the Sun Cellular brand’s operator, Digital Telecommunications Philippines Inc., or Digitel.

“We are all just waiting for the decision,” he said in a recent interview, but declined to specify exactly which of the company’s plans have been put on hold.

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NTC Commissioner Gamaliel Cordoba over the weekend said the regulator was still going over all the details of the transaction to ensure that the interests of consumers and the rights of both companies are protected.

Also hanging in the balance is whether PLDT and JG Summit Holdings, Digitel’s parent firm, still want to push through with the deal.

PLDT regulatory affairs head Ray C. Espinosa said the company’s board was still studying its options, whether to pursue or drop the deal.

PLDT chairman Manuel V. Pangilinan last August was quoted as saying that his group would “walk away” from the deal if it was not approved by a self-imposed deadline of August 26.

PLDT and JG Summit earlier wanted the deal closed by June 30, but both groups agreed to extend the date after regulators failed to rule on the matter.

The NTC, however, said that under the law, it had 90 days to deliberate on the deal before it is required to make a ruling. Hearings on the transaction ended in late July, which means the NTC has until late October to decide on the matter.

The P74.1-billion deal was announced last March, with PLDT hoping to augment its own network and subscriber base by buying out its smaller rival. The Gokongwei family, which owns Digitel, said it would use the extra cash to focus on other industries, particularly energy.

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But Ayala-led Globe Telecom has opposed the merger, saying it would give the PLDT group an excessive amount of frequency assignments, making it more difficult for smaller companies to compete.

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TAGS: acquisitions and mergers, Business, Digitel, Philippines, PLDT, Telecommunications
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