MANILA, Philippines – PLDT Inc. is expected to have bigger market share—and a “comfortable lead” over its competitors—in the broadband space following the acquisition of Sky Cable Corp. for P6.75 billion, according to Fitch Group unit CreditSights.
The credit watcher, in a recent report, noted that the Pangilinan-led telco player could increase its market share by 2 to 3 percent to 47 to 48 percent, cementing its lead in the industry.
The acquisition widened the gap with its peers Globe Telecom Inc. and Converge ICT Solutions Inc., which account for 31 percent and 21 percent of the market, CreditSights said. Less than 1 percent was occupied by small players.
The deal is also seen to grow PLDT’s broadband subscriber base by 9 percent with the entry of around 350,000 Sky customers.
“We think the acquisition represents a logical strategic addition to PLDT’s dominant cash-generative broadband business,” CreditSights said.
Earnings positive
The transaction, in addition, is anticipated to grow PLDT’s earnings before interest, tax, depreciation and amortization (Ebitda) by 4 percent and Ebitda margin by 20 basis points to 48.7 percent.
As for antitrust matters, CreditSights sees no “major regulatory hurdles” given that Sky only has a relatively small broadband market share of around 2 percent to 3 percent. The merger, as such, “should not materially reduce industry competition post-acquisition by PLDT.”
The acquisition deal, which was just announced last week, is still subject to regulatory approval.
Meanwhile, CreditSights said that the telco giant’s recent tower sale was “welcome from a credit standpoint, as PLDT will have greater financial capacity” to fund its capex (capital expenditure) and “deleverage.”
The Pangilinan-led company just sold 1,012 towers, which are primarily in Luzon, for P12.1 billion to Frontier Tower Associates Philippines in line with its asset-light strategy.
Following this deal, which is expected to be completed this year, PLDT has now monetized over 7,500 towers for P98 billion.
“The move to sell passive infrastructure allows telcos to focus more resources and shift to active telecom infrastructure rollout such as fiber and radio equipment,” PLDT said previously.
It explained the partnership with independent tower companies also provides the industry access to global best practices and technologies related to operating towers.
CreditSights expects PLDT to eventually sell additional 338 towers this year. INQ
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