Massive size to drive PLDT efficiency, says MVP

Businessman Manuel V. Pangilinan said having a bigger company that could deliver services to the public more efficiently and at a lower cost would be the best way to drive innovation in the country’s telecommunications sector.

At Philippine Long Distance Telephone Co.’s (PLDT) stockholders’ meeting on Tuesday, company chairman Pangilinan said the global trend was for smaller telecom firms to combine resources—not engage in competitions that result in the redundancy of investments.

“Market consolidation is happening across the globe, and this is driven by lack of growth in the previous years,” Pangilinan told shareholders.

The company on Tuesday approved the issuance of new PLDT shares at a price of P2,500 each, which will be used to pay for the acquisition of 100 percent of Digitel Telecommunications Philippines Inc., operator of Sun Cellular.

Pangilinan said the takeover of Sun Cellular, which will result in a telecom player with a market share of 70 percent, would result in a significant improvement in the value of PLDT shares held by investors.

“In many parts of the world, regulators have had a more tolerable view of market consolidation. In consolidated markets like Japan, services are better and cheaper than in competitive markets like the US and Europe,” he said.

Rival Globe Telecom Inc. earlier opposed the PLDT-Digitel deal, saying that the merger would result in a single player being able to dictate market prices, which is against the welfare of consumers.

“A consolidated market is better than a competitive one,” Pangilinan pointed out. But he said this did not mean that competition would completely be eliminated in the industry.

He said subscribers remained “contestable” and that there is nothing stopping the entry of new players to challenge PLDT’s dominance.

The approval of the National Telecommunications Commission, the Securities and Exchange Commission and the Philippine Stock Exchange are still required for the Digitel takeover to push through.

PLDT expects to complete the takeover of Digitel by the end of the month. Earlier, the Senate committee on information and communications technology said congressional approval for the deal was no longer required.

The total acquisition price is estimated at P74.1 billion, which includes 100 percent of the company shares and Digitel’s payables to its current parent, JG Summit. After the sale, JG Summit will end up with a 13-percent stake in PLDT.