PLDT to keep hands off Sun operations

Manila, Philippines - Telecommunications leader Philippine Long Distance Telephone Co. (PLDT) said it will keep its hands off the operations of Digital Telecommunications Philippines Inc. (Digitel), a rival company it recently acquired a majority stake in. Digitel operates the Sun Cellular brand.

“We are prepared to make a formal commitment to the government to keep the company separate from PLDT and to maintain the Sun Cellular brand and its services,” PLDT chairman Manuel V. Pangilinan said.

He stressed PLDT has no plans to end the unlimited services offered and pioneered by Digitel mobile phone service brand Sun Cellular as the latter will be run independently of PLDT’s wireless arm Smart Communications Inc.

“We will keep Digitel as a separate company. We will maintain the unlimited and bucket pricing of Sun Cellular,” Pangilinan added.

The statement is in response to concerns the acquisition, which is expected to be finalized by June 30, will jeopardize competition in the telecoms industry and will adversely affect the consumers.

President Aquino last Wednesday ordered a review of the “merger” to ensure “a level playing field.” The review will be spearheaded by the Cabinet economic team, the Department of Justice, and the National Telecommunications Commission.

 “I don’t think competition will disappear,” Pangilinan said, adding that PLDT is willing to further improve the Sun Cellular brand through further investments in its services.

Instead, the acquisition of Digitel will pave the way for an improved service offering especially in the broadband segment, Smart chief wireless advisor Orlando Vea said.

“With Digitel, we can have 95 percent broadband coverage in three years,” he said.

Meanwhile, Pangilinan said PLDT will reevaluate the stance of Red Mobile in Smart’s portfolio of wireless brands which include Smart Infinity, Smart Buddy, Talk ‘N Text and Red Mobile.

Red Mobile was first introduced in 2009 and was relaunched in March 2010. It is positioned to meet market demand for unlimited services, particularly for “second SIM” holders, and directly compete with Sun Cellular.

 “We have not gotten into Sun yet so we still don’t know,” he said.

PLDT’s acquisition of Digitel will add about 15 million wireless subscribers and 450,000 landline users to its network. Currently, PLDT has over 1.8 million landline users and 46 million wireless subscribers through Smart.

Earlier, PLDT president Napoleon Nazareno said Sun Cellular will continue to offer unlimited mobile voice and text messaging services even after PLDT completes its investment in Digitel .

“Our intention is to maintain Sun’s current offers and further improve them. One clear opportunity is mobile broadband. Leveraging the combined networks of PLDT, Smart and Sun, we plan to expand the reach and raise the quality of mobile broadband services for Sun subscribers. This is in line with our Internet for All advocacy,” Nazareno explained.

Some quarters had raised concerns that PLDT’s investment into Digitel would lead to the end of Sun’s unlimited offers.

 “That’s not going to happen. There is a market for unli services and we intend to be the best in serving that market,” Nazareno said.

Nazareno, who is also president of PLDT wholly owned mobile subsidiary Smart Communications, said over the next three months, they shall study further Digitel’s operations and networks to enable them to draw up specific plans in order to realize the synergies between PLDT, Smart and Digitel.

Pangilinan revealed that Digitel will be a subsidiary of PLDT instead of being absorbed by Smart. “For the meantime, each will operate on its own. We intend to maintain Digitel and its mobile subsidiary Digitel Mobile Philippines Inc. as separate corporations. Their respective organizations and businesses will remain as they are. Their brand equity will be maintained,” he emphasized, adding that Smart Buddy, Talk ‘N Text and Sun Cellular are all strong brands.

Earlier, top officials of PLDT and Gokongwei holding company JG Summit had signed an agreement under which PLDT will acquire JG Summit’s shareholdings and other economic interests in Digitel for P69.2 billion.

PLDT will also undertake a mandatory tender offer for the remaining common shares of Digitel held by minority shareholders. This could raise the total transaction price up to P74.1 billion.

Payment would be done in the form of PLDT shares valued at P2,500 each.

To complete the transaction, PLDT needs to obtain regulatory as well as shareholder approvals in a process it hopes to finish in the next three months.