SkyCable aims to grow market, signs 3 deals

Posted at 05/15/12 7:55 AM

MANILA, Philippines - Rather than aim for an increase in pay TV (television) market share, a ranking Sky Cable Corp. official said on Monday the company is gunning to expand the market which, at its present state, continues to suffer from rampant illegal cable connections.

“Let’s put it this way, instead of increasing the combined market shares of Sky, Destiny [Destiny Cable Inc.], MyDestiny [Solid Broadband Corp.] and Uni-Cable TV in the pay TV and cable broadband businesses, we can expand the market with digitization. Instead of fighting for a bigger share of a very small market it is better to expand the market size. If we offer varied and affordable cable TV subscriptions, the market will grow. We would like to think that way rather than all of us eating the same market size,” said SkyCable Chief Operating Officer Rodrigo Montinola, in a phone interview yesterday.

UniCable is a direct-to-home (DTH) cable TV subscription service covering the areas in Cebu. Solid Broadband, meanwhile, is a broadband service company that operates the MyDestiny brand. Destiny is a provider of cable TV service, similar to what SkyCable offers. On May 11 SkyCable signed separate deals with these companies that are under Solid Group Inc. owned by the Lim family.

“The combined market share is probably 45 percent. The rest is shared by our rivals including Cignal, Dream Satellite TV and Cable Link,” said Montinola.

The agreements involve the sale and transfer of Destiny Cable’s assets used in its business of constructing, maintaining and operating community antennae television systems for public and commercial purposes to Sky Cable, at a purchase price of P2,403,421,354.

Another asset purchase agreement was executed between Solid Broadband and SkyCable. Under the P1-billion deal, Solid Broadband will sell, transfer and convey to SkyCable all assets used in the business of operating commercial telecommunications facilities, coastal stations for ships-at-sea, aeronautical stations for aircraft in flight, television and broadcasting stations, and other telecommunications services.

Meanwhile, Uni-Cable agreed to sell, transfer and convey to Sky Cable all of Uni’s assets used in its business of operating a cable antenna television system in Mandaue and Lapu Lapu City, Cebu province, including, but not limited to, a satellite TV system, cable TV headend station, repeaters, booster, and other related equipment, at a purchase price of P93,578,646.

SkyCable will use both equity and borrowed funds to finance the purchase of the three companies’ assets which will be used in the expansion of its television and broadband business. “Funding will be sourced from a combination of equity and borrowings. The details are still being planned,” said Montinola.

SkyCable has no plans of acquiring more cable TV firms. “This is it. Even before this transaction we are already a strong No. 1 in the pay TV segment,” said the official.

For his part, David Lim, president of DCI, SBC and UNI, said “The pay TV and broadband markets require continuous significant investments, if we are to keep up with our major competitors, particularly the direct-to-home satellite and telco companies. We are gratified by the loyalty of our Destiny Cable subscribers and MyDestiny broadband subscribers all these years, and would always want to give them the best products and services possible. However, we realized that this will entail resources, for digitizing our cable network and expanding our broadband services, that we do not have. We believe our agreement with SkyCable will allow subscribers to enjoy the benefits of the latest technologies.”

He added that “our tieup with SkyCable came at an opportune time as it allows us to focus on our other core businesses.” Our holding company Solid Group Inc. markets and distributes mobile phone brand MyPhone.”

The cable industry has recorded billions of pesos in revenue lost due to illegal cable connections. Further, the industry cited that there is a one-on-one ratio between a paying cable subscriber and an illegal connect. This translates to about P6.3 billion in losses annually for the industry.t

With the deal, this gives us the opportunity to continue with our digitization efforts to curb illegal connections. Eventually, we will apply digitization to Destiny Cable subscribers,W said Montinola.

Sky Cable is aiming to convert about 80 percent of its 500,000 subscribers to go digital by year-end. About P1.5 billion has been earmarked for capital expenditures.