Globe welcomes approval of PLDT-Digitel deal

Posted at 10/26/11 5:10 PM

MANILA, Philippines - Globe Telecom Inc., the country's second-largest telecommunications player, has welcomed the approval of Philippine Long Distance Telephone Co.'s (PLDT) acquisition of Digital Telecommunications Philippines Inc. (Digitel) on two conditions set by regulators.

The National Telecommunications Commission (NTC) gave the deal a green light Wednesday, but ordered PLDT to divest itself of one of its third-generation (3G) frequencies in six months and continue offering unlimited services under Digitel brand, Sun Cellular.

“The approval of the joint application with condition to divest PLDT’s 10Mhz 3G frequency is a progressive step for the NTC in promoting consumer welfare and fair competition," said Globe, who was earlier the main oppositor to the deal.

"Given the length of time this deal has been discussed by several authorities in the government, the media, and private sector, the decision of the regulatory body upholds its support to the industry, ensuring equal opportunities among players to compete, and allowing consumers to enjoy quality services from their chosen service provider."

The plan to sell Digitel was announced by its owner, Gokongwei-led JG Summit Holdings Inc., and PLDT in March. The approval took seven months in part because Globe Telecom and consumer groups were blocking it. They said the deal would give PLDT control over two-thirds of the market, killing competition.

However, the NTC said the conditions it set ensure that the deal "will not result in a monopoly."

"We would like to assure the general public that the PLDT-Digitel transaction will not result in a monopoly and bring about unhealthy business competition that will be detrimental to the interest of millions of telecom users and subscribers," said NTC Commissioner Gamaliel Cordoba.

"If you look at the last condition, we placed there that in case any of the applicants fail to comply with the conditions, then the decision itself will be declared null and void, meaning the merger, in case, the parties fail to comply with it, it will be nullified," added NTC Deputy Commissioner Carlo Jose Martinez.

With the regulatory approval, PLDT said it has completed its P69.2 billion purchase of a 51.55% stake in Digitel via cross sale in the stock market at P1.6033 per share.

In exchange for the Digitel shares, JG Summit will get 12.9% of PLDT, comprising 27.7 million common shares at P2,500 apiece.

PLDT also acquired the zero-coupon convertible bonds issued by Digitel to JG Summit and assumed P34.1 billion in advances made by the parent to Digitel.

Restraining order

Meanwhile, militant group Bayan Muna said it may go to the courts to void the PLDT-Digitel transaction.

In a statement, Casino said, “We have yet to get a copy of the NTC order allowing the merger of PLDT and Digitel under Manny Pangilinan, but among the options we are studying is to file a motion for certiorari with injunction and TRO (temporary restraining order) at the Supreme Court.”

Casino pointed out that the SC issued a ruling declaring foreign ownership of PLDT unconstitutional as it violates the 40% limit for public utilities.

Casino also objected to the PLDT-Digitel deal, citing the need to protect consumers against monopolies.