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5 things to know about Globe, PLDT buyout of SMC’s telco assets

5 things to know about Globe, PLDT buyout of SMC’s telco assets
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The Philippines’ top two telecommunication companies, Globe Telecom Inc. and Philippines Long Distance Telephone Co. (PLDT),  agreed to buy out the telco business of conglomerate San Miguel Corporation (SMC).

This development followed the failed negotiations between SMC and Australian company Telstra Corp. Ltd. over a planned launch of a new telecommunications service provider this year.

So, what does this mean for the two companies? How does it affect us as service subscribers? Here are the five important things you need to know about the acquisition:

Fair share

Globe and PLDT will each acquire half of all the equity interest in Vega Telecom, Inc. (VTI), the telco unit of SMC. VTI owns control over various telecom-related companies, including Bell Telecommunication Philippines, Inc., Cobaltpoint Telecommunications, Inc. (formerly Extelcom),  Eastern Telecom Philippines, Inc., Express Telecom, Inc., and Tori Spectrum Telecom, Inc. (formerly Wi-Tribe), among others.

Included P17.02B debt

According to Globe, the total acquisition of  VTI is at P70 billion, which includes P52.8 billion equity and P17.2 billion of total debt. Globe and PLDT will purchase their 50 percent of the VTI’s total interests at P26.4 billion each.

More frequencies for better internet service

The buy out will give Globe and PLDT access to more radio frequencies, in particular the coveted 700MHz, which was previously assigned for analog television broadcasting. This allows the two telcos to improve their mobile data services with the new capacities and greater area coverage.

In addition to the 700MHz spectrum, frequencies in the 900MHz and 1800MHz bands are also covered in the acquisition.

Opportunity for a new market player

The deal between SMC, Globe, and PLDT further cements the latter two’s grip on the telecommunications market. However, Globe and PLDT both said that they will return certain radio frequencies in the 700MHz, 850MHz, 2500MHz, and 3500MHz bands to the government to allow future players to enter the market.

Challenges ahead

While this latest development greatly helps in improving the quality of mobile data services of the two telecommunication companies, there are still other hurdles that contribute to the quality and speed of mobile internet. One example is the low number of cell sites in relation to the growing base of mobile internet users. Globe and PLDT needs to invest on building more cell sites in the future to complement the addition of the new frequencies.

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