Philippine Long Distance Telephone (PLDT) has reached agreement to acquire a controlling interest in smaller rival Digital Telecommunications Philippines, known as Digitel, in a move that would reduce the number of significant players in the country’s mobile market from three to two and further confirm PLDT’s dominance. The market leader, which offers its cellular service under the Smart brand, is to acquire a 51.55 percent stake in Digitel from JG Summit Holdings and other parties. It will also acquire bonds held by JG Summit which are convertible into additional Digitel shares by end-June this year as well as taking over debt obligations in the operator. PLDT will extend its takeover offer to the remaining shareholders in Digitel.
The deal puts together the first and third-largest cellular operators in the Philippines. In addition, by acquiring Digitel, which offers its service under the Sun Cellular brand, PLDT is removing a rival which had damaged industry margins with an aggressive approach to pricing in recent years. According to Wireless Intelligence, PLDT has 45.6 million subscriptions out of an estimated total in the country of 89 million (Q4 2010 figures). The addition of a further 14 million from Digitel would increase PLDT’s total to 59.6 million subscriptions and give it an overwhelming two-thirds market share. The second largest operator is Globe, part-owned by SingTel, which has 26.5 million users. The possibility of new competition does exist in the shape of food-and-drinks giant San Miguel which is already present in the country’s fixed-wireless market and has been linked to the purchase of Express Telecom, a largely inactive mobile operator with approximately 7,000 users which would provide an entry to the market.
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