The Philippines’ San Miguel Corp (SMC), after failing to find a foreign partner to launch a third mobile operator in the country, announced it is selling its telecoms assets to incumbents PLDT and Globe Telecom for more than $1 billion, with each taking a 50 per cent stake.
The two operators, which together have a 99 per cent market share of mobile connections, will pay a total of PHP52.8 billion ($1.13 billion), which includes the valuable 700MHz spectrum. SMC’s telecoms assets are valued at an estimated PHP70 billion, including liabilities of PHP17.02 billion.
The agreement, which was signed this morning, comes as a major surprise and will see PLDT and Globe strengthen their control of the market, but it also requires the two companies to give up part of their spectrum holdings to the regulator to allow for the entry of a third operator.
The duopoly has long called on the regulator to auction off part of the 700MHz spectrum held by SMC’s units. SMC, the country’s largest corporation by revenue, had taken steps over the past two years to consolidate its growing telecoms holdings in the Philippines. It owns 90MHz out of 100MHz in the highly efficient 700MHz band, with the company’s Wi-Tribe holding 80MHz and High Frequency Telecommunications allocated 10MHz. Its other telecoms assets include BellTel, Eastern Telecommunications and Cobaltpoint Telecommunication.
Under the agreement, PLDT and Globe will split 70MHz of the 700MHz spectrum holding, while 20MHz will be returned to the regulator.
Talks break down
SMC held talks with Australia’s largest operator Telstra for nearly a year about setting up a wireless joint venture in the Philippines, but the operator announced in March it was unable to agree on an equity investment with SMC, and the two companies ended negotiations.
SMC began talks with PLDT and Globe after those discussions ended, the Inquirer said. Smart (a PLDT subsidiary) is the market leader with a 53 per cent share, while Globe, 46 per cent owned by Singtel, has a 46 per cent share.
Earlier this month Norway’s Telenor stepped forward and expressed interest in teaming up with SMC to set up a wireless joint venture.