SMC gets windfall as Globe, PLDT pay P69.1B for radio spectrum

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In a development that stunned the telecom industry on Monday, May 30, fierce competitors Globe Telecom and PLDT temporarily put their bitter rivalry aside to team up and purchase jointly the telecom assets of defeated contender San Miguel Corporation.

Globe and PLDT will split the P69.1-billion price tag on a 50-50 basis.

Top PLDT execs explain the deal in a presscon
Top PLDT execs explain the deal in a presscon

The dominant telcos admitted during their press briefings that the overriding objective of the purchase was the acquisition of various radio frequencies, including the highly coveted 700 MHz band, held by SMC through its telecom subsidiaries.

?The main goal of this transaction was the radio frequencies. Anything that came with it was just extra,? said Globe CEO Ernest Cu during a briefing at the Makati Shangri-la Hotel.

The deal will not require congressional approval as Globe and PLDT are not buying the radio frequencies per se but the company that owns them. In this case, SMC?s Vega Telecom holds the license to use the radio frequencies from the government. SMC-owned broadband firm Eastern Telecom Philippines Inc (ETPI) is also included in the sale.

Globe officials in a press briefing
Globe officials in a press briefing

Under the deal, PLDT and Globe will use a major portion of the radio frequencies that they will acquire from SMC. A few portions of the spectrum will be surrendered back to the government via the National Telecommunications Commission.

PLDT chairman Manny V. Pangilinan said the deal is a win-win solution for the industry as PLDT and Globe will now have access to the valuable radio spectrum, while at the same time giving a possible third-player the frequencies ? from 2G to 4G ? that it can use in its telecom business.

PLDT and Smart Communications network head Mar Tamayo and Globe chief technology and information officer Gil Genio said the 700 MHz band is a good spectrum to use for boosting the Internet speed of their 2G and 3G subscribers.

Tamayo said PLDT-owned wireless units Smart and Sun Cellular will share the use of the 700 MHz spectrum with Globe. He said the band can cover more subscribers per unit area compared to the radio frequencies it is currently operating.

The new allocations of the radio frequencies
The new allocations of the radio frequencies

Pangilinan said President-elect Rodrigo Duterte was notified ahead regarding the transaction. ?We didn?t want him to know the news from the papers,? he said.

Globe?s Cu said Duterte?s earlier pronouncement that he would seek to address the country?s slow Internet access prompted the telcos to talk to each other and close the deal. He did not say when the discussions started.

Pangilinan and Cu differed, however, with regard to the timeline as to when the effects of the deal would be felt. The former said it would take six months while the latter forecast it would only take three months.

JP Morgan advised Globe on the transaction while PLDT took UBS as financial counsel.

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