SMC’s Liberty Telecom to bid for 3G licence; sets PHP1.1bn CAPEX figure

24 May 2012

San Miguel Corp’s (SMC’s) Liberty Telecoms Holdings, which operates Wi-Tribe branded wireless broadband internet services in the Philippines, will bid for the 10MHz 3G mobile licence that the government intends to sell, as it looks to boost sales at the unit. SMC president and COO Ramon Ang says that the acquisition of the third-generation licence forms a key part of Wi-Tribe’s plan to offer voice call and SMS services ‘within a year’. Speaking to reporters on the sidelines of a Liberty Telecom shareholders’ meeting, Ang confirmed the parent group’s commitment to the venture, saying: ‘Rest assured that we will support this business. We will soon offer fast voice and SMS services within a year. Without the 3G frequency, we cannot deliver the voice and SMS.’

The 3G frequencies in question relate to the 10MHz block of spectrum that must be relinquished by Philippine Long Distance Telephone Company (PLDT) as a result of its acquisition of Digital Telecommunications (Digitel), owner of the Sun Cellular brand. Last month the National Telecommunications Commission (NTC) asked PLDT to update it on its ongoing divestment of radio frequencies currently held by its subsidiary Connectivity Unlimited Resources Enterprise (CURE, trading as Red Mobile), and confirm that it will return them by July 2012. PLDT has just three months to complete the phased migration of Red Mobile customers to sister firm Smart Communications’ network, after which it must relinquish CURE’s 3G frequencies as part of the terms and conditions of PLDT’s takeover of Digitel last October. Once the frequencies are returned, the regulator intends to launch an auction to sell them off again. PLDT and its subsidiaries are prohibited from participating in the bidding process, although interest is also expected from Globe Telecom, and Bell Telecommunications Inc (BellTel) along with other telecom players such as Bayan Telecommunications and Multi-Media Telephony Inc.

Ramon Ang also confirmed that Liberty Telecoms intends to invest PHP1.1 billion (USD25.4 million) in its networks and services this year, including CAPEX for new base transceiver stations (BTS) in Northern and Southern Luzon as well as in Cebu for its ‘pure 4G’ Wi-Tribe broadband service. The unit currently has 500 BTS in operation in Mega Manila, Bulacan, Cavite, Laguna and Rizal, and hopes that network expansion and continued subscriber growth – particularly in the mass consumer segment – will help it reach its goal of entering the black by 2014. Liberty Telecoms booked losses of PHP1.68 billion in FY 2011, up 12% from PHP1.50 billion a year earlier. The funding will mainly come from ‘internally generated funds and capital infusion from the shareholders,’ said Liberty treasurer Paul Bernard D Causon. The company, which ended 2011 with 70,000 subscribers, is also seeking congressional approval for another 25 years of its franchise, which is currently set to expire in 2014. Liberty Telecoms holds a congressional franchise under Republic Act 153, granting it the rights to construct, maintain and operate radio stations for international and domestic communications of all types and services.

Philippines, PLDT Inc. (incl. Smart Communications and Sun Cellular)