SMC bows out of third telco bid; NTC awards frequencies to Globe, PLDT (Smart)

31 May 2016

Beer and food conglomerate San Miguel Corp (SMC) has given up on its long-harboured ambitions to shake up the Philippines’ uncompetitive mobile market, by agreeing to sell its telecoms assets to the nation’s effective duopoly – PLDT and Globe Telecom – for approximately PHP69.1 billion (USD1.48 billion). The move is, however, likely to lead to an even greater examination of the mobile market which only last week president-elect Rodrigo Duterte described as a ‘cartel’, as he called for an urgent improvement in its performance, lest it face tighter regulation and the prospect of foreign-backed competition.

In 2014 SMC unveiled an ambitious plan to build and operate a third national mobile network via its Vega Telecom subsidiary, and last year announced that it was in talks with Australian telco Telstra concerning a joint venture. When discussions ended without agreement in March this year though, SMC president Ramon Ang bullishly stated his company would continue to go it alone. On Monday, however, it became clear that Ang had thrown in the towel when PLDT shareholder First Pacific Co, a Hong Kong holding company controlled by Indonesian tycoon Anthoni Salim, and Ayala subsidiary Globe Telecom both issued statements confirming they were each buying a 50% stake in Vega Telecom, ending the prospect of a third player entering the market.

In the wake of the announcements, the National Telecommunications Commission (NTC) has given Globe Telecom and PLDT mobile unit Smart Communications permission to co-use certain radio frequencies in the coveted 700MHz spectrum previously held by SMC, as well as rights to other bands previously held by Vega. Confirming this, PLDT used a stock market filing to note: ‘The NTC has today approved the use by Smart Communications of certain radio frequencies in the 700MHz, 900MHz, 1800MHz, 2300MHz and 2500MHz bands’. Globe Telecom later released a similar statement. According to the NTC letter of approval on May 27, 2016, Globe will be permitted to use the following frequencies:

703MHz-720.5MHz and 758MHz-775.5MHz

880MHz-885MHz and 925MHz-930MHz

1710MHz-1717.5MHz and 1805MHz-1812.5MHz

2380MHz-2395MHz

2555MHz-2595MHz.

Smart will get to use the following:

720.5MHz-738MHz and 775.5MHz-793MHz

885MHz-890MHz and 930MHz-935MHz

1717.5MHz-1725MHz and 1812.5MHz-1820MHz

2365MHz-2380MHz

2629MHz-2669MHz.

In addition, the NC confirms that other frequencies previously assigned to Bell Telecommunications Philippines – a subsidiary of Vega Telecom – would also be assigned to Globe and Smart subject to certain conditions, namely:

• the companies must immediately commence and implement the co-use agreement over the allotted frequencies

• provide higher broadband and internet access speeds within a year and the submission of a quarterly progress report

• come up with a rollout plan within 60 days, covering at least 90% of the cities and municipalities in three years to address the growing demand for broadband infrastructure and internet access

• payment of the Spectrum User’s Fee and other required fees and charges

• secure the necessary permits and licences from the NTC for radio stations owned and operated by each company

• give the NTC access to base stations or cell sites for monitoring purposes.