Digitel all set to launch mobile phone service

The Gokongwei-owned Digital Telecommunications Phils. Inc. (Digitel) is all set to commerciallly launch its cellular mobile telephone service (CMTS) next year, joining five other players in this highly competitive field. This despite the postponement of its bond float that seeks to raise funds for the project.

Digitel senior vice-president for legal and carrier services William Pamintuan said in an interview that they were able to secure a foreign commercial loan that is more than enough to cover the $190-million (around P10-billion) initial requirement for the mobile telephony project. It was learned that the source of the loan, the exact amount of which was not disclosed, is a French bank.

Plans by Digitel to float bonds before the end of this year was deferred due to uncertainties in the business climate here and abroad. According to Pamintuan, the bond flotation has already been approved by the Digitel board but has not yet been submitted to appropriate government authorities like the Securities and Exchange Commission (SEC) for approval.

"The officers of Digitel have yet to decide on the form of bond float," Pamintuan said, adding that now is not the right time to raise funds from the public.

But he said the company may still need to resort to a bond float since the cellular phone project will cost at least $500 million in the next three years. "This is a continuing business and we will need to continuously upgrade and expand as we go along," he explained.

He added that financing for the cellular project will be a combination of commercial loans and bonds as well as funds from a new investor.

Digitel is already in talks with a potential foreign strategic partner that is expected to put in both new money and technical knowhow in the CMTS business.

Digitel’s soft launch of its CMTS scheduled for this month, however, has been postponed to early next year.

Asked when the commercial launch would be held, Pamintuan said this will have to be kept under wraps in the meantime in order to surprise competition. It is expected, however, that the project will be commercially launched during the first half of next year.

Digitel was able to secure its provisional authority to engage in the CMTS business from the National Telecommunications Commission (NTC) in August last year and under NTC rules, the company will have to roll out its services within 18 months from the grant of the PA on February next year.

The company has begun installing some cell sites and the switches are epected to be put up anytime. Pamintuan expressed confidence that they will be able to meet their scheduled rollout.

Initially, digitel plans to install a CMTS capacity that will be able to accommodate 500,000 subscribers. Of this, around 300,000 will be during the first year of operations and will be a combination of prepaid and postpaid subscribers.

Digitel officials earlier said they believe that the CMTS business is far from being saturated and that there is money to be made by concentrating on niche markets.

One of the plans of the company is to bundle the CMTS offering with its existing landline bsiness which means that current Digitel landline subscribers will be able to avail themselves of the cellular service at more affordable prices. The same will be true for new fixed line subscribers.

Right now, Globe Telecom and Smart Communications have the largest share of the GSM or digital cellular phone business in the country followed by Pilipino Telephone Inc. (Piltel) and Isla Communications (Islacom). A fifth player, Extelcom continues to offer analog but plans to go into digital soon.

Digitel is 47.4 percent owned by JG Summit Holdings of the Gokongwei family while Swedish company Telia AB holds 9.4 percent.