SMC to expand presence in telecommunications sector

MANILA, Philippines - San Miguel Corp. (SMC) has confirmed it is expanding its presence in the telecommunications business, which industry observers said will be made via a possible investment in an existing mobile phone service company.

SMC made the confirmation in a disclosure to the Philippine Stock Exchange (PSE) without giving details.

There are reports that SMC may invest in Express Telecommunications, a cellular mobile telephone system (CMTS) licensee. Previously, there were rumors of a possible buy-out by SMC of Lopez-owned Bayan Telecommunications. Extelcom and BayanTel are both under corporate rehabilitation.

SMC president and COO Ramon Ang and Extelcom officials reportedly presented to the National Telecommunications Commission (NTC) a plan to upgrade the Extelcom analog platform to GSM.

An industry official said Extelcom may need additional frequency if it wants to offer mobile phone services.

When asked earlier to confirm SMC’s purchase of Extelcom, Ang said: “We are still in talks.”

Extelcom has not been using its full 10 megahertz (MHz) of spectrum in  800 MHz, specifically within  835-845 MHz/880-890MHz. Further, the company was also given five MHz of additional bandwidth in the 1800-MHz range in September 2001.

Globe Telecom, Smart Communications and CURE are all eyeing Extelcom frequencies because these are of a lower bandwidth than the current 3G frequencies assigned to them. As such, their transmission and reception capability covers a greater range from a technology standpoint. This characteristic can permit the use of fewer 3G base stations and network elements, while still providing substantial coverage.

“Extelcom frequencies can also be used for the deployment of wireless broadband services particularly in rural areas. They are not that keen on competing with the two cellular giants, which have already established their presence in the cellular market. Broadband is more in the horizon and that is where they will be,” a source said.

SMC is also is negotiating to acquire up to 60 percent of publicly listed Liberty Telecom Holdings Inc., Ang earlier confirmed.

He declined to disclose the status of the negotiations but said that SMC was prepared to comply with the tender offer rule, which requires an investor to offer to buy out minority shareholders if it buys at least 35 percent of a publicly held company.

Ang said the “very good frequency” in the congressional franchise of Liberty Telecom’s subsidiary was what attracted SMC  to offer to acquire the firm.

Another favorable factor is that Liberty Telecom is partnering with Qatar Telecom (Qtel), the exclusive telecommunications service provider in Qatar, Ang added.

Liberty Telecom recently said it was increasing its authorized capital stock by P4.8 billion by issuing preferred shares.

San Miguel recently initiated talks with Qtel on a possible joint venture partnership that will take advantage of opportunities in the wireless broadband, mobile and mobile broadband businesses in the Philippines.

San Miguel has been aggressively expanding, acquiring the stake of state-run pension fund Government Service Insurance System in power retailer Manila Electric Co. and agreeing to buy a 51-percent interest in oil refiner and retailer Petron Corp. from British investment fund Ashmore group.