MVP adopts Inasal strategy on Digitel

Apparently MVP isn’t running out of guts even if outright cash is no longer on the table. The somewhat shocking news that is now forcing me to revise my column at the last minute has to do with his purchase of Digitel from the Gokongweis. From what I heard, the Gokongweis didn’t go to MVP offering to sell Digitel. It was MVP who approached the Gokongweis with an offer that even John Gokongwei could not refuse.

A press conference on the transaction is being held at the Crowne Plaza as I write this column to meet my early afternoon deadline. An official hint something was in the works came as the Gokongweis asked the PSE to suspend trading of JG Summit and Digitel Tuesday morning. But unlike in the US where the purchase of T-Mobile by ATT is facing one year of examination by anti trust and FCC authorities, no such government review is required for the PLDT purchase of Digitel.

I think there should be such a review. The purchase consolidates a huge segment of the local telecoms market that could threaten the competitive environment. All we have left is Globe Telecom and a still struggling telecoms operation of San Miguel. I am not sure that is enough to assure enough competition to protect consumer interests.

But I can understand why MVP decided to buy Digitel, which operates Sun Cellular… he had to do that before it becomes even more expensive to deal with a stronger competitor. The Gokongwei telecoms venture has been building market share through the years. At one point it overtook Globe in the post paid market. Globe recently announced it got back on top of Sun but no one really knows for sure.

It seems MVP took lessons from Tony Tan Caktiong of Jollibee. The Jollibee entrepreneur surprised Edgar ‘Injap” Sia II with a P3-billion offer for 70 percent of Mang Inasal. Sia was reportedly surprised with the offer but couldn’t say no specially when told that he would continue to manage the enterprise after the purchase.

MVP offered the Gokongweis a seat in the PLDT board after the purchase. In so doing, MVP like Tony Tan Caktiong in the Inasal purchase, bought a strong competitor that is getting stronger every day. They are buying market share, in other words.

But in the case of Digitel or Sun and PLDT, I am not too sure it is as simple as adding Digitel’s market share with PLDT’s. Many with Sun cell phones have it as a second phone… because it is cheap for teens on allowance to use to call kabarkadas or for housewives to supervise the maids at home. The value of the purchase probably has something to do with the frequencies of Sun Cellular but not so much with the infrastructure which merely duplicates PLDT’s. But they can save money on consolidating facilities.

They also claim complementation of network and geographic reach. It makes sense, as they pointed out, for PLDT to maintain the mobile operations of Digitel separate and intact, to capitalize on Sun Cellular’s operations and significant brand equity in specific segments of the market.

Because no cash is involved the Gokongweis will not be able to immediately use the proceeds to expand Cebu Pacific and get the petrochemical project really going. I understand the money value of the deal from MVP is good enough to cover the capex needs of both companies and plenty more leftover for their property and other businesses… if they decide to liquidate those PLDT shares. Trust John Gokongwei Jr. to spot great opportunities and have even greater luck.

Wow! The question now really is, when will MVP stop expanding his already expansive empire?

Graduation

Graduation time and I understand that half a million new graduates will join the country’s labor pool. I am sure only a small portion of this year’s batch, as always, will be able to find gainful employment here. Many will probably end up in call centers, assuming their education and communication skills are good enough. Others will try to go abroad. Most will be frustrated looking for work anywhere as they find out they have not been trained for anything that’s in demand.

Blame our highly commercialized educational system. It has a business model that calls for graduating as many students as quickly as possible with no regard to future employability. CHED, the government regulatory body that is supposed to safeguard the quality of higher education, is no match to the political clout of these diploma mills.

Market forces are now doing what the CHED should have done: closing down those schools. As the demand for our nurses declined from foreign hospitals, a large backlog of jobless licensed nurses grew.

So what courses should our young people take? I am told that there are always job openings for good engineers. But I can see that we have lost our manufacturing sector with many factories losing out to more efficient competitors in the region.

But engineers are in high demand abroad and a good number of OFWs are highly paid skilled engineers. Then again, not all engineers are created equal. There are also some types of engineers more in demand at certain times than others. It seems that these days, it is all about computer engineering.

According to the New York Times, a fierce war for talent, the fiercest in more than a decade, is now raging in America’s Silicon Valley, the New York Times reports. “Free meals, shuttle buses and stock options are de rigueur. So the game maker Zynga dangles free haircuts and iPads to recruits, who are also told that they can bring their dogs to work. Path, a photo-sharing site, moved its offices so it could offer sweeping views of the San Francisco Bay.”

As for salaries, NYT reports that “Google is paying computer science majors just out of college $90,000 to $105,000, as much as $20,000 more than it was paying a few months ago. That is so far above the industry average of $80,000 that start-ups cannot match Google salaries.”

The Times continues: “…the shortage of qualified engineers has grown acute in the last six months… Nationwide unemployment among computer scientists and programmers is higher than in other white-collar professions – around five percent… But even with a glut of engineers on the job market, few have the skills that tech companies look for, said Cadir Lee, chief technology officer at Zynga.

“Colleges rarely teach the newer programming languages like PHP, Ruby and Python, which have become more popular at young Web companies than older ones like Java, he said. Other skills, like working with large amounts of data and analytics, can be acquired only at a few companies.”

It is important for various agencies of government to closely coordinate in the matter of guiding our schools and our youth on education for their future. Parents are investing heavily in their children’s education and it is painful for them to realize after graduation that their children are not as employable as they thought they would be.

Unless DTI, DECS, CHED and DOLE start talking to each other and actually have a program that will make our educational system relevant to what the market here and abroad requires, we will only add to our increasing number of frustrated jobless youths. We all saw what is happening in the Middle East and North Africa as this segment of the population vented their job-hunting frustrations on the political elite and overthrew governments.

In the meantime, what do we tell 500,000 new graduates all brimming with hope about their future?

Getting a raise

Nicholas Rivas and Ruth Marbibi sent this one.

Employee: Excuse me sir, may I talk to you?

Boss: Sure, come on in. What can I do for you?

Employee: Well sir, as you know, I have been an employee of this prestigious firm for over 10 years.

Boss:  Yes.

Employee: I won’t beat around the bush. Sir, I would like a raise. I currently have four companies after me and so I decided to talk to you first.

Boss: A raise? I would love to give you a raise, but this is just not the right time.

Employee: I understand your position, and I know that the current economic down turn has had a negative impact on sales, but you must also take into consideration my hard work, proactiveness and loyalty to this company for over a decade.

Boss: Taking into account these factors, and considering I don’t want to start a brain drain, I’m willing to offer you a ten percent raise and an extra five days of vacation time. How does that sound?

Employee: Great! It’s a deal! Thank you, sir!

Boss: Before you go, just out of curiosity, what companies were after you?

Employee: Oh, the Electric Company, Gas Company, Water Company and the Mortgage Company!

Boo Chanco’s e-mail address is [email protected]. He is also on Twitter @boochanco