Globe not against PLDT, Digitel deal, but rather its consequences

MANILA, Philippines -  Globe Telecom emphasized yesterday that it is not against the acquisition by telecommunications giant Philippine Long Distance Telephone Co. (PLDT) of a majority stake in third largest telco player Digital Telecommunications Phils. Inc. (Digitel) but rather the consequences that such a deal will bring about.

Just last month, PLDT said it is acquiring a 51.55-percent stake in Digitel from the JG Summit Group for a total consideration of P69.2 billion which will be settled by the issuance of one new PLDT common share for every P2,500 consideration payable for the assets.

The completion of the transaction will require regulatory approvals from the National Telecommunications Commission (NTC), the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE).

PLDT’s petition seeking the NTC’s approval of the deal was filed last April 20 and the NTC has set the first hearing on May 23. The transaction is intended to be completed by the end of the second quarter of 2011.

Globe said it will likely file an opposition to the petition, adding it wants PLDT to submit a copy of the contract to the NTC. The Ayala-controlled telco also wants the NTC to redistribute spectrum frequency in a “rational manner.”

Globe president and CEO Ernest Cu explained that what they are asking from government is to level the playing field. “We are not against the deal itself but the consequences it will bring about,” he emphasized.

Cu also stressed that contrary to PLDT’s claim that Globe is a sore loser and simply lost in the bid to acquire Digitel, Globe would not have offered the buyout price of PLDT given the existing valuation of PLDT as such would not have been an attractive option for them.

He pointed out that in the 1990s, the allocation of radio frequencies were given in 10 megahertz blocks. “The optimal is 20 mhz. Beyond that, one company will not be able to utilize it. Our regulators never contemplated that one company will end up owning three out of four frequency allocations,” he said.

In a letter submitted to the NTC last May 3, Globe chief legal counsel Rodolfo Salalima said there is currently a situation happening in the United States very similar to the telco monopoly that is about to return in the Philippines, which the US government is reviewing and looking at with concern.

“However, unlike the dominant telco company in our country, the dominant AT&T in the US is willing to sacrifice and waive some of its monopolistic powers in the interest of the public/consumers,” he stressed.

AT&T had bid $39 billion for T-Mobile USA, a smaller wireless operator owned by Germany’s Deutsche Telekom. The proposed merger needs the approval of antitrust and telecoms regulators and some members of the US Congress have called for a thorough review of the transaction.